Business Ethics Case Study
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Introduction The situation currently inside Eclipse Airline is one that involves the absence of ethics. There is no ethics program of any type in line with the daily functions or the future progression of Eclipse Airline. As so, “ethics” is defined by the employees and is passed on under management from employee to employee via verbatim. The CEO of Eclipse Airline further recognizes possible problems that may arise in the absence of an ethics program, one that recognizes the safety of the employees and also of their client passengers. The problems are compounded by the duality of unrefined form of ethical culture in the company and the economic pressure which is at the face of any business progression. Further note, because the airline conducts business outside of the U.S., to define ethics is another hurdle due to the differences in culture in foreign soils. From the top down perspective, there is no one to be identified who models exquisite behavior for which others can follow in foot step.
Assumptions The assumptions that is made for Eclipse Airlines is that there is no current form of any ethical programs which yields no positive ethical culture. It is deemed important to note that because no such programs or culture exists, there seems to be no communication being conducted from top management down to the entry-level employees about any ethical procedures or values except from the hear say of the employees amongst themselves. The most prevalent assumption to be taken away is that Eclipse Airline wants to succeed and share the success within the organization across all relevant personnel. By assuming these three elements, it is to the benefit of the board of directors for the company of Eclipse Airline to immediate put into effect the following recommendations.
Comp advantage By assuring ethical behavior that meets the satisfaction of the organization, the general public may also be satisfied. According to Weaver, studies show a positive correlation in the perception that general public can hold on the company that exhibits a superior ethical foundation. The media attention gained by the ethical values of a company and its employees, if positive, can influence the behavior of future passengers/clients and the groups that look for prospects to invest in (Weaver, 1999). In terms of competition that is in the airline industry, the victor within the industry will have strong progression of future business with growing demand by the general public/clients.
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To ensure that Eclipse Airlines remains competitive or even exceed the current position in financial standings, Eclipse Airlines have to adhere to developing a strong ethics culture that will permeate out to the satisfaction of the customers. In turn, having a prestigious public image will acquire better returns as customer base and loyalty will grow complemented with ethical and loyal employees.
Ethics Committee Values and moral across individuals differ and furthermore, an individual’s claim to ethical code of conduct and substance of ethics may be incongruent with what is to be expected from the organization’s stand point. In the case of Eclipse Airlines, the issue at hand is the lack of committed individuals who sustain the ethical views of the company. Currently, the situation in Eclipse Airline is one without a standard to live up to for the employees. Employees are given the freedom to hold ethics to their own moral foundations (whether it is just or unjust; it is right or wrong). What is recommended is an Ethics Committee that once established, should develop policies regarding ethics inside Eclipse Airlines. This committee has to be in charge of evaluating the employee’s actions, investigating and enforcing ethics policy violation (Weaver, 1999). With the establishment of an ethics committee for Eclipse Airline, it will help to set a standard for which employees can measure their personal ethics to and will also help to maintain an ethical culture across the company uniformly. This Ethics Committee has to be made up of well qualified personnel who understand the differences between ethnicity cultures as well due to the fact that Eclipse Airlines is an airline company that is saturated all over the world. This committee can ensure the substance of an individual’s ethical conduct instead of individuals judging for themselves.
Ethics Training Program
Through the Ethics Committee, the company has to regulate ethics training. The airline needs to recognize that an individual working for the company differs amongst themselves. Even though one may find inconsistency between individuals, what is currently consistent in the employees is that they all share differing ideas and norms of what is and isn’t ethical. To curb this problem, Eclipse Airline has to create an Ethics Training Program. The program has to share the organizational values and provide a guide to the employees when and if they come across ethical issues (Trevino, 1999). The key element to be gained by the establishment of an Ethics Training Program is broadly acknowledging a base in ethical thinking/behavior that is shared by everyone in the company. While the employees learn about the company’s mode of ethics, they screen through potential ethical problems that the industry can bring about.
Ethical Communication System and Ethics Personnel The Ethical Training Program will help to ensure the proper ethical development in the employees’ behaviors. As so, the Ethics Committee will be able to regulate what that norm will be and also will carry out in seeing that a positive ethical culture is being maintained within the company. What is needed to further avoid the silent abuse of ethical behavior by employees and managers alike is a system of communication. An anonymous system needs to be in place to protect employees who are reporting ethical dilemmas faced by other employees or when ethical conduct is in question by another employee (Weaver, 1999). This system can come in different forms i.e. email system, telephone hotlines, etc. but needs to be readily accessible. Once systems of communications are in place, the company needs to have ethics officer or ethics personnel in place to answer or give guidance to the standing issues faced by the calling employees. The personnel who will be charged with the duty to guide and to answer also need to be available in case further investigations or counseling is needed. What a system of communication places in the company is standardization of behavior (Weaver, 1999). It prevents employees from going outside of the commitments of the organizational goals and values. It is important to have a fully functioning anonymous system to moderate behavior without the fear of persecution and to protect employee privacy.
Commitment of Top Executives Economic pressure combined with the current situation in Eclipse Airlines may lead to short cuts and unethical conduct to save money by top managers of the company. Economic pressure is a variable that can not be controlled and the progression of the company is driven by monetary means so saving money has to be maintained in the daily functions of managers in the company. To curb any unethical conduct that may contribute to the saving of money, there has to be the involvement of the top executives. According to the upper echelons theory, the commitments of the top executives prove to have the necessary influence on organizational actions (Weaver, 1999). Establishing an ethics culture is not enough if no one is a model example of them and since the top executives are influential to the views of the management and below, a commitment has to be made by the top executives to enforce and follow the ethics that are to be followed by this company. The Board of Directors for Eclipse Airlines has to play a big role in the changes being recommended. Without the cooperation of the top executives, there is no way to ensure any success for the company’s lack of ethical culture.
Evaluation By establishing all the recommendations, Eclipse Airlines will engage business in an ethical manner. The problems concerning potential client safety will digress due to the fact that employees will act on good ethical conduct to ensure the safety of passengers. Positive change in the culture concerning ethics will prove to be a vital sign in the business itself as it can be measured by customer satisfaction. The effects of ethical conducts by the employees and the organization as a whole will permeate to the customers and clients as well as capitalists that are out there to invest in the growth of good promising companies. The firm believes that there will be a positive correlation in company outlook of future growth and the positive perception of the people that use its products and services. In this case, the growth of customer satisfaction will lead to good publicity for the company yielding in growth in sales and growth in the funding provided by the people and companies out there that wants to invest, which ultimately will help Eclipse Airlines to grow.
Toffler, B. L. (1999). Managing ethics and legal compliance: What works and what hurts. California Management Review, 41(2), 127-149
Many scholars have researched a lot on business ethics. Business ethics is a mode of operation that a given organization adheres to in its daily activities with its customers, employees and shareholders. Ethics of a business can be diverse and may include its dealings with an individual person, organization, community or government. Business ethics covers an organization’s dealings in relation to its environment, people and its shareholders or owners (Fraedrich, Ferrell, & Linda, 2010).
This paper is going to revolve around business ethics to demonstrate a clear understanding of business ethics concepts covered in this concept. I am going to focus on Paso Limited which is located in Eastman, Georgia. There will be a brief description of the company’s products/services, the scope and size of its operations. The paper will also include the various ethical issues that affect the company, a visual representation of its stakeholders, measures put in place in managing ethical issues, company’s CSR strategy and the implications of my approach (Pojman & James, 2009).
Paso limited is a big firm located in Eastman, Georgia. The company deals with various production lines such as; production of agricultural chemicals, production of detergents, soaps and waste treatment products, construction of agricultural structures such as green houses, preparation and coordination of agricultural field days and exhibitions and lastly a consultancy firm (Henn, 2009).
The company has branches spread all over the United States of America and Europe. The firm was started in 1989 by Dr. Mark Sports as a small agricultural firm manufacturing agricultural chemicals such as pesticides. The company has grown to an international multibillion company. As of January 2011 the company was valued at 450 billion dollars. The company supplies 60 percent of the agricultural industry with its range of products and services hence considered to be the leading company in this business. 70 percent of the company’s ownership is by various US citizens and the remaining 30 percent by Dr. Mark Sports (Kozami, 2002).
The company is managed by a good team of professional and experienced managers from all genders and diversity. The board of directors is chaired by Dr. Mark and meets twice in a month in order to set and review policies for smooth running and operation of the firm. For the past years the company has won several awards from the government and non governmental institutions for its great contribution to the country’s economy. The company has also hit headlines with it being criticized for poor working conditions and environment pollution. The company has some few cases to settle with its suppliers pending in court. This has raised many questions concerning its ethics. The company vowed to pull up on the issues being raised during its last annual general meeting with the shareholders (Pojman & James, 2009).
The company needs to purchase latest equipment and catch up with latest technology in order to improve on efficiency, effectiveness and environment pollution in line with its vision and mission (Shaw, 2011).
Ethical issues facing Paso limited
Paso Limited like any other organization has a few ethical issues in its operation that may have great effect to its reputation, market segmentation, production output and efficiency. Customers trust has to be maintained in order to survive in the business world as well as improving on the firm’s revenues. A company’s relationship with the society surrounding it plays a major role in its operation. There are three ethical issues that Paso limited is currently facing: Its operation has major effect on the surrounding environment, employees are complaining of hazardous working conditions/poor working terms and lastly the annual revenues generated by the company due to its decrease in market share (Shaw, 2011). This has great impact on Paso Limited’s triple bottom line (Bose, 2006).
Paso Limited deals with manufacture of agricultural chemicals, detergents and soaps which produced from poisonous raw materials such as highly concentrated acids. The company has constructed a good drainage system that connects to the council’s sewer line. However, during rainy seasons this never works due to constant blockage of the line which ends up busting the line, exposing chemicals to the environment. Much of this waste mixes with running water which ends up contaminating rivers (Jones, Parker, & Bos, 2005). This is a great threat to the environment and the society that uses these rivers for irrigation and as a source of drinking water. Communities around the company have been complaining about this for quite some time are intending to sue the company if it does not come up with good measures to reduce the rate of pollution in the next three months. In business ethics the company should ensure that its activities do not affect the either the society or environment surrounding it (Jones, Parker, & Bos, 2005). The company should also avoid several cases with its stakeholders as a sign of an ethnical organization which is not the case with Paso limited. An ethical organization should avoid causing unwarranted harm to its employees and the neighboring communities which may be directly or indirectly affected by its operational processes.
Allowances and working conditions
According to business ethics an organization should be fair to its employees by providing good working conditions, equipment/machinery and good rewards/remunerations. Paso limited employees have formed a registered workers union and soon will be going on strike due to poor working conditions, allowances and salary (Shaw, 2011). This will be a big blow to the company which will have a major effect on its reputation. The management is meeting with trade union officials in order to come up with workable structure that will help in settling the issue fairly. The company deals with chemicals that cause permanent disability to human beings in case of an accident or poor handling which as had been the case recently (Shaw, 2011).
Legal suits filed against the organization
We have several cases pending to court as a result of the company’s negligence and not settling its debts. We have employees whose employment was terminated with no reasons. The company has also failed to honor some debts and the suppliers have opted to taking the case to court (Henn, 2009). The government claims that the business has been importing some of its raw materials illegally and has a case to answer. According to business ethics, an organization should adhere to the law as well as maximizing it profits. The organization should not concentrate on profit maximization and forget to follow the law in its exports and imports as well as settling its debts. This is really affecting its operations and overall output. A lot of money is spent in settling court cases hence affecting the amount of revenues generated by the company (Crane & Matten, 2007).
Paso Limited stakeholders
Business stakeholders are people or organizations that are either directly or indirectly affected by its operations. Stakeholders can also affect an organizations activities and performance. Our main stakeholders are farmers using products from our company (Weber & Savititz, 2007). This group of stakeholders has great impact to the company’s revenue generation because it has to purchase and consume the company’s products and services. These products should be of helpful to the farmer in satisfying his or her needs and yield improvement. If the farmer is not satisfied with the company’s products and services, he will opt for product from other companies which slowly reduces the company’s market share and profits generated from its activities (Fraedrich, Ferrell, & Linda, 2010).
Company suppliers play a big role in supplying the company with raw material for manufacturing of products and service delivery. At times the company gets its raw materials on credit and makes payments later. If the payments are not settled in time the suppliers may refuse to supply raw materials in future. Production can’t go on without the major raw material required for various products. Therefore, suppliers should be treated with due respect and their payments being settled on time to avoid any inconveniences (Henn, 2009).
Employees play a major role in an organizations success. These are the people formulating the new products to compete in the market. Machines cannot operate without technicians and operators. Products have to be transported from one place to another. Ready products have to be marketed and the ready established market maintained. All this work has to be done by the employees. Paso Limited has to make sure that it values its employees by rewarding them well as well as ensuring good working conditions and terms. According to business ethics, all employees should be treated equally and fairly without any discrimination or favor. Every organization must respect human rights by protecting their lives (Jones, Parker, & Bos, 2005).
Shareholders have invested in the organization and expect to receive some dividends at the end of every financial year. The organization has to ensure that at the end of each year there are some developments to show to shareholders if no profits realized. The company belongs to the shareholders; the management team has been employed by the shareholders in order to multiply their investment. According to business ethics, the management should not concentrate much on making profits but should also make strengthen its ties with the society and other major stakeholders in the industry (Fraedrich, Ferrell, & Linda, 2010).
Paso production activities should not affect the communities or society in its surrounding. The company should appreciate the society by providing employment, safe products, minimal environment pollution, and contributing to development activities in the surrounding areas. These are also stakeholders because they can paralyze its activities as well as its reputation (Jones, Parker, & Bos, 2005). The company has to consider all stakeholders’ interests that are being affected by its activities both internally and externally. According to business ethics the organization should conduct itself on a plane that is above the law in relation to it behavior. The laws and regulations set by the government are just minimum conditions that govern an organizations operation in order not to infringe other people’s and organizations’ rights (Crane & Matten, 2007).
Managing challenges facing the company
Most of the challenges the organization is facing can be easily managed hence making it successful. The company needs to train its employees on several issues that affect the organization’s relationship with the outside world, enterprise management and good team work. We have several motivational organizations that prepare short courses and seminars that can help the company’s management team and employees in their daily activities at the workplace (Kozami, 2002).
The company should invest on research and development of new products and services that have not yet been developed by other competitors. It should invest on latest technology and machines in its production lines to save on labour and development of new products and services. Acquiring the latest technology might be a big challenge but with good program proposals, the organization can get unsecured loans from financial institutions such as banks, non-governmental institutions and venture capital institutions. Good and advanced technology reduces on wastage as well as human labor. It improves and maintains the quality of products and services being offered by the company (Sekhar, 2010).
The company should establish good relationship with the society by contributing to development activities such as cleaning of environment, building of schools and health centers, creation of environment and offering discounted products to the surrounding communities. There should be a complete overhaul of the procurement department to ensure make sure that company acquires quality raw material. This will minimize on wastage as well as boosting the company’s production output. Rate of corruption will be reduced by 70 percent which is high in the supplies and procurement department (Bose, 2006).
The organization can review its employees’ salaries and their working conditions. They should be provided with protective clothing while handling the chemicals as well as good equipment to assist in loading and offloading of products from trucks. The company should minimize the rate of environment pollution by recycling some of the byproducts instead of releasing it to the environment (Fraedrich, Ferrell, & Linda, 2010).
Strict adherence to the states laws and regulation can help the organization in reducing the number of cases with stakeholders. This help in building confidence hence increased investments. Much time and resources are wasted in settling disputes arising from negligence, corrupt deals and illegal activities by the company. All taxes and company returns should be settled with respective institutions on time to avoid fines being imposed by theses organizations due to late submissions (Weber & Savititz, 2007).
Every business should conduct its activities in an ethical manner prioritizing interest of the surrounding society. As the CEO the company should respond positively to new developments in the community’s interest and expectations. The main shareholders’ interests are increased profits but the society interests should be considered first. The company must stand out as a good and patriotic citizen in the society. The company can reduce its profit margin to offer affordable products to the community as well as paying its employees good salaries. In CSR the manager should look in general at the welfare of all stakeholders and not concentrating on shareholders’ interests only which are profits (Weber & Savititz, 2007). The company has a role to play in the community development and conservation of the environment where it is located (Henn, 2009).
The strategic plan should start by assessing the most critical issues that have major effects on the company if altered a bit and where opportunities stand. This is followed by an agreement on the primary factors to motivate CSR in my organization (Kozami, 2002). Revision of the company’s vision and milestones is important in achieving the new objectives/goals. This should be well documented and published. A well structured system to monitor development and achievements towards its vision should be established. The company should be reviewing its goals and policies of its competitors against its policies and objectives. The CEO should agree with his management team on a plan to be followed in achieving consistency in my company’s processes (Sekhar, 2010).
The CEO should be able to identify key personnel in different departments to work with. These people should be reporting their progress as well as being responsible with all the activities taking place in their production lines. One should collaborate with other organizations like government to help him in implementing his CSR strategy (Fraedrich, Ferrell, & Linda, 2010). With constant evaluation and audit of the program one can easily realize where the strategic plan needs some adjustments in order to fit the intended productivity. My main responsibility is to oversee that the strategic plan is implemented down to the operators as well as ensuring that the society is not oppressed in any way by the company (Jones, Parker, & Bos, 2005).
The organization’s short statement for management outlining my overall CSR strategy should be Serving the community interest and satisfying the shareholders interests in an encouraging environment that is acceptable by the society (Weber & Savititz, 2007).
Implications of the approach
With the above described approach the company is going to create a good relationship with the community at large. There will be great increase in profits as well as development of quality farm inputs that are going to benefit the community so much. There will be an increase in production output and an increase on company’s sales projections (Kozami, 2002). The company will have fewer cases in court hence boosting investor confidence. There will be a smooth learning of the organization with corporation and support from all the employees. There will better salaries and allowances which will motivate employees in their daily activities aimed at the organization’s success (Jones, Parker, & Bos, 2005).
With good revenue generation the organization will avoid illegal and unlawful activities which will enable it to concentration on its production output, efficiency and effectiveness (Weber & Savititz, 2007).
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Pojman, L. P., & James, F. (2009). Ethics: Discovering Right and Wrong. Belmont: Cengage Learning Inc.
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Weber, K., & Savititz, A. W. (2007). The triple bottom line. San Francisco: Jossey-Bass Press.