BUSINESS ETHICS
EXECUTIVE SUMMARY
The focus of this paper will be mainly a work situation at my present employment which posed an ethical dilemma. It will also include the options which were available, preferred option, reasons for and against the preferred option. Finally the solution to the situation will be restated by relating it to one of the classical ethical theory.
Ethical dilemmas are common in life and at work. Research suggests that managers encounter such dilemmas in their working relationships not only with superiors and subordinates but also with customers, competitors, suppliers and regulators. A basic concept in an economic system is that the major function of the management of business units is to maximize profits for the benefits of the owners. As long as actions are legal and not immoral, any decision that might enhance the return on the investment would appear to be a proper course of action.
The logistics company which I am working is facing a current ethical dilemma which I am involved. Working in a logistics company makes me deal with various customers. With the increasing competition that is involved in the nature of the business, our company has to come up with various plans that will help our company overcome and succeed competition. One of these is the offering of gifts, offers or bribes to our customers. Although this is allowed by our boss, the opposite, which is to accept bribes from our customers are not allowed. We are prohibited to receive any bribes from our customers.
Such a situation also poses an ethical dilemma on our part but also on the part of our customers who receive the bribe. Usually, our customers are also businesses whose employees are also not allowed to accept any bribe from use. Therefore, when offering bribes, it is done in a very discreet manner which in no way will provide evidence that our company gave away bribes and our customers receive any.
On may part, I do such bribery of customers since it is what my boss tells us. As an employee I have to follow his orders if I want to still work for the company. I conditioned myself that what I am doing is what is best for me and the company. However, another part of me really believes that what our company is doing is worng and is againt the code of business ethics.
If I was the manager of a small company, I would have instructed the same thing for my employees. But if I was the manager of a large company, perhaps the scenario might be different. The reason for the difference in positions is that small companies need to do whatever it takes in order for it to survive. Well known large companies on the other hand are already secure in their positions and do not likely need bribes to get customers.
Perhaps business ethics is not really doing what is morally right, it is doing what is right for the company. Still, it is within limitations and more and more businesses are aware that doing what is morally right is the only right way.
Introduction
Throughout recorded history the concept of business ethics has meant different standards of conduct to different people at different times. Both industries and individual companies have taken positive steps to indicate their belief in and support of the concept of business ethics and ethical practices.
Although this sounds simple, it is easier said than done as there will always be a conflict of interest between various groups of people. Any decisions made by businesses need to be made with an informed awareness of the specific situation and then act according to some sort of system of principals which is Business Ethics.
Business ethics is exactly the same as normal ethics, and that is knowing what is right or wrong, and learning what is right and what is wrong in a business environment. Then doing the right thing, but the right thing is not as straightforward as explained in many business ethics books. Businesses cannot function without ethics. Society dictates a set of rules and conformities and seeing as all businesses strive in doing that which is right, businesses must adhere to ethics in order to be successful.
At this point, however, a question can be raised that has ethical overtones. Is a business run for the benefit of its owners or should it be operated as well for the benefit of its employees, its customers, its suppliers, the government, and the public in general?
As an example, in recent years some firms have closed down inefficient plants and moved to new locations. This is legal and certainly not immoral. But what about the effect on the employees who live in the community and on the community itself? In some instances ethical rather than profit motives have resulted in a decision to modernize the old plant rather than to move. Or, what should management do with an old and valued employee who has lost his executive ability but who still lacks a year of reaching retirement age? The profit motive would certainly dictate that he be fired.
The focus of this paper will be mainly a work situation at my present employment which posed an ethical dilemma. It will also include the options which were available, preferred option, reasons for and against the preferred option. Finally the solution to the situation will be restated by relating it to one of the classical ethical theory.
Body
My company is a small privately owned logistics company. In order to stay competitive and compete with other logistics firms, we resort to customer bribery (commissions to customers) to obtain a new business. That is, we offer commissions or gifts to the affect the decision of our customers.
This is the nature of the conflict. Although we understand it is not right to do it, however, our boss is open for negotiation the paying price of it. Normally, our company will not seduce our client directly. Usually our clients’ decision maker is the one to seduce or hint to us to see whether our company can offers commissions or benefit to them if they can agree to sign the contract with us.
Stress on the job has been found to be a major factor influencing unethical behavior. Role stress is also strain, conflict, or disruptive result of a lack of agreement on certain job-related activities ( 2003).
We as a company providing service for customers, for example, are often confronted by customers who state or imply that they will avail of a service if given extra personal incentives that may be against company policy—that is, a bribe. Such a scene is actually present in other companies also. Take for example, accountants who are working on the audit of a company may be called aside and asked not to report information in a way that might disclose discrepancies. A human resources manager may discriminate against a minority. Since there is little doubt that ethical decision-making is stressful for decision makers who face conflict, the tendency is for role-stress situations to increase the likelihood of unethical behavior.
Our boss thinks if it is necessary sometimes we have to offer commissions or gifts to the clients, because it is a privately owned business. He will put profit as first priority. On the other hand, our company expects us not to receive bribe, tips or gifts from our suppliers or customers. This is clearly stated in our employment contract and also our customers’ contracts. If these cases happen, according to our company policies we must report to the company otherwise it will lead to contract termination.
A major component of the leader-follower relationship is the leader's perception of his or her self relative to followers, and how they in turn perceive the leader (1998). The case that is happening to our company is an example of this. As a follower, I see the leader as someone who I should obediently follow whatever he may say.
This self-other perception implicates important ethical issues concerning how followers are involved, used, or abused, especially in a relationship favoring a leader's power over them. Within this dominance motif, followers are essentially seen to be compliant and manipulated in the extreme (1998).
In addition, conduct personal business on company time is prohibiting too. Currently, our company did publish formal codes of conduct to help guide the ethical conduct of our staffs. Our delivery order forms have also clearly stated to the customers that our staff should not request any tips from our customers. Staff who received gifts or tips from the customers should directly report to the company, otherwise, it will lead to contract termination.
Many trade associations have adopted a Code of Ethics that is expected to serve as a guide to their members. These codes are printed, and framed copies are frequently found hanging in the offices of the individuals or firms who comprise the association. A large number of business firms have drawn up codes that are binding on their employees. Some of these are stated in general terms, but others deal with specific problems, such as honesty in communications and contracts, accepting bribes or expensive gifts and conniving with competitors (2002).
The role that an individual plays within a business, including the various tasks that have the potential to create conflict, as in this case is bribery of customers, may have a direct bearing on ethical decision-making behavior ( 2003). Some tasks require a decision maker to make many more tradeoffs and to face many more ethical dilemmas than others.
The likely consequences of breaking the law rarely happen in my given situation even if such bribery to customers is against most businesses’ certain code of ethics. This is due to the fact that the clients themselves are not willing to disclose to others that he or she received commissions or special gifts from our logistics company.
The reason for this is because the sensitivity of such a matter. On their part, accepting the bribe from our company is also an ethical dilemma. Even if their company suspects this; we believe he or she will deny admitting it for sure since they will suffer penalty too.
In addition, commission payment usually settles by cash rather than directly transfer through bank accounts. This is less risky since no evidence can be provided as proof that the other party received a bribe from our company. If a huge amount of commissions are involved, our company will usually settle it by few installments rather than settle it at once in order to reduce the risk.
Although as an employee I have to follow my boss’ orders, there are times where I cannot rationalize the behavior that I have done. Offering bribes makes me think twice if such activities are not really illegal or immoral. Yet, the thought that you will not be discovered makes me think that it is safe to continue doing so and the fact that the boss asked me to do it and accept me for doing it is enough for me. On the other hand, even if I had my scruples, I also think that it is done at the individual and corporation’s best interests.
This clearly shows that we usually pretend the behavior we are doing is not really unethical or illegal or affect other people. We excuse our unethical behavior by saying it is really in the organization or our best interest. We assume that the behavior is right because no-one else is expected to find out about it. We also expect our superiors to support and protect us if anything goes wrong.
Furthermore, I’m doing this for my boss due to individual values such as instrumental values and terminal values. Also people are at different levels of maturity in terms of the way they interpret their values. For example, since I want to get promotion I will accept my boss’s advice to attract the customers by offering them commissions or cash rebates. However, if I’m old now I might refuse my boss because I am not willing to take risk and I think is not worth to try it. In addition, it is mainly due to the fact that I’m at self-centered level as I want to have promotion and salary raise. Clearly it shows that I am only thinking of what could be good for myself. Therefore, as I have mentioned, under stress most of the staff including me will regress to earlier values.
The situation which I have outlined has certainly happened within my own company and even in other companies around the world. If I am the manager, I will use same method to manage this situation. This is because in reality, small business is difficult to sustain if they do not play such kind of tricks. As customers have a lot of choices of suppliers, no matter how good qualities or services your company provide. Customers can always find a better supplier. Also, even our company stays as ethical, others might not and they can steal your customers away. Therefore, in order to attract and maintain new customers besides offering good services and prices, sometimes you have to maintain good relationship with customers by buying gifts or taking them out for good dinning. For example, once a foreign customer visited Hong Kong and I have to be the tourist for him although it is not necessary my job duties. Furthermore, most customers always trying to taking grant from suppliers as they think they can receive more than just to provide a service.
However, if I work in a large corporation I will not use the same method to manage this situation. It is because large corporation have sufficient bargaining power to their customers. Most large corporations already have well-known names. I can find potential customers more easily in a well-known large corporation than in a small company. As my company will have better reputations and probably already well known which sometimes I don’t have to find special ways to attract customers; the customers will just seek for our services. Therefore, I can have the options to think about how I make decisions such as moral management, immoral management and amoral management. I can also setup codes of ethics, ethics audits, ethics training or ethics hotlines.
If an ethical issue involves or is limited to an individual's responsibilities, that person may examine her or his own ethical motives and standards before choosing a course of action. Organizational level people also confront ethical issues at the organizational level in their roles as managers or employees. Certainly, many of these issues are similar to those we face personally. However, these issues may carry consequences for the company's reputation and success in the community and also for the kind of ethical climate or culture that will prevail on a day-to-day basis at the office (2003).
If an ethical issue arises at the organizational level, the organizational members should examine the company's policies and procedures and code of ethics, if one, exists before making a decision or taking action ( 2003).
However, wherever it occurs, bribery is wrong. I might have defended my actions but still, we all know that it is wrong. That is because bribery violates distributive justice. By hypothesis, the benefit (e.g., the contract to do the business again, the access to confidential information) is awarded in exchange for the bribe, not on the relevant merits of the case.
A damaging conflict of interest is an essential feature of bribery--an individual or group, "the bribee," receives the benefit of the bribe, but it is the organization which is expected to deliver the goods . . . typically in ways contrary to its best interests. Even if the bribe induced end would have been the one coming about in the ordinary course of events, bribery is still wrong, by virtue of the bribee's lying and cheating about the benefits he was purporting to provide (1994).
Conclusion
The potential for individuals and organizations to behave unethically is limitless. The company where I am working is no exception. Our boss allows and even asks us to bribe our customers. As an ordinary employee seeking promotion and approval from the boss, I do what he asks of us. Still, the other side of me knows that bribery is wrong and is against the business code of ethics. To excuse my behavior, I just tell myself that this is for the good of myself and the company.
But it is probably fair to say that most businessmen today recognize that the maintenance of high ethical standards in their dealings with each other is also good for their firms. Considerable evidence supports the contention that “honesty is the best policy,” which is, perhaps, another way of saying that good ethics makes for good business. A firm with a reputation for using questionable practices in its dealings is likely to find itself without customers and, in some instances, on the receiving end of the legal action.
The efforts to create a favorable corporate image, while they may eventually prove valuable to a business, involve decisions based on what is right and good rather than the most profitable. This business ethics is an important element in decision making. When ethical considerations come into conflict with an otherwise profitable course of action, ethical dilemmas ensue. By taking the right and ethical course of action, more and more businesses became more successful. From the public viewpoint, it is comforting to discover that many business units have a heart as well as a mind and are recognizing their social responsibilities.
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