The key stakeholders in the company
Stakeholders in an organization include customers, shareholders, customers, employees, suppliers, employers or investors who can either affect or be affected by the organizations objectives. The stakeholders of an organization must be taken into consideration because a business is run in their interests. Stakeholders are incorporated into the organization through legally binding contracts. (Hutchinson, 2001). Organizations are required to be transparent and communicate effectively in their decisions, policies and activities to its stakeholders.
Judith Schmidt who is the managing director of the computer sales office is in charge of identifying the problems that the company is experiencing Judith calls an emergency meeting in her office to discuss the problems facing the company. As a managing director Judith has decided to make decisions for the firm without consulting the company’s union and its stakeholders. Judith decided that in order for the company to survive, the organization must be restructured and the staff reduced. She sees this as a ways of increasing the company’s savings. Judith acknowledges that wider consultations and discussions with other stakeholders are important, but she says that there is no time for that. By so doing, Judith has the problem of democratic accountability because she is not transparent since her decisions are not made visible. She argues that the three regional sales departments will be merged into two and that her decision is final. She however creates room for consultation with Human resource manager and regional sales office managers on the practicalities of the process. Judith urges her team to keep the matter confidential because it was very sensitive. It should not be disclosed until details are finalized and an announcement made to all the sales staff.
Lesley Jones who is the manager of a regional computer sales office with 15 staff is called for an emergency meeting by the managing director to discuss the problems being experienced by the company. Lesley is informed by Judith of her decision to restructure the company and reduce employees by merging the three sales departments into two. Though no prior discussions had been held with her, Lesley accepts the decision and agrees to keep the matter confidential until it is finalized and announced to all the staff. She is upset with the decision to merge the departments and reduce the number of staff. Lesley is not sure whether she will still have the job herself when the plan is finalized. One of Lesley new staff, Juan, overheard about the re-organization and redundancies and demands to know the truth. Lesley admits to Juan about the managing director’s decisions to restructure the company. She asks him not to tell anyone else about the matter. Lesley has broken her promise to keep the matter confidential until all the staff is informed.
Jagdeep and Eric are managers in two different sales departments. They are both called to the emergency meeting together with Lesley. Jagdeep and Eric agree to keep the matter confidential at the end of the meeting. The two sales representatives are overheard discussing about the re-organization and redundancies at the company’s canteen by Juan. Jagdeep and Eric are not supposed to discuss the matter in public but they break the decision to keep the matter confidential.
Doris is the human resource manager who is working with the managing director to ensure that the plans are finalized and the best decision is made. Juan, a new employee who overhears Jagdeep and Eric discussing about the decision to reduce employees, storms in his manager’s office and demands to know the truth. As an employee he should wait until the manager announces the decision himself.
Ethical Theories in business
Business ethics involves decisions and situations’ concerning what is right or wrong as viewed from a moral perspective in the business. Being ethical in the business world means doing what is right just and fair and avoiding causing harm to the stakeholders. Ethics involves the use of morality to determine what is right or wrong for any given situation. Ethical theories therefore are rules regulations and principles that address right and wrong in a certain situation. Business ethics provide guidelines which individuals can use to determine what is right or wrong in the business world. (Megone, & Robinson, 2002).
Virtue theory emphasizes on developing good character traits such as honesty and faithfulness in the business field. These character traits will assist in developing good working relationships in the working environment. It also helps workers to relate and behave in an ethical manner. The virtue theory assists an individual to make the best decisions in the workplace and also in their lives (Virtue in the Marketplace, 1998, Autumn). Virtue theories do not focus on the rules and regulations that people should follow in an institution but rather focus on what is morally right or wrong. Virtue theory is a character-based ethical theory that determines what kind of a person one should be. Virtue theories assist in fostering good ethical organizations and employees. Acting from virtue ethics, requires a certain moral motivation so as to make the right moral decision. (Neuhaus, 1999, August).
As a manager of a regional office, Lesley could not keep the decision about restructuring the organization from his employee. Lesley had been informed by the managing director of the company about her decision to restructure the organization. She aimed to do this by merging the three sales departments into two departments. She also decided to cut down the number of the employees to increase the company’s saving. Judith, who is the managing director had not discussed her decisions and intentions with the company’s stakeholders because, she felt that she needed to act immediately to sale the company.
Lesley felt bad about the decision because many employees would be laid off without their notice. She was not sure if she would have a job after the decision was finalized. When Juan overheard about the decision he confronted Lesley his manager and demanded to know the truth, Lesley decided to tell him the truth because if he pretended or lied he would be going against his virtue ethics. So he tells him about the re-organizational and redundancies and asks him not to tell anyone further.
Lesley had promised to keep the matter confidential until the decision was finalized and announced to all the sales staff, but she went against her promise and told one of the staff. This is a virtuous step because she felt that her staff was entitled to know the truth. Virtue ethical theory enhances the relationship between employees and employers by educating for honesty and faithfulness. ( Hunkin, 2002, September/October).
Ethics of duty theory
Ethics of duty provide that an individual must work with consistency. This means that an individual should act according to the laws in place. Ethics of duty emphasize that humanity should be treated as an end rather than as a mean (Spaak, 2006). Sometimes ethics of duty are referred to as the slave rule because they bind employees to obey the commands of their seniors without regard to whether the command in place is ethical or not. Duty of ethics requires that one must follow orders without questioning their morality to other employees or to the company itself. Individuals should consider whom they have obligations to, in a given situation and take into consideration what would happen if they acted in a particular manner. They should also consider what would happen if other people acted in their exact behavior. In ethics of duty an individual should treat other people in a manner that will benefit other people or the organization and not for their own selfish interests. (Hooker, 2002).
Judith, the managing director of the computer sales office analyzes and identifies problems being experienced by the company. Judith identifies that since the company was floated on the stock market 18 months ago, it has experienced tough competition, rising prices and sweeping on sales all in a period of economic down turn. She decides that the company current projections are bad and the main priority now should be saving the company as a whole. Although Judith acknowledges that wider consultation and discussion with the company’s stakeholders is important, she makes her own final decision. Things are getting worse very quickly, so she decides on restructuring the organization. The decision she has made provides that the three regional sales departments be merged into two so that the staff headcount can be reduced and savings made. Judith decides to work with the Human resource manager and consult the regional sales office managers to analyze the practicalities of the process. She urges her team members to keep the matter confidential until the details are finalized and an announcement made to all the sales staff.
As the managing director (MD) of the company, Judith is acting on the duty of ethics. Duty of ethics provides that decisions made by an individual should be for the best interests of the company or employees and not for self –interest. Her decision to cut down on the staff head count and merge the sales departments into two is aimed at increasing the company’s savings and in the end, save the company as a whole. Judith asks Jagdeep, Eric, Lesley and Doris to keep the matter confidential because she wants to avoid panic among the staff. If the sales staff find out, they will panic wondering who will loose their jobs or who will be retained. Just like Juan, they will demand for the twin, even before the details are finalized by doing this she is protecting her employees interests and those of the company.
Utilitarianism is based on achieving the greatest happiness on the greatest number of people. This theory provides that the moral worth of a decision is determined by its outcome, in utilitarianism, the purpose of moral decisions is to create a better place. Utilitarianism is not based on self interests, rather on actions that benefit the whole of humanity (Pihlstrom, 2004). Utilitarianism theory focuses more on individuals rather than an individual. Individuals are required to chose actions and make decisions that are the right or moral ones. Therefore the right or moral decision is one which creates the best results for the most people. This theory must be accorded to all individuals when determining the results of a given decision. Utilitarianism theory is based on two aspects which include Act utilitarianism and Role utilitarianism. (Hollingsworth, Hall, & Trinkaus, 1991).
Act utilitarianism explains that before making choices and decisions we must consider the consequences of our potential actions. Therefore, we must learn to choose decisions that will be much benefit to more people. In this we consider the happiness of the majority. Rule utilitarianism is known for following actions and that will at the end decrease happiness of affected individuals. This theory has many limitations and problems because it is not always clear on what the outcome will be and who will be affected by the decision. It is very hard to define the good and to measure the outcome of the good. In this theory achieving the greatest happiness for a large number means that under same conditions some harmful measures against certain individuals may be undertaken. (Hardina, 2004).
This means that consequences of the decisions and actions will not be of benefit to all involved individuals. Such actions are based on the fact that that they provide more happiness to the society in the long run. The morality of actions in utilitarianism depends on its consequences by maximizing average utility (Heter, 2006). Judith who is the managing director has the sole responsibility of running the company. She notices that since the company was floated on the stock market, it has been experiencing problems that could lead to its collapse. Judith now has the responsibility of making decisions that will immediately save the company. Without making consultations with the stakeholders, she makes her final decision and calls an emergency meeting to inform the managers of the sales departments. She decides on restructuring the organization by merging the three sales departments into two. This means that the staff headcount can be reduced and savings made. Although some employees will be laid off, the company will be saved and its customers will benefit in the long run. According to this theory, Lesley should lie to Juan because he has an ethical duty to keep the information confidential.
Should Lesley lie?
Based on business ethics, Lesley should lie to her employee Juan. The virtue theory encourages faithfulness among employees. Lesley made an agreement with the managing director and therefore she should not break the agreement. The virtue theory does not allow Lesley to break the agreement and disclose confidential information to the staff. Lesley works under the managing director and therefore has a duty of ethics to her manager. The managing director has asked Lesley to keep the information confidential and therefore she must follow her duties of ethics by keeping her boss’s word. Breaking the agreement means that Lesley has dishonored her employer. Lesley is bound by ethics of duty to do what is in the interest of the company. All decisions made by Lesley must be aimed at benefiting the company. By breaking the agreement and telling the sales staff about the re-organisation of the company, she is exposing the activities of the company without authorisation. (Yoder,1998).
Utilitarianism theory binds Lesley to keep the company’s decisions and actions confidential until they are disclosed to the staff. Although some of the staff will be affected by being laid off, the decision will be of much benefit to the company and its customers in the long run. The company’s interests should be taken into consideration first. Staff members do not need to know of the decision before it has been finalized. This is because managers have a sole responsibility of protecting the shareholders of a company and can make the decisions they think best for the company. (Grace, 2006). Based on this, Lesley is not entitled to disclose any information to the staff unless if authorized to do so.
What I would do in such a situation.
I would take into consideration business ethics that involve analyzing situations and conditions to establish a decision that is morally right. Before making any kind of decision, I will go through rules and principles that address right and wrong in any given situation. Stakeholders of the company or individuals that may affect or be affected by the decisions and actions of the company should be taken into consideration before effecting any potential action. As part of the management I’m required to take into account the rights and interests of all the stakeholders. The utilitarianism theory explains that the consequences of the actions taken justify the mean. Keeping the information confidential might seem like a conspiracy against other employees but in the long run it will be for their own benefit because after all, not many of them will lose their jobs. This will reduce panic among the employees because panicking will affect their work efficiency. Utilitarianism aims at achieving the greatest happiness on the largest number of people. The final outcome of the decision determines the moral worth of a decision decided. (Audi, 2002).
I would choose to lie to Juan when he confronts me concerning the re-organization of the company. Having made an agreement with the managing director to keep the matter confidential until the details are finished, I’m bound by the duty of ethics to keep the agreement. Judith is the managing director of the company and has authority to pass orders to her employees. She has asked them to be confidential so that incase they break the agreement it is seen as a breach of contract. I will therefore honor my responsibilities and keep the decision a secret from the sales staff until the final details are made. According to the utilitarianism theory, keeping confidentiality concerning the matter will be of benefit to the company in the long run. This is evident by the fact that employees will not be given reason to panic or spread wrong information before the final decision is made. (Craig, 1999).
I will ask Juan to await the managing director’s word on the matter and also to avoid believing anything he heard concerning the matter. Juan should not spread baseless information to other staff members. The virtue theory binds me to be faithful and honest to my seniors, so I will hold the information confidential as an act of service to the managing director. By breaching the agreement I could lose my job.
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