Chapter Introduction
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Chapter Objectives
· Define ethical issues in the context of organizational ethics
· Examine ethical issues as they relate to the basic values of honesty, fairness, and integrity
· Delineate misuse of company resources, abusive and intimidating behavior, lying, conflicts of interest, bribery, corporate intelligence, discrimination, sexual harassment, fraud, financial misconduct, insider trading, intellectual property rights, and privacy as business ethics issues
· Examine the challenge of determining an ethical issue in business
An Ethical Dilemma
Jayla just landed an internship with Acme Incorporated in the Payroll Department. She was excited because these internships usually turned into a full-time job after graduation. Jayla was hired by Deon, the head of the Payroll Department. He told her about their policies and stressed the need for maintaining strict confidentiality regarding employee salaries and pay scales. “Several years ago we had an intern who violated the confidentiality policy and was given a negative internship summary,” explained Deon.
“I understand, sir,” Jayla responded.
Jayla was determined to learn as much as she could about the job. She made sure she was always on time, followed all of the policies and procedures, and got along well with her coworkers. She started to feel like she fit in at Acme and dreamed of the day when she worked there permanently. However, one day while studying the books, Jayla began to notice abnormalities in one salesperson’s salary. Greg, one of the senior sales representatives, made three times as much as the next highest earning salesperson in the company. Jayla assumed he must be a spectacular salesperson and worked efficiently. She often overheard Mia, the General Manager, and Deon praise Greg for his sales numbers. She also noticed the three of them would often go to lunch together.
One morning, Deon handed a stack of client folders to Jayla. He explained, “These are the clients for the salespeople for the week. They will come to you when they need more work, and they are only to take the files on top of the pile. You are in charge of making sure the salespeople don’t pick and choose the files. This is how we keep things fair among the sales force.”
“I will make sure the files are distributed fairly,” Jayla promised. She was excited to be trusted with this responsibility, and she made sure she did her best. Mary, one of the salespeople, came by to get files for the week. They made small talk as Mary looked into her files. She looked disappointed.
“You didn’t get any good clients?” Jayla asked.
“Nope, not a one,” replied Mary, “which is just my luck!” She threw down the files in exasperation. Jayla was concerned and asked, “What’s the matter?”
“I’m sorry,” she replied, “It’s just that my sales have been slipping, and my pay checks are much smaller than they used to be. If my pay decreases much further, I may lose my health benefits. My daughter is asthmatic, and she has been in and out of the hospital over the last few months.” Jayla looked at Mary sympathetically and tried her best to console her.
The next week, before the salespeople started coming into the office to pick from the pile, Jayla had some documents for Deon to sign. When she arrived at his office, the door was slightly open. She peeked in and saw Deon and Greg going through the stack of clients. Jayla watched as Greg rifled through the pile and picked out files.
“Thanks, Deon. These are the top clients for the week,” Greg said.
“No problem, Greg,” Deon responded “Anything for my favorite brother-in-law. Just keep up the good work.”
Jayla stood there, mouth open. She turned to walk back toward her desk. She could not believe what she just saw. The boss was giving Greg all the good clients, while the rest of the salespeople had no choice in which they were assigned. Jayla knew this favoritism was a serious conflict of interest. Then she thought of Mary and her situation.
“What am I supposed to do?” Jayla wondered. “If I say something to Deon, he will give me a bad evaluation. If I say anything to Mia, I may get fired. And I definitely can’t say anything to the other salespeople. There would be a riot.” Saddened, she sat at her desk and wondered what to do.
Questions | Exercises
1. Discuss how this conflict of interest situation affects other salespeople, the organizational culture, and other stakeholders.
2. Describe the decision that Jayla must make. What are the potential ramifications of her choices?
3. Are there legal ramifications to this kind of behavior? If so, what are the potential consequences?
Stakeholder concerns determine in large part whether specific business actions or decisions are perceived as right or wrong, which drives what the organization defines as ethical or unethical. In the case of the government, community, and society, what was merely an issue to the firm can become an ethical issue and later law. Additionally, stakeholders often raise issues when they exert pressure on businesses to make decisions that serve their particular agendas. For example, the use of antibiotics in Chinese agriculture has become a serious worldwide health concern. U.S. agencies and consumer interest groups as well as retail food outlets are trying to protect consumers from distribution networks that smuggle meat and seafood with unsafe food additives onto the table of consumers.
People make decisions and then recognize that a particular issue or situation has an ethical component; therefore, a first step toward understanding business ethics is to develop ethical issue awareness. Ethical issues typically arise because of conflicts among individuals’ morals and the core values and culture of the organizations where they work. Institutions in society provide foundational principles and values that influence both individuals and organizations. The business environment presents many potential ethical conflicts. Organizational objectives can clash with its employees’ attempts to fulfill their own personal goals. Similarly, consumers’ need for safe, quality, and competitively priced products may create a demand for consumer regulation. For instance, the Food and Drug Administration considered regulation on the use of pure caffeine powder after two people died from using the substance.
In this chapter, we consider some of the ethical issues emerging in business today, including how they arise from the demands of specific stakeholder groups. In the first half of the chapter, we explain certain universal concepts that pervade business ethics, such as integrity, honesty, and fairness. The second half of the chapter explores a number of emerging ethical issues, including misuse of company time and resources, abusive and intimidating behavior, lying, conflicts of interest, bribery, corporate intelligence, discrimination, sexual harassment, fraud, financial misconduct, insider trading, intellectual property rights, and employee privacy. We also examine the challenge of determining decisions that have an ethical component for the firm to consider. Because of the rise of the multinational corporations as well as increased vertical systems competition, there are certain practices and products that have ethical and legal issues. It is important you understand that what was once a legal activity can become an ethical issue, resulting in well-known practices becoming unethical or illegal.
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