Ethical Issues Faced In It Businesses Commerce Essay

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Mr. Bob is a good old friend of Mr. Adrian and both know each other since their schooling from last 10 years. With the technology changes and varied opportunities in the I T Industry attracted Mr. Adrian and he completed his Networking degree an year ahead of Bob. Mr. Adrian now works for a leading IT software development company "ITSD NZ Ltd", he is working in this organization since last 4 years and recently been promoted in to management as Assistant Manager, Bob works for a local City Councils Library as a PC Tutor for Senior Citizens, teaching basics of computers.

ITSD advertised for 2 new roles for Network Analysts with pay compensation between NZ $ 40,000 to $50,000 per annum + 5% Performance based Bonus and also states compensation will be decided on the basis of past experience and skills. The two new roles advertised happened to be in the same department where Mr. Adrian works. Mr. Bob recently met Adrian and during a casual conversation Adrian was been made aware that Bob is looking for a opportunity. Mr. Adrian quickly recollected this conversation and invited his friend Bob to his place in the evening and wanted to discuss about an opening in their department.

Since Bob is also an I.T Networking Graduate Mr. Adrian discussed about this New Role and encouraged Mr. Bob to join their ITSD and as part of staff referral program of ITSD NZ Ltd. Bob was pleased to hear about this opening immediately provides a copy of Resume to Adrian to be forwarded to HR of ITSD NZ Ltd.,. Mr. Adrian does the same very next day and within a week Mr. Bob gets a call for an Interview. Mr. Bob successfully secures the role after being through HR Recruitment process, Along with Bob; Mr. Charles also secured a role from other department in ITSD NZ Ltd.

Both Bob and Charles will report to Mr. Adrian who is their immediate manager. Mr. Adrian is been handed Employment Contracts by his Manager and was been advised to deliver on the first day of reporting to the company. Contractual Documents are "Marked Confidential". But, Mr. Adrian has to read them and get a signed copy from both Bob and Charles, during which Mr. Adrian checks the Compensation Packages for both and was surprised to see that Mr Adrian his friend is been compensated 10% more than Mr. Charles in-spite of Mr. Charles working in the same organization and moved internally within ITSD NZ Ltd and holds 2 Years experience within the same company.

Compensation Info:

Mr. Charles new pay package: $ 44800 (Prior to this role was on $40,000 / annum)

Mr. Bob's new pay package: $49280

Difference between packages - 10%

Statistically it will take approximately 2 + Years for Charles to equate or near Bobs pay compensation Provided Bob's pay remains the same which is unlikely due to the fact Company has a Annual Pay Review Policy which is performance based and the rise can be anywhere between 3% to 5 %. Depending on the individual performance, Ratings are classified as:

Not Achieved - 0%, Achieved All - 3%, Exceeding - 4 %, & Outstanding Ratings - 5%.

Mr. Adrian immediately reports this to his immediate manager who advises him to raise with HR, HR receives the dispute and advises it's the company policy that compensation is based on Skills and External Candidates for recruitment will be compensated more to attract into the ITSD and further advises Mr. Charles is internal and maximum allowable compensation hike is 12% on the current compensation as per Company Policy on Existing Staff Compensation.

ITSD does not have any Employees Union of its Own but encouraged their staff to join an External Union "For Ur Rights" and had a tie up with the said. ITSD also has staff policy which clearly discourages staff to discuss one another's compensation packages.

Mr. Adrian on the same day after work meets Bob and discusses the situation, Bob encourages Adrian to be impartial and be ethical. Further advises Adrian to suggest Charles for taking assistance from For Ur Rights. Adrian felt very happy that his friend is supportive in spite of being aware that both Bob and Charles will be working together.Mr. Adrian since he could not get the issue resolved with HR discusses with Mr. Charles and encourages him to approach For Ur Rights and raise a dispute; Mr. Charles appreciates Mr. Adrian's help and approach the employees union to raise a dispute.

For Ur Rights is a fairly new and been in existence since last 3 months and even-though they have a tie up with ITSD they never received any concerns from the ITSD Staff. Mr. Bob's case will be the first one to be raised against the ITSD NZ Ltd.

Ethical Dilemma

Union (For Ur Rights): Since, it is fairly new and Mr. Charles's dispute will be their first one against ITSD, given that their reputation will be at stake if they loose, and will also pose a negative impression on the current staff of ITSD subscribing to the Union they are under ethical dilemma "Whether to accept the concern raised by Mr. Charles and represent him against the ITSD Management".

Case Analysis - Part B


This report is an analysis of the Case Study presented in Part-A discussing in detail on the Currency of Ethical Issues derived, impact on Stake Holders and a detailed evaluation of the ethical dilemma presented by the Employee Union (For Ur Rights) in comparison with the Whistle Blower Theory, Pyramid of CSR and Potter Box Ethical Model's.

Apart from Analysis this report also provides a Recommendation to the Union in overcoming their Ethical Dilemma.


Currency of Ethical Issues

Stake Holders

Analysis on Mr. Adrian's Decision based on Whistle blowing theory

Pyramid of CSR.

Potter box Analysis




Currency of Ethical Issues

   Conflict of Interest

Human Resources

Staff Engagement


   Equal Employment and Compensation

1.1 Conflict of Interest:  

  "We can define a conflict of interest as a situation in which a person has a private or personal interest sufficient to appear to influence the objective exercise of his or her official duties as, say, a public official, an employee, or a professional."(Chris MacDonald, Michael McDonald, and Wayne Norman).

In enterprises the conflict of interest mostly happens in almost all levels of management. But it is widely noticed between Middle Level Management and Administrative levels, as Middle Level Management act as the intermediary between the Upper level Management and the Staff levels.

In this case Mr. Adrian interest seems to have a conflict between the company's interests, as Mr. Adrian holds his ethical value which contradicts with company's policy.

1.2 Human Resource

Human resource is a department or a group of individuals in an organization who looks after the employee related activities. This department is charged with the responsibilities of employees, for example recruitment, applying strategies and policies in concern of the employees.

Example: HR department of AIS St Helens takes care of recruitment, training and development, supervising, providing assistance to employees in every problem related to work.

Reference to Case Study: Role of human resource of ITSD is to come up with some fair solution abiding with recruitment policies. In this case Mr. Bob is paid more because of the fact that ITSD wants to attract new employees to join the company and Mr. Charles being loyal with the organization from two years was deprived of Equal Compensation for Employees aspect. This may result in conflict between the existing employees and the new employees.

1.3 Confidentiality.

Confidentiality is an ethical principle that is attached with different professions like medical, law, religion and many more. Confidentiality in an organization means the communication between two parties, whether it is written or spoken should not be discussed or revealed to any third parties. At a customer support level first point of customer is with the support executive and personal information is readily available to the executive to proceed with his task. But, an element of confidentiality lies with the support executive and should adhere to the same without revealing and or sharing personal information of the customers abiding to Ethical Policies of the company. As per the ethical policies this information cannot be disclosed to anybody and should be kept confidential. (Beck C : 1990)

Reference to Case Study: As per ITSD policy, employee's compensation should be kept confidential. Mr. Adrian had access to Individual Employment Contract marked "Confidential" his approach to raise with his manager is admissible within in the company policy, but his decision to disclose and discuss with Mr. Bob breached confidentiality. But an underlying ethical belief and principle forced Mr. Adrian to discuss with Bob. Mr. Adrian could have avoided this by following the right escalation channel within the organization without revealing the confidential compensation information to Mr. Bob.

1.4 Equal Employment and Compensation.

"Equal employment and compensation relates to the equality among all the employees within the organization based without any discrimination based on race, color, religion, sex, compensation etc."( Conoll J, Conolly B : 1979)

According to the New Zealand Bill of Rights Act 1990, the law is meant to save most New Zealand employees from employment discrimination based on race and religion, gender, minority discrimination.(

Reference to Case Study: Mr. Charles was the victim of ITSD HR Policy, which resulted in a miss-match of compensation package alongside an External Recruitee. Company's policy of attracting new employees by providing a higher compensation package in comparison with Internal Recruitee, Over-shadows the work and loyalty of Mr. Charles for the organization which is truly unethical.

1.5 Staff Engagement

"Staff engagement is characterized by employees being committed to the organization, believing in what it stands for and being prepared to above and beyond what is expected of them to deliver the outstanding services to the customer and within the organization".(Cook S : 2008).

Example: Mc Donald's retail food chain, staff is highly committed to work to deliver high quality services to the customers. At times especially during weekend it is busier than the business days and yet, Staff are well prepared for the said, company ensures to provide extra resourcing during the busy hours and looks after their Staff. Staff and Mc Donald's on the whole received good feedback from customers, adding extra credits to the image of the organization.

Reference to the Case Study: Staff engagement is not up to that level. The HR department is not that committed to resolve the issue of Mr. Charles compensation. The responsibility of HR department is to be empathetic with the staff and give them a proper solution but here they have put the company's policy as an excuse for not doing anything. The function of HR is to see staff as a cost and need to be helped and rewarded.

2.0. Stakeholders

Stakeholder is defined as "Any group or individual who can affect or is affected by organization's objective" (Freeman 1984: 46)

Referring to the Case Study following are determined as Key Stakeholders -


Employees union

ITSD management.

2.1 Staff

From the viewpoint of staff there may occur a conflict regarding the compensation as Mr. Bob is getting paid more and there should be equality among all the employees but, from the Management perspective they hold a different view that new employees are necessary for the company's growth so that they can bring in new ideas and hence the reason why Mr. Bob's compensation package is valid contradicting to the perception of Staff.

2.2 Employee Union

Employee Union is very much concerned about their existence and long term relationship with ITSD due to the fact that there are a Newly Formed Union, Even though the Union's underlying duty is to look after the employee's welfare, they are falling back on ethical dilemma "Whether to represent Mr. Charles against ITSD", this gesture is not allowing the Union to fulfill their duties.

2.3 ITSD

According to the ITSD Management discrimination is done with a point of making new employees attracted to the firm, so as to have the new generation with new ideas to get involved in the business processes. They think this would enable them to create brand image among young and potential employees but this action not only creates disputes towards the firm but also makes the new employees losing their trust in company's management.

3.0 Analysis on Mr. Adrian's Decision.

Referring to the Case Study it's clear that Mr. Adrian is purely an ethical person. Even though Mr. Bob whom Mr. Adrian has referred to the company for the network analyst job, he is not supporting the difference in compensation package offered to Mr. Charles and Mr. Bob. He strongly believes providing different compensation scale for the employees working for the same department on the same job is unethical and he wants this to be resolved out regardless of his personal relations with Mr. Bob. He did choose the proper channel for raising the concern with his immediate manager first, complied with the ITSD policies of Confidentiality without going public and ethically followed the natural justice by identifying the person in the organization itself.

Mr. Adrian's decision of raising the issue through proper channel was based on Whistle Blowing theory.

3.1 Whistle Blowing theory

Whistle blowing theory is a process of an insider in an organization raising any malpractices or wrong doings within the environment affecting those related, with a view to get it solved. The person who raises the issue is termed as whistle blower. Whistle blowing can be good or bad, depending on the attitude of the whistle blower. The issue may be raised with a view to achieve personal interest, which can interpreted a good or bad depending on the circumstances i.e., for public welfare this can be good on the other hand management perception may be bad. It also depends on the channel selected for raising the issue. Especially in private organizations if any employ goes public, that means improper channel, without consulting the superiors, it could be harmful for the employee and organization as well. (John Barry: 1998)

3.2 Mr. Adrian's action relativity with Whistle Blowing theory.

When relating Mr. Adrian's action to the Whistle Blowing theory, Mr. Adrian is the whistle blower. Here we can see that the whistle blowing action was good for the organization as he first informed the issue to the manager and followed up according to what manager has advised him. Even though we can't say that Mr. Adrian's way of resolving things was completely correct because when he couldn't find a solution through the HR department he, advised Mr. Charles to seek help from the Employees Union. This action of Mr. Adrian would create a negative impact on his whistle blowing. This situation cannot be judged as the intension was not to have a negative a negative impact on the organization rather than to find a solution for an issue regarding the conversation.

4.0 Pyramid of Corporate Social Responsibility

Corporate social responsibility (CSR), is a form of self regulatory model integrated into any business model where in the business would automatically monitor the law, ethical standards and the international business norms, environmental norms. It is also knows as sustainable responsible business model .

Figure 1 illustrates the pyramid of social responsibility

we will now discuss the nature of corporate social responsibility (CSR) in employee union decision in regards to this pyramid.

"Carroll's CSR Pyramid is probably the most well-known model of CSR, with its four levels indicating the relative importance of economic, legal, ethical and philanthropic responsibilities respectively".( Mahad Huniche, Esben Rahbek Pedersen,2006)

4.1 Analysis of Employees Union Decision

The purpose of the employees union is a written contract between the employer and the employees, specifying the rights and duties of each. According to Carroll's CSR Pyramid, we can see its economic, legal, ethical and philanthropic responsibilities as below:

4.1.1 Economic Responsibilities

Economic responsibilities refer to business's primary function as a producer of goods and services that consumers need and want, while making an acceptable profit. This responsibility is considered to be primary, at the bottom of the CSR pyramid, because without financial activity the other responsibilities become invalid issues. In the earlier days businesses were established as an entity to provide goods and services to the society. Entrepreneurs soon realized that Money is involved in these businesses along with the term profit. Prior to the said the business was just a part of the society with a purpose to provide services, Business was making acceptable profits. During this process of transformation the key term Profit transformed into Desire and this in-turn become an enduring value.

In evaluating the Employee's Union decision - following constitute as key economic responsibilities:

Perform in a manner consistent with maximizing earnings per share of each employee.

Promise the employee to be as personal profitable as possible.

Maintain a strong competitive position.

Maintain a high level of operating efficiency of the employment.

A successful employment is the one which attains profits consistently.

4.1.2 Legal Responsibilities

In addition to its economic responsibilities, business is expected to carry out its work in accordance with the law and government regulations, as partial fulfillment of the social contract between business and society. Firms are expected to attain their goals within the framework of the law.

For the employee union decision, the legal responsibilities may include:

Perform in a manner consistent with expectations between the employment and the government and law.

Instruct the employer to comply with all regulations of the state and .

Make sure each employee is to be a law-abiding corporate citizen.

A successful employment is defined as one that fulfills its legal obligations.

It is important that we meet the minimal legal requirements.

4.1.3 Ethical Responsibilities

The economic and the legal responsibilities talk about the fairness and ethical responsibilities but, prohibit the illegal activities. Ethical responsibilities include the standards, procedures, and moral rights on as to what the stake holders regard as fair.

For the employee union decision, the ethical responsibilities may include:

Perform in a manner consistent with expectations of societal mores and ethical norms for the employment.

We need to be aware of the ethical norms (present and evolving) for both employers and employees.

We should not compromise on the ethical norms to achieve our.

We would be recognized as good corporate citizenship and employment when we are doing what is expected morally or ethically.

4.1.4 Philanthropic Responsibilities

Philanthropic means being a good corporate citizen and living up to the expectation of the society. This can also be interpreted as engaging in programs to promote the welfare of the society. Examples of philanthropy can be contributions towards the financial requirements of society or spending time through education etc. We need to act an integral part of the community we live in by showing leadership qualities and helping them. The most important difference between philanthropy and ethical responsibilities is that the former is not expected in either ethical or moral sense

For the employee union decision, the philanthropy responsibilities may include:

We need to do business in such a way that we meet the philanthropic and charitable expectations of the society.

Assist the fine and performing arts.

Provide assistance to private and public educational institutions.

Assist the community in enhancing the quality of life.

5.0 Potter Box Analysis

The Potter Box is a model for making ethical decisions, developed by Ralph B. Potter, Jr., professor of social ethics emeritus of Harvard Divinity School. It is commonly used by communication ethics scholars.

The Potter Box consists of a few simple steps, which can be completed in any order. We can use the Potter Box to analyze the company by following the steps below:

Define the situation: This will help us understand exactly what ethical dilemma we are trying to solve. From the ITSD case we can see, Mr. Charles appreciates Mr. Adrian's help and approach the employees union to raise a dispute.

Identify the values: What do the ITSD and Employees Union stand for? It could be honesty, responsibility, and broad minded for both ITSD and the employees.

Choose the loyalties: We may have several loyalties here, and be sure our decision does not abandon our loyalties. In the ITSD case, it may be encourage the staff to join the External Union "For Ur Rights", and reduce the strict policy which clearly discourages staff to discuss one another's compensation packages.

Identify the principles: Identify the principles and make the final decision, whether to raise this with ITSD given that their reputation will be at stake if they lose, and will also pose a negative impression on the current staff of ITSD subscribing to the Union.

6.0 Conclusion

It is evident from the analysis of Mr. Adrian's decision in comparison with Whistle Blower theory that the decision taken to raise the concern with the Manager and the HR Department proves that he is diligent in his deeds. Mr Adrian is fully aware of moral and ethical responsibilities.  

Mr. Bob on the other hand played a vital role in engaging with Mr Adrian and encouraging Mr. Charles to raise a concern with the Employees Union. This gesture is commendable and provides an insight into Bob's awareness towards ethics.

 ITSD NZ Ltd policy towards Employee compensation is not logical and ethical in the industry. It surely impacted on the staff engagement. Stake holders are impacted due to the fact of concentrating on the marketing strategy of attracting employees into the company rather on Equal Employment and Compensation factor.  

Employees Union's ethical dilemma is legitimate but, should not be a deciding factor to represent Mr. Charles. Union is also worried about its visibility and perception by ITSD Management and Stake Holders. This gesture is not allowing them to decide on whether to represent Mr. Charles.

7.0 Recommendation:

The following is a recommendation for ITSD NZ Ltd., and Employees Union "For Ur Rights"

ITSD Company should revisit their company policy towards Equal Compensation for Employees; it should be impartial and be away from a marketing strategy to attract new employees into the company. They needs to work towards lifting the engagement level within the company else would be facing adverse effects in-terms of employees choosing to leave the company and or negative image in the Industry. Stake holders should play a vital role in driving the company policies and code of ethics of the company which should work towards betterment.

 Employees Union should over-come their ethical dilemma and judge their decision on the basis of "Whether it is right or wrong to represent Mr. Charles". Once again Union should follow their representation policies and be governed by them rather in comparison to the fact of their in-experience or length of existence. It should work towards a better outcome for the company as well as the staff but, should not divulge into the impact of the outcome. Surely Outcome plays a vital role and hence be concentrating on merits of the case rather worrying about their image.

8.0 Referencing

Bratton J, Gold J, 1999, Human Resource: Theory and Practices, Macmillan Publishers Ltd, Hampshire, London.

Carroll,Archie B, (1991),The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders, Business Horizons.

Charles . Fombrun, Noel M. Tichy, Mary Anne Devanna,(1984) Strategic human resource,John Wiley and Sons.

Chris MacDonald, Michael McDonald, and Wayne Norman,(2002) Charitable Conflicts of Interest, Journal of Business Ethics .

Christians, (2001) Media Ethics: Cases and Moral Reasoning, 6th Edition.

Freeman L, Miles S 2006 Stakeholders: Theory and Practices, Oxford University Press Newyork.

James C Back, 1990, Confidentiality versus the duty to protect: foreseeable harm in the practices. American psychiatrics Inc. New York.

Mahad Huniche, Esben Rahbek Pedersen,2006, Corporate citizenship in developing countries:New Partnership Perspectives, Copenhagen Business School Press DK

Sarah Cook, 2008, The Essential Guide to Employees Engagement: Better Business Performance, Kogan Page Limited, London.

Trevino.L.K and Nelson.K, Managing Business Ethics 4th Edition -Straight talk about how to do it right, John Wiley & Sons, Inc.

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Walter B Connolly, Michael J Connolly 1979, Practical Guide to Equal Employment Opportunity, ALM Properties Inc,Law Journal Press.,9171,895045,00.html