Ethical Dilemma in Business

According to Cambridge English dictionary, dilemma means a situation in which a  difficult choice has to be made between two different things you could do; an ethical dilemma is a moral situation in which a decision has to be made between two option which is neither fully acceptable or preferable. (Fernado, no date)In this essay we are discussing the relevance of Ethical theories or models in managers professional life to deal with the ethical pressure (dilemmas) occurring in their work place. Personally, I believe that the Ethical theories cannot provide accurate guidance to the managers to reach a moral conclusion.

Importance of Ethics in Business

Ethics are crucial to the business organizations as well as the whole society. Good Ethic is required for effective Business practice. Ethical behavior of everyone in an organization plays a vital role in a firm’s reputation or we can say that it reflects the culture of the company. Human nature and irrelevant control of management forces manager to face several ethical dilemmas in an organization. However, each company have their own Codes of Ethics to deal with these issues, but due to the different point of view of individual to see things may make it difficult for managers to choose the moral one or precisely the ethic decision. Social interaction with school, parents, religious institution, friends and so on make each individual aware about the right and wrong decision, but to deal with the unique ethical problems of their profession they need special training, so they can recognize the ethical dilemmas that may arise in their job. According to Andrew Crane, “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed”. In short, business ethic means conduct the business in a moral way to give the welfare to the community. Anyway, failure to implement the ethical standard within an organization may affects the entity in various ways like its reputation, unwillingness of professionals to join such business and even it makes company less appealing to stakeholders. (Akrani, 2011)

Managers Role in Ethics Conduct

Managers one of the primary responsibilities in an organization is to ensure that they and their subordinates are behaving ethically and will not affect any stakeholders adversely. Managers would face many ethical dilemmas in their work place may be with their supervisors, customers, management, subordinates, competitors and so on and the issues can be performance, evaluation, discipline, honesty etc…. But they must make sure that their each decision reflects the moral motivation and positive character traits such as Integrity, Trust, Fairness, Self-control and Humility because they are role models for the employees in their department. An ethical organizational culture will only be possible by a responsible and ethical manager. The failure of manager to follow ethics can even lead to the collapse of a company. Nationalization of the third largest bank in Ireland “The Anglo-Irish Bank” in 2009 is an example for this. The failure of Anglo-Irish chief executive Mr. Sean Fitzpatrick to practice virtue ethics caused the reputation of the bank to be destroyed, leading to its near collapse and nationalization.(Chu, 2014) So it is clear that unethical behavior and immoral decision of manager can even collapse a company.

Ethical Theories and Its application

Prescriptive approach and descriptive approach are the two different ways for an individual to take ethical decision. The major contemporary approaches in prescriptive are Consequentialist theories, Virtue ethics and Deontological theories. Consequentialist theory would suggest employees to think about the consequences of the decision or action, when Virtue ethics will ask individual to pay attention on integrity, while deontologist decision will be based on duties, obligations and principles. Each theory suggests three different ways to face problems and as a result each approach will conflict with each other. For example, let’s consider the financial crisis that happened in US due to the loan sanctioned by Mortgage brokers to NINJA. In this case, a consequentialist  would have focused on the damages  that could have caused to primary stakeholders and secondary stakeholders by these risky mortgages, a deontologist would have focused attention on the relevance of honesty, responsibility and transparency they should maintained with the customers and a virtue ethics theory would have asked that a person with integrity quality could sell mortgages to people who have no income.(Trevino and Nelson, no date, p. 51).And the toughest situation would arise when each theories suggest different guidance’s to an ethical dilemma and in such occasion it will be up to the decision maker to examine the situation thoroughly as possible considering the values and principles, social responsibility and integrity to reach a conclusion. Let’s consider other example where consequentialist theory contradicts with deontologist reasoning, In World War II Germany was compelled by Nazis to spill the truth about the place where Jews were hiding. If Germany told the truth about Jews to Nazis authorities then the consequence would be the death of Jews so consequentialist approach would suggest Germany to keep num, but as per deontological approach Germany should have spoken truth to Nazis because deontological principle stick on truth and honesty, so in short the managers faces difficulty to take moral decision because each theory conflict with each other reasoning and as a result manager get confuse to take the decision.

Anyway, Linda Klebe Trevino and Katherine A. Nelson recommend eight steps to coordinate these three different analyses and they propose a linear decision-making process. The first step is to find the facts, even though it is difficult to identify due to the uncertainty that found around the ethical issues but the worry part is facts that we found can be biased due to our over confidence or may be due to confirmation trap.(Trevino and Nelson, no date, p. 87).Then next step is to identify the multiple ethical issues of the situation. The third step is to identify the primary stakeholders and secondary stakeholders of the issues and then should view things on their perspective. Then next process is to find out about the potential positive and negative consequences for the affected stakeholders by the decision taken. In business, it is necessary to identify all short-term consequences, long term consequences and systematic consequences (symbolic and secrecy) before reaching a conclusion. Barriers such as choosing the consequences for self rather than to society, underestimating the risk that could arise and reducing the number of consequences to simplify the problem could be arise while identifying the consequences and it is necessary to deal with these issues in a broad way to identify the important consequences. Then the next step is to find out the obligation that could be raised due to the rights and principles of stakeholders and the sixth step is checking how society is going to evaluate our character based on our decision and the next step suggest that before taking any decision manager must think creatively about all potential action and the last step suggest decision maker to show guts without fearing.(Trevino and Nelson, no date, pp. 51–58).

Let’s take the example stated by Linda and Katherine in their book Management Business Ethics. They told about an ethical dilemma faced by Pat the plant manager in ABC Company. She was in such a situation that telling the truth about staff layoff to her friends will make her disloyal to the company at the same time hiding about staff layoff from her close friend will make Pat disloyal towards her friend. In this case, Pat may find it difficult to find out all facts especially the time workers would take to find a new Job .Pat, the workers, Pat’s Boss, society, the company are the affected stakeholders.  The right of both the workers and company to know and hide about layoff and the loyalty that company and workers expect from Pat are the main ethical issues Pat face. The consequences of telling and hiding about the staff layoff would be, Pat may lose her job, workers will get time to find other placement, Pat will remain in good book of management or workers have to suffer from sudden job loss. Anyway, before reaching a conclusion Pat should have to think about the duties towards company as an employee also about how society is going to value her by the decision she take. However, Pat can warn both employees and management like not to make any big financial commitment or about the aftereffect of hiding the layoff truth from employees.At last Pat must take a decision considering all these factors and should have the gut to stand on the decision taken by her

In conclusion, the theories and all these steps will only help managers to deal with the ethical dilemma more carefully or we can say it help managers to view the various “lenses” of the issue from different angle. And at last managers must take a moral decision from all these multiple conclusions. I feel that theories only give little guidance to manager to take a decision.

Bibliography

Akrani, G. (2011) ‘What are Business Ethics? Meaning Definition Features’, 30 September. Available at: http://kalyan-city.blogspot.com/2011/09/what-are-business-ethics-meaning.html (Accessed: 2 November 2018).

Chu, W. (2014) The Anglo Irish Bank Case Study by Seven Pillars Institute, Seven Pillars Institute. Available at: https://sevenpillarsinstitute.org/fall-anglo-irish-bank/ (Accessed: 30 October 2018).

DILEMMA | meaning in the Cambridge English Dictionary (no date). Available at: https://dictionary.cambridge.org/dictionary/english/dilemma (Accessed: 2 November 2018).

Fernado, A. . (no date) Business Ethics and Corporate Governance. Second.

Trevino, L. K. and Nelson, K. A. (no date) Managing Business Ethics. Sixth.