Please review this memo to understand the importance of ethical decision-making. Please send feedback.
Engaging in ethical practices are essential in the decision making process for any business professional. The choices we make now have a ripple effect on how an individual and their respective organizations are perceived. Business activity today will set an example for future generations on how they should conduct business. Ethical practices are different in every country due to cultural norms, importance of environmental conservation and the rate of growth of an economy.
Nations who strive to find their place as a contender in the world economy tend to engage in unethical practices in order to gain an advantage over competitors in order to increase short-term profitability despite not taking into consideration the long term unintended adverse consequences it may have.
Ethics in America is particularly intriguing because of the wide range of cases deeply rooted in history as early as 1910 when Charles Ponzi stole over 20 million dollars from investors to 2008 when Bernie Madoff who is currently serving 150 years in prison operated the largest Ponzi scheme in US history by stealing over 18 billion from investors. (US Securities and Exchange Commission)
Definition of Ethics
Ethics are the moral principles an individual calls upon during conscious and subconscious decision-making. What is considered right and wrong varies for each individual; a person’s ethical beliefs stem from a variety of factors including upbringing, environment, social norms and personal beliefs. The three ways to categorize ethics are: personal ethics, social ethics and conservation ethics. Personal ethics are predominantly derived from family, culture and faith. These morals, which are shaped by personal experience, are active in decision-making and can change over time.
Social ethics are tied into what you believe should be tolerated in society. Historically, people deem that the rights that they believe in should be for everyone living in society and should be equal. The definition of utility is a key factor in social ethics and means that, generally, the opinions of many should outweigh the opinions of a few. In modern society, lawmakers make selfish decisions sporadically because they are receiving monetary incentives from companies and do not create legislation that will benefit the masses.
This form of corruption needs to be eliminated from society. Conservation ethics is playing a transformational role in the way business is conducted today. The environment is sacred and must be respected in the present and future in order to sustain a healthy planet, which goes hand-in-hand with a sustainable economy. (Johnson-Sheehan) Companies are taking steps to promote their stance on environmental sustainability.
Process for Evaluation of Ethical Decisions
In the workplace, business professionals are faced with ethical dilemmas on a regular basis. Some ethical problems have clear answers while others require careful deliberation. If unethical decisions are made, it could have profound effects on the future of an individual’s career as well as how an organization is perceived in the public eye. Because of this, strict processes should be followed when facing an ethical dilemma.
The following tools should be utilized appropriately to solve ethical dilemmas: persuasion through costs and benefits, seeking legal advice, mediation and distributing memos to follow. The regular and thorough use of these processes will lower the probability of negative choices in ethical decision-making. (Johnson-Sheehan)
Persuasion Through Costs and Benefits: Conducting a cost-benefit analysis is an effective way to lay the facts on the table and understand what will be gained as well as lost in an ethical decision. By simulating multiple scenarios, a professional can contemplate the future effects of their decision. In a cost benefit analysis the benefits should always outweigh the costs and take ethics, profitability, sustainability, and the monetary value of time into consideration.
Seek Legal Advice: We live in a litigious society where lawsuits are the social norms. Business has evolved to include countless laws that protect commerce and intellectual property. When faced with a situation that you are not sure if it is ethical or not, consultation with a law professional is standard. Lawyers may be expensive to use as consultants but they can easily help the company avoid a costly lawsuit.
Mediation: Mediation has gained popularity as a form of solving ethical dilemmas. Mediation is an informal way of finding an answer to a dispute. A third party generally will hear both sides and award compensation. The benefit to mediation is that both parties can avoid lawsuits and resolve the dispute in an informal setting.
Memos to follow: Email has made communication with employees quick and effective. Regularly sending memos that outline expectations is a popular way to communicate what is expected in employee behavior and how to handle specific situations.
Situations that require an individual to make ethical decisions occur in public as well as in private companies. All levels of businesses face ethical dilemmas and must make responsible decisions. The following problem exemplifies how ethical dilemmas are cross cultural due to the increasing trend of globalization.
A manager is faced with an ethical dilemma: he can have his product (shoes) made in Indonesia by women for the price of $40 a month. This would bring the company high profit due to cheap labor costs. Recently a similar company was under criticism for exploiting labor practices of women in Indonesia. The two options the manager has is to take the offer from Indonesia and manufacture there or decide against it on moral grounds and continue to manufacture from a higher price and collect less profits in the United States. (Clarkson, Miller, Jentz, Cross)
If the manager takes the offer in Indonesia, the first thing that needs to be decided is if the action is legal. Manufacturing in another country is legal. Contributing to the economy of a country in poverty is generally not illegal if laws are being followed in that country. The second question that needs to be addressed is if manufacturing in Indonesia is profitable. Producing shoes in Indonesia is profitable according to the fact pattern due to cheap labor costs.
Finally it must be determined if the action is ethical. In the public’s eye this action is unethical. The human rights advocates made it known to the public if other companies are engaging in cheap labor in Indonesia. Because this is thought of as unethical, the decision the manager should make is to abandon the idea of producing in Indonesia.
In the long run if the company went against human rights advocates, a negative image will be associated with the company and sales will ultimately decline. The company may also be violating the principle of rights, which states that a key factor of determining whether a business decision is ethical or not is if the decision affects the rights of others including firm owners, employees, consumers, suppliers, the community in which it does business and society as a whole. (Clarkson, Miller, Jentz, Cross)
If the shoe company exploits the laborers in Indonesia, this principle will have been violated making the business venture unethical.
Making ethical decisions actively and regularly is integral to any professional organization. The decisions that professionals make are under the careful eye of the public due to the news, watchdog organization and the power of social media. As business professionals it is important for us to advance the practice of ethical decision making while retaining high levels of profitability.