SM0381 Applied Business Ethics

SM0381 Applied Business Ethics

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SM0381 Applied Business Ethics

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SM0381 Applied Business Ethics

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Course Code: SM0381
University: Northumbria University

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Country: United Kingdom

Questions:
1. Your analysis of Mei-Hua before coming to the class2. How do you think Mei-Hua would describe “ethical leadership”?3. Mei-Hua clearly puts a lot of faith in Corporate Codes of Governance and Professional Codes of Ethics. What is underlying her arguments?  Do her arguments have merit?4. Mei-Hua does believe that Ethical Leadership and moral business behaviours can work side-by-side with shareholder interests? Are there any problems you can see in her argument?5. Does Mei-Hua working as a tax accountant prevent her from being a moral person? Mei-Hua is able to stay within the codes of conduct of the company, and her professional accountancy codes of conduct and the legal parameters (limits) of international tax codes and save the company millions (possibly billions) in tax payments. Should she be praised for this? Is this moral? How does this balance against the codes themselves?
Answer:
Ethics may be defined as the principles which distinguish between right and wrong and proper and improper (Carroll & Buchholtz, 2014). Ethics would not imply simply one course of action as right or wrong, but would evaluate all existing actions, so as to enable an individual to make an informed decision. In business, ethics may be defined as moral philosophy, which expresses professional and personal values that would facilitate all business actions (Bednarz, 2013). The purpose of ethical values in business is to ensure that the enterprise is based on a strong moral foundation. A dilemma may be defined as the inability to distinguish between right and wrong – or the inability to decide on something (Rossouw & Van Vuuren, 2017). I have worked as the head of the marketing team at a reputable company for two years. During my stint there, I have faced numerous problems which mostly revolved around ethical decision making. The following paper attempts to analyze the concept of ethical decision making, focusing on my personal experiences. 
Ethical dilemma description
In my role as a marketing head, I have understood that decision making can be one of the most important challenges that I would have to face. This is because the concept of right and wrong are mainly subjective and what I would perceive as right might not be so to other team members. Recently, the aspect of decision making has garnered the attention of the media and theorists because of changing customer views that companies need to be held more accountable (Ferrell & Fraedrich, 2015). Moreover, business ethics has expanded its horizons from just the employees to all the stakeholders involved (Craft, 2013). In business, ethical decision making would involve taking decisions in such a way that it has a positive impact on the stakeholders and their interests. Decision making comprises of ethical considerations and a degree of clarity; unlike production or financial decisions, such ethical decisions cannot be put into numbers (Trevino & Nelson, 2016). Instead, I believe that they require a level of evaluation and critical thinking, along with cognitive development. In order to analyze my role as a decision maker, Kohlberg’s Theory of Moral Development may be used. According to this theory, there are three levels of critical thinking or moral thinking which go into the decision making process (Bandura, 2014). One, the preconventional level, where the person’s sense of moral thinking and morality is limited and he is unable to look beyond the immediate authoritative figures. Two, the conventional level, where the person begins to develop social and personal relationships which are of the utmost importance in the workplace. Three, the post conventional phase where an individual’s morality and sense of ethics is defined by abstract values and principles (Gibbs, 2013). I believe that I was in the second stage while acting as the marketing head; this is because I did not allow myself to be lead by abstract values.
It must be remembered that any enterprise is nothing short of amalgamation of individuals; thus, it is expected that conflicts would surface from time to time between these individuals, with each person focusing on his or her own welfare, as compared to that of others. In such situations, I, as the leader, was responsible for resolution of such conflicts. In such cases, ethical dilemma as to the decision to be taken might arise (Crossan, Mazutis & Seijts, 2013). For example, I was asked to demonstrate my decision making skills when there are conflicts between the existing scenario and the conception of how it should be. Conflicts of the third kid would include decision making on what may be morally permissible. For example, at my organization, there were certain situations where I as the team leader had to differentiate between good and bad and right and wrong, especially when there is a very fine line between the two. However, it must also be remembered that good and evil would differ from person to person. In such a case, the onus would be on the manager to reduce the evil and arrive at a consensus.
Ethical decision making would refer to an intricate process where the person concerned would have to consider his actions and their consequences, as far as the business is concerned (Yeager, 2015). Ethical decision making is based on the foundation of balance of choices; the person would be asked to forego of poor choices for good ones, which would be for the benefit of the organization as a whole (Slade & Prinsloo, 2013). In this respect, I would like to draw on the western modernist ethical theories, which comprises the virtual ethical theory, the consequential theory and the deontological theory. According to the teleological theory, ethical decision making would be guided on the basis of what is bad and what is good – they would be judged strictly on the basis of moral rules (Iphofen, 2016). On the other hand, deontologists believe that morality should be upheld as the only principle and an individual should strive to abide by it at all costs (Crane & Matten, 2016). In my role as the marketing head, I tried to abide by the teleological theory; I tried to ensure that moral rules formed the basis of our operations as a team.
Ethics and decision making
Decision making posed a major challenge as far as right and wrong were concerned for me. For example, the manager may be plagued with an ethical dilemma as to what actions would be right for the company, for the society as a whole, for the stakeholders and simultaneously take his own interest into account (Holland & Albrecht, 2013). While I was working as the marketing head, I had to make several choices where I had to weigh my options and see how far my actions would impact the organization and my team. The way decisions are taken would entirely depend on me, the person making the choice. For example, most shareholders would not bother about the decision making process as long as it yields the desired results; however, the decision maker would have to take into consideration the people who stand to gain or lose from the choice made (Johnson, 2017). This also highlights the fact that the decision maker might be inclined to overlook certain ethical issues if it guaranteed them the desired results or attainment of predetermined goals (Lawrence & Weber, 2014). In this case as well, the western modernist ethical theories of deontology may be applicable (Minus, 2013). As a matter of fact, there are several approaches to ethical decision making which would include the following – moral rights, universalist, cost benefits, utilitarian, fairness, common good, theological, deontological, contextualist, principle based and so on, which I tried to follow in my leadership practice. 
My own moral approach determined my course of action. For example, a leader may take a decision which would lead to his own gains – in this case, he would have a materialistic and self absorbed approach. He would not be willing to consider the consequences the stakeholders and the organization would have to face as a result of his actions (Weiss, 2014). On many occasions, I too had the choice to look into my own gains and make decisions accordingly, because I was the leader and had the opportunity to do so. However, I chose not to. Another major challenge in ethical decision making is the fact that most people are unable to distinguish between ethics and morals in business. While the former refers to a set of guidelines or principles which are acceptable in society and must be adhered to, morals refers to the set of guidelines or rules which form the very essence of society (Shaw & Barry, 2015). In business, ethics, more than morals, determines the code of conduct which may be deemed acceptable or appropriate. Also, ethical decision making is extremely subjective in nature; it is mainly personal and would be determined through words and actions.
An important challenge in decision making, which I faced, is conflict management. There have been various conflicts which proved to be a hindrance to effective ethical decision making – they may be between social and personal values, benefits of others and personal gain, organizational rules and personal values, ethical codes and benefits, benefits and honesty or integrity and social norms and personal values (Menzel, 2014). Another challenge would be that of problem solving. In a managerial position, I was expected to take decisions in order to find solution to problems which may arise at any given moment. The task of problem solving would entail elimination of discrepancies between desired and actual outcomes. Furthermore, it can be understood that the outcome cannot be predicted, as far as ethical decision making is concerned. Essentially, ethical decision making would be based on the principle that decisions are guided by the greater good of the people concerned (O’Connor & Aranda, 2016). However, it is next to impossible to grasp the exact outcome of such decision making, which poses one of the major challenges in ethical decision making.  
Solutions to ethical decision making
The solutions provided here are based on my own personal experiences and the lessons I learnt from them. I realized that the key to effective ethical decision making in business would be a sound conscience and character. It must be ascertained that ethics is not just actions but also one’s way of thinking; thus, the decision maker’s character would determine his course of action. Here are three steps that I think a decision maker can follow to ensure that the action is executed with integrity and honesty. One, he or she would have to first identify the prevalent ethical issues, which could be adversely affecting the actions of others (Kuntz et al., 2013). For example, in the place of work, the manager’s decisions and actions would have a direct impact on the customers, employees, creditors, shareholders and other stakeholders. Two, he or she would be advised to look for alternatives; it would do well to remember that every dilemma provides more than one opportunity. Thus, the manager would have to look at alternatives, weigh pros and cons and finally make an informed decision. Three, he or she would have to engage in ethical reasoning in order to take the decision.
Some of these methods can be elaborated as follows – one, in the egoistic approach, the decision maker would be taking into account only his or her personal gains. Such a method must therefore be avoided. Two, in enlightened egoism, the decision maker takes into account the stakeholders’ interests, but eventually focuses on individual gains. Three, the utilitarian approach is usually recommended in ethical decision making because it would take into consideration the benefits and the harms of the potential decision on the persons concerned.
During my role, I tried to follow the four components model of moral functioning to ensure that the decisions I took were ethical and moral. The four component model of Moral Functioning was introduced by James Rest so as to study ethical behavior and integrity which should form the underlying principle of all decisions and choices in business (Nisan & Kurtines, 2013). The four components are moral awareness, moral judgment, moral commitment and moral actions. In the first component, the decision maker would have to analyze the situation, notify the existence of some core values like loyalty, integrity, fairness and sanctity and finally determine if the issue in hand is a moral or ethical one. In the second component, the decision maker would be expected to analyze the action, gain an insight into possible consequences, decide the stance that ethical individuals would take and explain core values that help in justifying the decision (Nucci, Krettenauer & Narváez, 2014). In the third component, the decision maker would have to decide his course of action and prioritize core values. In the final component, he or she would have to engage in skills required to make the decision and finally implement it.
There are some characteristics that an individual must possess in order to implement ethical decision making. I made sure that my role was autonomous and I was not answerable to anyone else; if I were bound by obligations, I would be unable to take impartial decisions. This might lead to unethical decisions. I was also aware of the impacts of my decision on the business and people involved. Similarly, every business is bound to have certain laws and regulations governing it; I made sure I had a sound knowledge about the same so as to prevent violations of law.
I believe that ethical leadership may be defined as the kind of leadership where the person decides his course of action based on values and ethical beliefs, which promote and preserve the rights and dignity of others. Trust, consideration, honesty, fairness and charisma are some of the characteristics of ethical leadership (Yukl et al., 2013). In the Case 1 provided, we come across four character profiles, each of whom has a distinctive view point on ethics in business and how it can be applied. I would like to say that I agree with the debate motion, and that ethical business would be impossible in an enterprise that is driven by shareholder interests. I believe that stakeholders form the chief assets of any organization and that stakeholder engagement and interest would be important in the case of ethical leadership. For example, in the first case profile, Mike, a professor of Business Ethics was of the opinion that ethical leadership would facilitate good decision making, enforcement of company policies and an overall moral and ethical operation within the organization. However, he was greatly disappointed in his daughter who did not harbor the same viewpoints. She used to be someone who was concerned about social problems and environmental impacts but now was money minded and only eagerly waited for her bonus payments. Here, Mike’s stance highlights the ethical dilemma that the mentioned organization may be facing. According to Mike, it was not ethical for them to take fresh, enthusiastic graduates from business schools and convert them into money minded corporate executives.
We also come across Jan, who is the CEO of Clean Solutions. She is a firm believer of the fact that gainful employment can provide self reliance and also motivation. Thus, she runs a programme where those employed under her would help people lacking the privileges they had. However, she finds that young people she hired in her company, fresh out of various business schools, would rather focus on their profitability than working on their people skills and essentially being humane to those less fortunate than them. On the other hand, we come across Mei Hua, who has made a career out of sticking to rules and company policies. She has always followed regulations and company laws regarding morality and ethics. Mei Hua stands against the motion; she believes that running charitable programmes can be used as a marketing gimmick because it does not technically harm the customers and at the same time increases shareholder environment. Similarly, we also come across Deshi, who is unable to make sense of the Business Ethics course and believes that it should be done away with. According to him, a business strategy that does not serve the purpose of the shareholders would be unnecessary and meaningless. I beg to differ; I am of the opinion that an organization is made up of both shareholders and stakeholders and that the interest of both parties should be taken into account. An environment which is entirely shareholder oriented would not take the stakeholders into consideration, thus paving the way for ethical issues.

Guiding Reflective Question

Student Reflections

 
What were the ethical dilemmas in this case?

There were quite a few ethical issues observed. One, the employees were required to work early or stay till late if deadlines were approaching. This could often be perceived as unfair by some employees. Two, the employee turnover rate is high owing to the fact that a large number of employees leave after 2 – 3 years or are dismissed. Three, it was unfair of the company to ask Borries to give up his holiday which had been sanctioned long ago. It would be going against his right to avail of a leave especially since he had not taken a leave in the past year. Finally, another ethical dilemma is observed in Borries; he gives up his holiday with his girlfriend for his job but faces the wrath of his peers who feel that his act of cowardice could jeopardize their holidays and leaves as well.

 
Who had them, and what choices were available to them?

The first and second ethical dilemma as mentioned were faced by the company. The second ethical issue was between the company and Borries and the fourth ethical dilemma was faced by Borries. In the first two cases, the company could take adequate measures to regulate working hours or compensate employees for working late. They could also reduce employee turnover by taking requisite steps to increase employee engagement and retention. In the third case, the company could easily have asked someone else to take over the account instead of asking Borries to give up his holiday. In the fourth case, Borries made a choice based on what he thought was right. He prioritized his job over his personal life.

 
For each dilemma,  did you agree with the majority opinion in the room?
 
 
 

In the first and second dilemma, it is indeed the responsibility of the company to ensure that working hours are kept optimum and employee retention is increased. In the final case however, I feel that it was unfair or Borries’ colleagues to attack him or reprimand him for giving up his holiday. It was a personal choice that Borries made and he considered his job to be more important than a holiday with his girlfriend. Therefore, it would be unfair to call him out for it or comment on his actions since this is entirely his decision.

 
What, if any, further information would help you to decide on any of these dilemmas?

It would be easier to decide on these dilemmas if I had the following information:
· The rate of employee retention in the company
· The details of the project that Borries left his vacation for. If someone else could fill in for Borries, he could easily have continued with his holiday as planned.
· The viewpoints of the colleagues who reacted vehemently when Borries gave up his holiday. It is important to understand why the colleagues felt that Borries had been selfish while making a decision.

Was it easy to resolve these ethical dilemmas?
Which ones were the most difficult?

It was relatively easy to get to the bottom of the most important dilemma, the one faced by Borries. It must be understood that Borries had made a personal choice and must be commended for choosing career over personal life.

In this module, I used my personal beliefs about what ethical leadership should be and how it should determine the decision I take. That is why I chose to support the motion and opined that a completely ethical business would be impossible in a working environment that is completely dominated by shareholder interests. I believe that leadership should be based on certain ethics and morals which include trust, caring, fairness, integrity and honesty. Moreover, a team spirit must be inculcated within the team in order to promote ethical business operations. Ethics in business is largely focused on proper decision making skills; I believe that a leader should be able to make choices which would not just benefit him but the organization as a whole, including all stakeholders. The decision making process should be fair and impartial; without this, it would be impossible to make ethical choices. However, in a shareholder focused environment, the emphasis would be on the profitability of the organization and not human interests, which might get in the way of ethical decision making.
To conclude, it can be said that ethical leadership must be practiced in the workplace. As shown in the portfolio evidence and the seminar case in the second part of the assignment, people have varied opinions as far as ethics in business is concerned. While some people are of the opinion that ethical business decisions form the pillar of the organization and is necessary to ensure smooth operations, some people believe that business decisions that would not benefit the company in terms of profits are pointless and unnecessary. However, it must be asserted that a degree of morality and ethics must be kept in mind while running business operations. 
Reference:
Bandura, A. (2014). Social cognitive theory of moral thought and action. In Handbook of moral behavior and development(pp. 69-128). Psychology Press.
Bednarz, T. F. (2013). Ethics in business. Practical Ethics for Food Professionals: Ethics in Research, Education and the Workplace, 52.
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Craft, J. L. (2013). A review of the empirical ethical decision-making literature: 2004–2011. Journal of business ethics, 117(2), 221-259.
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Crossan, M., Mazutis, D., & Seijts, G. (2013). In search of virtue: The role of virtues, values and character strengths in ethical decision making. Journal of Business Ethics, 113(4), 567-581.
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Gibbs, J. C. (2013). Moral development and reality: Beyond the theories of Kohlberg, Hoffman, and Haidt. Oxford University Press.
Holland, D., & Albrecht, C. (2013). The worldwide academic field of business ethics: Scholars’ perceptions of the most important issues. Journal of business ethics, 117(4), 777-788.
Iphofen, R. (2016). Ethical decision making in social research: A practical guide. Springer.
Johnson, C. E. (2017). Meeting the ethical challenges of leadership: Casting light or shadow. Sage Publications.
Kuntz, J. R. C., Kuntz, J. R., Elenkov, D., & Nabirukhina, A. (2013). Characterizing ethical cases: A cross-cultural investigation of individual differences, organisational climate, and leadership on ethical decision-making. Journal of Business Ethics, 113(2), 317-331.
Lawrence, A. T., & Weber, J. (2014). Business and society: Stakeholders, ethics, public policy. Tata McGraw-Hill Education.
Menzel, D. C. (2014). Ethics management for public administrators: Building organizations of integrity. Routledge.
Minus, P. M. (Ed.). (2013). The ethics of business in a global economy (Vol. 4). Springer Science & Business Media.
Nisan, M., & Kurtines, W. (2013). The moral balance model: Theory and research extending our understanding of moral choice and deviation. Handbook of Moral Behavior and Development Application, 213-249.
Nucci, L., Krettenauer, T., & Narváez, D. (Eds.). (2014). Handbook of moral and character education. Routledge.
O’Connor, M., & Aranda, S. (2016). Ethical Decision-making. In Palliative Care Nursing (pp. 53-67). Routledge.
Shaw, W. H., & Barry, V. (2015). Moral issues in business. Cengage Learning.
Slade, S., & Prinsloo, P. (2013). Learning analytics: Ethical issues and dilemmas. American Behavioral Scientist, 57(10), 1510-1529.
Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.
Yukl, G., Mahsud, R., Hassan, S., & Prussia, G. E. (2013). An improved measure of ethical leadership. Journal of leadership & organizational studies, 20(1), 38-48.

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