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Friday, July 17, 2009

Dealing with the Ethical Saga in Business

JoAnn Lombardi
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Given the increasing social impact of business, ethics has emerged as a discrete subject over the last 20 years. Business ethics is concerned with exploring the moral principles by that we can evaluate business organizations in relation to their impact on people and the environment. 
There are four types of ethical problems that are common in business organizations - human resorting, conflicts of interest, customer confidence and misuse of corporate resources.   
Human-Resorting Ethical Problems
These relate to the equitable and just treatment of current and potential employees. Unethical behavior here involves treating people unfairly because of their gender, sexuality, skin color, religion, ethnic background for example.  
Conflicts of Interest
Here, particular individuals or organizations are given special treatment because of some personal relationship with the person or group making the decisions. For instance, a company might get a lucrative contract because a bribe was paid to the management team of the contracting organization, not because of the proposal’s quality.  
Involving Customer Confidence
This involves corporations that behave in ways that show a lack of respect for customers or a lack of concern with public safety. Examples here include advertisements that lie (or at least shield the truth) about particular goods or services, and the sale of products, such as drugs, that a company knows to be unsafe.  
Misuse of Corporate Resources
This involves employees that make private phone calls at work, submit false expense claims, take company stationary home among other things.  
The financial scandals that have rocked the corporate world in recent years (Enron, WorldCom, Parmelat for example) involve a number of these cases that senior managers have engaged in improper bookkeeping and making companies look more financially profitable that they actually are. This increases the stockholder value of the company so that anyone with stock profits directly. Those profiting will include those making the decisions to manipulate the accounts that would qualify as a conflict of interest. However, the fall-out from the downfall of these companies affects stockholders, employees and society at large negatively that results with innocent people losing their retirement reserves and/or savings as well as employees losing their jobs.  
Holding Those Accountable for Such Behavior
The response to identifying and holding an individual or group of individuals responsible for such unethical behavior as the perpetrators is an oversimplification. Most accounts that are restricted to the level of the individual are inadequate. Despite popular belief, decisions that are harmful to others or the environment and are made within organizations are not typically the result of an immoral individual seeking to gain personal benefit. While individual influences such as the employee’s level of moral maturity or the locus of control may be factors, we also need to explore the decision-making context in order to understand why an unethical decision was made. For example, group dynamics very often influence the decision-making process.  
A particularly important group-level influence is group think, a phenomenon identified by Irving Janis in his research on U.S. foreign policy groups. The research demonstrates the presences of strong pressures toward conformity in these groups; individual members suspend their own critical judgment and right to question with the result that they make bad and/or immoral decisions.  
In a company in which the dominant approach to business ethics is social obligation, it is likely to be difficult to justify a decision based on ethical criteria. Morally irresponsible behavior may be condoned as long as it does not break the law. Legal loopholes, for instance, may be exploited in such a company if these can benefit the company in the short-term, even if they might negatively influence others in society.  
Ethical Dilemmas
In some situations, it is clear that a business has behaved unethically such as when a drug is sold illegally, the company accounts have been falsely presented or where client funds have been embezzled. However, what is more common a scenario and of greater interest are situations that pose an ethical dilemma; situations presenting a conflict between right and wrong or between values and obligations, so that a choice is necessary.  
For example, a corporation may want to build a new factory on a previously undeveloped and popular tourist site where there is large-scale unemployment among the local population. Do we help build the economy of this location at the expense of spoiling some of the naturally beautiful countryside? This is something that we will continue to come across during this period of economic strife.


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