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Ethical issues in management faced by KOSAN Company

Organizations that do not put their emphasis on attracting and retaining talents may find themselves in dire consequences because their competitors may be outplaying them in strategic employment and more aggressive in arrange strategy to compete. With the increase in competition, locally or globally, organizations must become more adaptable, resilient, agile, and customer-focused to succeed. The organization will also promote and fight for values, ethics, beliefs, and spirituality within their organizations, especially in the management. Ethics refers to principles that define behavior as right, good and proper in human conduct. That defined ethic as the moral values, beliefs, and rules that one upholds in their life on the job and personally to ensure right from wrong. The terms “ethics” and “values” are not interchangeable. Ethics is concerned with how a moral person should behave, whereas values are the inner judgments that determine how a person actually behaves. That means ethics is about choices, dilemmas and grey areas. It explores the question of what we ought to do, rather than simply discuss what people could do or actually do [1].

I have chosen KOSAN Company in order to enhance my ability to evaluate the ethical issues in management faced by manager. I have arranged the interview with KOSAN manager on 15 February 2011 (Tuesday) at 10.30 am until 12.00 am. The KOSAN manager name is Joannes Siliun. I meet the manager at its factory located in Tuaran Sabah and ask the manager about the company background and got more information about ethical issues in management that has been faced by KOSAN manager. Koperasi Serbaguna SANYA Berhad (KOSAN) is established on 1976 and registered on 10 June 1976 under Ordinance Cooperation Firm No. 3 1958 and Cooperative Association. The establishment of KOSAN is consistent with Government. Its factory is located in Tuaran Sabah. The address of this factory is Koperasi Serbaguna Sanya Bhd (KOSAN), Batu 191/2, Jalan Tuaran, Peti Surat 34, 89207 Tuaran, Sabah.

KOSAN produce product such as primary school uniform and shoes. The vision of this KOSAN is achieve excellencies and efficiency in production process to produce school uniform with good quality at good price and supply to primary school around Sabah. The uniqueness of this factory is one and only factories in Sabah that process to produce primary school uniform and supply to school around Sabah. KOSAN Manufacture provides service such as, during delivery, perhaps damaged will occurs. Thus, school can return the damage uniform and KOSAN will change with the new one to replace the damage garment. KOSAN also provide school uniform in range of size such as from 22 to 42 sizes. KOSAN is located on the outside town. The mission of this company is to give the opportunity to the youth’s society to learn how to sew. They also can get the knowledge about how to produce garment. Besides that, these also give the job opportunity to the youth’s society and become their monetary sources. There are about 400 employees including the branch located at Papar Sabah.

This factory has process including cutting, sewing, packing and delivery. China is the main fabric supply to the KOSAN. This is because fabrics from China are cheaper than other country and have the good quality of fabric. The delivery or shipment of the fabric from China is three times in every year. KOSAN have other branch at Papar and Sandakan. However, KOSAN papar only produce school shoes to supply to school around Sabah. All school uniform delivery was done from Kota Kinabalu and this caused problems in the delivery of school uniforms and shoes to areas located far from the state capital, including the east coast of Sabah. Therefore, KOSAN at Sandakan was constructed to help in delivery school uniform and shoes that far from Kota Kinabalu. KOSAN currently have two factories, a shoe factory in Papar and a clothing factory in Tuaran.

Companies’ are often faced with ethical issues in management in organization, as well as KOSAN. Issues in ethics often arise when a business makes or a plan makes and made a decision that is difficult to interpret as ethical. Usually, managers make ethical decisions by analyzing the effect of the decision, evaluating alternatives, and referring to their code of ethics as a guideline in order to make the best decision. The most ethical issues in management faced by KOSAN manager in organization are Working Condition, Customer Service and Supplier Relations [2].

First ethical issues in management faced by the manager are working condition. The manager faced with ethical issues in working condition as the company needs the employees to work in long hour in a day. This is because the company needs to finish the product to meet deadline and delivering the product to school around Sabah. Therefore, time really important to these organization and push the worker to work in long hour. Besides that, the employees’ safety while working hour need to be taken care by the manager. Indeed, the organization has indicating that there is an increased likelihood for illness and injury among employees working in long-hour schedules and exposed to dust produced from fabric can cause disease and unhealthy to body. In addition, fatigue-related errors made by employees working in these kinds of demanding schedules can have serious and adverse repercussions for public safety [3].

Second ethical issues in management faced by KOSAN manager are related to customer service. Customer Service is your ethical response to the actual results of an agreement between you and your customer. The most problem arise and complaint by the customer are about the product size, number of product delivered to them and some kind of damage happen on the product like the size is too larger or too small, the product arrive is not enough to all student and then the damage occur like the button lose, the zipper damage and the cloth ripping. Your customer buys that product in good faith. If your product fails to meet your claim, the customer will asks for some kind of response. Manager will respond to a customer problem or complaint is entirely up to manager, which also is entirely up to your own morality and your own ethics. Business ethics, like customer service, are most definitely a profit center. It’s only that most people don’t make the connection between the words of "morality" and "ethics" with commonplace terms like customer support, customer relations, and customer service [4].

Third ethical issues in management faced by KOSAN manager are in supplier relation. Almost every company in its role as “purchaser” buys unfinished inputs provided by many other companies called “suppliers”, before refining them and sending them downstream toward their ultimate end-users known as “consumers” [5]. KOSAN always bought fabric, accessories for making school uniform from other supplier such as from China. In order to produce good product, the company needs to have good relationship with supplier to maintain faith and trust. Therefore, the supplier will supply high quality product with good price to their company. Besides that, they must have enough information about the supplier product to make sure there are no problems happen in future. When upstream supplier information was positive, managers were likely to leverage ethics regardless of their beliefs. However, when supplier information was negative, low-ethical-beliefs managers nonetheless rationalized downstream market leveraging of ethical positions. Thus, the importance for marketers to seek information about upstream supplier behaviors cannot be overemphasized. Simply put, the ethics problem in the supply chain is that consumers often blame purchasers for ethical lapses that were actually committed further upstream by suppliers. Blame attaches to the purchasing company even though its suppliers are legally or factually distinct and mistake. The manager also worried when problem happens, the company will get stuck with most of the blame [6].

We always faced with making choices and decision in daily life such as what outfit to wear today, what to eat, some time it can be more serious issues involving life and death. Ethical decisions generate and sustain trust, demonstrate respect, responsibility, fairness and caring, and are consistent with good citizenship. The decision might well be called effective but it is also unethical, if we lied to get something we want and we get it. Ethical issues in management can be categories in five characteristics such as Most Ethical Decisions Have Mixed Outcomes, Most Ethical Decisions Have Personal Implications, Most Ethical Decisions Have Multiple Alternatives, Most Ethical Decisions Have Extended Consequences and Most Ethical Decisions Have Uncertain Consequences [7]. Most Ethical Decisions Have Mixed Outcomes is commonly thought that ethical issues in management are largely antithetical, with directly opposed financial returns and social costs. The antithetical model for outcome evaluation presents ethical issues in sharp focus but it does not accurately portray the managerial dilemma. Social benefits and cost as well as financial revenues and expenses are associated with almost all of the alternatives in ethical choices.

Most ethical decisions have personal implications is commonly thought that ethical issues in management are largely impersonal, divorced from the lives and careers of the managers. Many people believe that ethical decisions in a given operation may reduce the profits of the company but not the executives’ salaries or their opportunities for promotion. Most Ethical Decisions Have Multiple Alternatives is commonly thought that ethical issue in management are primarily dichotomous, a “yes” or a “no” choice, with no other alternatives. Most Ethical Decisions Have Uncertain Consequences is commonly thought that ethical issues in management are free of risk and doubt, with a known outcome for each alternative. A deterministic model-that is, one without probabilities-simplifies the process of analysis, but it does accurately describe the managerial dilemma [7].

Most Ethical Decisions Have Extended Consequences is the results of managerial decisions and actions that do not stop with first-level consequences. The decisions made by managers have an impact upon others, both within the organization and within the society. The impact is beyond their control since they should be seriously considered when decisions are made by managers [2, 7]. The three ethical issues in management faced by manager can be categories in most ethical decision have extended consequences. The ethical issues in working condition arise when manager made decision that the employees need to working in long hour in a day can which give impact to employees healthy and safety. This is because the employees will be exposed to dust produced by the fabric in long hour. The employee will faced with danger because dust produced by fabric can cause disease and unhealthy to body. In addition, the production process become slow because more employees ill.

Besides that, the ethical issues in customer service arise and need to be taken carefully. Manager need to arrange the time carefully and made decision when to start the production and deliver the product to end-user. If the production team make the process follow the instruction given by manager and meet the deadline. This will give a good impact and impression to the company. But, if the manager make mistake in made decision which give impact to organization production process, there are such problem will be occur such as wrong product deliver, late delivery and product damage occur like the button lose, the zipper damage. The customers will lost faith and trust to the company if these kinds of problem occur in customer service.

Ethical issues in supplier relation always faced by KOSAN manager in made decision to buy the fabric and accessories need to make school uniform. Manager need to get information and accumulate information about supplier to make a good decision. After manager made decision from whose supplier they need to buy the product, the company needs to have good relationship with the supplier to get they trust and put their faith to the supplier. Therefore, the supplier will supply high quality product with good price to their company if they have good relation in business. They will became good business partner and make sure there are no problems happen in future. But, the company will face problem and loss their money if manager made wrong decision. Manager not have enough information about supplier will buy product from supplier who sell low product quality with high price. Indeed, these three ethical issues will give effect that long lasting if the manager make mistake in made decision. Therefore, manager decision in everything in organization is very important.

Ethical theory is some consistent analytical method of classifying our action as “right” or “wrong”. Ethical theories and principles bring significant characteristics to the decision-making process as we are usually bound by a concept of right and wrong in our behavior.. There are at least five major systems that do have a direst relevance to managerial decisions such as Eternal Law (Thomistic Natural Law), Personal Liberty Theory, Distributive Justice Theory, Classical Teleological Ethical Theory: Utilitarianism and Classical Deontological Ethical Theory: Universalism [7]. Each theory emphasizes different points such as predicting the outcome and following one's duties to others in order to reach an ethically correct decision. However, in order for an ethical theory to be useful, the theory must be directed towards a common set of goals. Besides that, these ethical theories also can be used in combination in order to obtain the most ethically correct answer possible for each scenario [8, 9, 10].

KOSAN organization can used ethical theory to solve the ethical issues in management. One of the more functional and commonly used theories is utilitarianism which sometimes called teleology. This theory basically promotes good or valued ends, rather than using the right means. This is because the utilitarian ethical theory is founded on the ability to predict the consequences of an action. To a utilitarian, the choice that yields the greatest benefit to the most people is the choice that is ethically correct. This theory can be used to solve the ethical issues in working condition about employees need to working in long hour and to make sure the employees safety. Manager can made better decision by divide the work hour among employees such as made two work shift. Therefore, employees can choice the work shift that they want. In addition, manager can provide mouth and nose cover for safety to avoid the dust and care the employees healthy. The employees can feel comfortable during working and can do work more efficient with the utility provided by the company [8,10].

One benefit of this ethical theory is that the utilitarian can compare similar predicted solutions and use a point system to determine which choice is more beneficial for more people. This point system provides a logical and rationale argument for each. Manager can make better decision by make schedule early about what the organization need to do, when to start production process, finishing product to meet deadline and deliver product on time without faced any problem on the production process. Better decision made by manager will provide good customer service that can satisfied customer. This theory instructs adherents to work for those outcomes that will give the most advantage to the majority of those affected in the most impartial way possible. Manager decision in choose supplier is very important to make sure the product quality. So, information about every supplier is important for manager to make decision and choose the supplier that can bring benefit to their organization. Manager also can build good relation with supplier. Simplistically, this theory advocates achieving the greatest good for the greatest number of people. It is often advocated as the basis for broad social policies [8, 9, 10].

When it comes to project management, ethics are extremely important in gaining the support of the project team and to ensure right from wrong. There are a number of different components of managing a project. While conducting project management, profit and staff motivation are often paramount. However, a project manager must also remember his obligation to be an ethical, responsible employer, employee and corporate citizen. I recommend to KOSAN Company that the ethical implications of unconventional shift work and long work-hour schedules are considered. There are things a manager can do to make sure that ethical issues are considered in business decisions such as favor hiring and promoting people with a well-grounded sense of personal ethics and build an organizational culture that places high value on ethical behavior. Most important to make sure that leaders within the business not only articulate the rhetoric of ethical behavior but also act in a manner consistent with that rhetoric. Then, put decision-making processes in place that requires people to consider the ethical dimension of business decisions and develop moral courage [4].  Relevant ethical considerations involve societal benefits accruing from the equitable distribution of available working hours, their effects on workers’ health and employer responsibilities can help to solve the ethical issues and reduce the ethical issues.

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