Analysis Of An Ethical Dilemma

Most of the organizations we have today are not doing the right things. In newspapers, TVs and other print media, you can’t miss a government agency or a business enterprise being skewered due to their wanting unethical business operations. There are ethical dilemmas everywhere in the current turbulent times. These unethical operations have become a disgrace and such organizations have lost their ethical ways. There is no company today that can escape the current turbulent world. This shows the reason why we need to develop an excellent defined framework on ethical business conduct. Even if there are ethical challenges, every organizations whether domestic or global should have a very solid foundation of ethical values. Successful organizations are characterized by respect, responsibility, honesty and fairness as these are the basic values. It is said that those organizations aspiring to be successful in tomorrow’s market must do “Right Things” now. An organization failing to pay attention to an ethical code on honesty may find itself violating different laws and public policy. Sometimes, organizations failing to be honest enough may have an everlasting tarnished reputation and this will affect its overall operations. Such a company may loose customers and register losses.

Doing the morally right thing in the business operations may be outweighed by staff promotions and profits. An organization not keen may have ineffective decision making. There are so many organizations which have broken environmental, anti-trust, labor and employment laws. Some of the consequences for these have been bankruptcies, managerial shakeups and fines. Having associations with unethical enterprises should be taken cautiously since they may be operating some risky transactions which may put another organization or individual in jeopardy. Within an organization, individual employees are also advised to be cautious since some of their colleagues may be unethical in their conduct. Such unethical employees may also tarnish good reputation for others and in some cases lead to firing. Those who have organizational integrity must not work together with those who don’t have it. This paper gives a review of ethical decision making. There is an 8 step ethical decision making process as outlined by Trevino and Nelson with specific emphasis on Wal-Mart and its unattractive wages, poor health insurance plan and gender discrimination.

Introduction

For centuries, prominent theologians and philosophers have provided us with quality documents stating that the fate of enterprises and careers entirely depends on quality of decisions we make. Many others in the field of business have paid extra and special attention on decision making and this add meaning to the statement that decision making will always remain a critical part of organizational operations. Ethical decision making deals with matters of good and bad, or of right and wrong. Making organizational decisions ethically concerns quandaries and dilemmas where we are faced with difficulties of not being clear on our decision. Just like in all other aspects of the organization, ethical decision making must be carried out in service and in light of the company’s purpose and mission. It is the ultimate mission that guides and motivates decision making. Businesses in need of promoting health corporate cultures and wise ethical decision making should in the first place get clear understanding what their purpose is or why they have ventured in business. It is a prerequisite that ethical decision making should have a moral agent with the right character. A moral agent is more than just a rational decision making person. Being in capacity to transfer skills on logical reasoning to someone else does not guarantee that you will provide a wise ethical performance (Gill, 2004). Moral agency should be seen as more than a decision making skill. Thus enterprises whether domestic or international should hire, promote and most importantly train employees of good character but not employees of just high reasoning and technical skill if they aspire to obtain excellent ethical performance and decision making.

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Businesses should always take ethical performance as a community affair not an individual one. It’s a team sport. In ethics, when we are looking at the possible consequences, specifying the rules and arriving at the best decision all these are challenges which are wisely and effectively addressed if we work as a community. A community helps us to decide and carry out the right. Business implication in this context is thus to have team players, not only build but also reward team effort not forgetting to reward good decisions. It’s thus clear that in ethical decision making, the essential preliminary features are community, mission and character (Commfaculty.fullerton.edu, 2003). Then what should follow in the first phase of ethical decision making is determination of whether a particular action, issue or question has a serious ethical importance.

Many companies have gone global and each has its work-place ethics. However, establishing an international code of ethics has always been a difficult task due to differences in cultural orientation. Due to this, emphasis is placed on employee-management communication and quality training in ethical conduct. It’s advisable for multinational companies to avoid basing their code of conduct on national mores (Iep.utm.edu, 2004). Such companies should come up with an international business code that can provide its employees with guidance in the best way to behave in their business duties and this helps to increase their awareness on global ethical matters within which the company is operating. Global companies should have a variety of workplace programs promoting cosmopolitan ethical awareness. Cultural education should be an every day activity if a company aspires an effective international ethical training.

The manner in which employees are used in ethical performance should however be checked since it is important to avoid creating changes that promote intolerance. Such training must incorporate international human rights and ethics education but not just on compliance with foreign laws. An International Business Code of Ethics (IBCE) has several principles such as honesty, respecting national sovereignty, fairness, being responsible for our dealings, trust, respecting fundamental freedoms and human rights, disclosing financial information fully and respect for host country’s economic goals among others (Asgary and Mitschow, 2002). Internet training should be used in order for employees to be tested prior to international business practice. This should be enhanced by creation of an ethics committee where members are rotated from different departments so that all employees are involved in discussion of feelings and thought. Corporate companies like Wal-Mart should follow such guidelines.

Key facts:

Wal-Mart is among the world’s most successful companies. For the period between 1995 and 1998, it was ranked 4th in Fortune 500 while from 2002 to 2009, it was ranked number one after it was overtaken by Exxon Mobil (Scu.edu, 2004). Of the Fortune 500 top four companies, it is the only one that does not deal with energy. Severally, there have been criticisms from the public for its low wages, its decision to become a member of the National Gay and Lesbian Chamber of Commerce, offering of abortion pills in 2006, supporting mandatory health coverage for large employers and its strategy of “Every Day Low Prices.”

Key ethical issues:

Wal-Mart offers low wages and seeks to keep them down. Workers in Wal-Mart earn an average of $8.00 per hour for 32 hours in a week. This translates that in a week, a worker earns $256 and this is equal to $13,312 annually. According to the federal government, poverty level is $14,630 for a family of three. This is in contrast to what is earned by grocery workers who earn 30 percent more. Its personnel policies aim to keep wages low while older workers are being laid off so that they can hire cheaper and younger ones. This company has faced several lawsuits for failing to pay its workers overtime. There is sex discrimination with women receiving low wages compared to their male counterparts yet they are in the familiar positions. Because of its strategy of “Every Day Low Prices,” it pulls down benefits and wages in several other grocery shops thus lowering standards of living in such areas. It has forced closure of other better paying firms in some areas due to its low wages. It is estimated that in any location where a Wal-Mart supercenter is opened, there are two or more other supermarkets that are going to be closed. This is a company that applies pressure on its suppliers to manufacture cheap products and this applies pressure on wages and this leads to jobs being moved overseas. For example, imports of goods from China were a total of 12 billion.

Relevant stakeholders affected by this dilemma:

The surrounding community has been affected since they have been forced to live on low wages. Most of them cannot afford to pay Wal-Mart’s health insurance plan. It is estimated that despite being such a big corporation, two-thirds of its employees don’t participate in the health insurance scheme since it is almost 20% of what they receive in a month. Their operations on low wages forcing other companies to close down or to move overseas make several jobs to be lost. These are companies that could have paid better wages than them. Premium cost for its employees have been increased since 1993 by a staggering 200% and this was above corresponding rise in health insurance cost (Carden, 2010). Competitors have been adversely affected. Due to its unethical performances, it has contributed to a large population in US characterized by inequality. So many people are receiving low pay with insufficient or no benefits and dead-end jobs. This has resulted in spreading of poverty while upward mobility within and between generations has become rare.

Possible consequences of responses:

Responses of Wal-Mart’s to these ethical issues has been to use aggressive advertising campaigns and believes its not its behavior that is supposed to be changed but its public image. Wal-Mart has financed several economic-impact studies in its efforts to counter those showing Wal-Mart costs to communities. Some ads by Wal-Mart such as “Goods Jobs” featured employees explaining how good it is to work for Wal-Mart. Other ads have shown Wal-Mart’s involvement in the community with one employee explaining that it helped cure liver disease for his 7 year old son. Since one of their responses was to charge lower prices, households are going to have greater savings. If they penetrate 20% of the seven southland counties market, savings estimated to be $3.6 billion may create 36,400 jobs per year. Still, it is estimated that this kind of response may lead to loss of around 3,000 to 5,000 jobs in grocery stores. Customer savings from food prices will become more consumers spending merely on non-grocery products and several jobs may be created in those sectors. More California consumers may spend on sports equipment, restaurant meals and continuing education classes.

Relevant obligations:

Wal-Mart should respond to the outcry of its employees. In the first place, they should strive to offer wages that are competitive and align with what Wal-Mart competitors are offering in the job market. Even if their wages are not going to be better than those of competitors, they should make it attractive so that the inequality in the population may be minimized. Benefits offered in form of health insurance should be affordable to all. The moment the cost of health insurance is increased there should be a corresponding pay rise. Their every day low prices strategy should be scrapped so that no more companies are going to be closed down. This will ensure that there are more job opportunities.

Community standards of integrity providing me with guidance:

Fairness should be there for this community but Wal-Mart is going against this community standard. Wal-Mart should provide fair wages to its employees, there should be no sex discrimination and all workers must receive equal pay. Moreover, Wal-Mart should aim to build trust in the community by making sure that their operations are not interfering with grocery stores’ operations. Wal-Mart has forced several of them to close down and communities have lost jobs where they could have been paid even much better. Wal-Mart should allow such grocery stores to operate since where there is competition even the community builds trust on operating businesses.

Possible creative alternative actions:

Wal-Mart already knows that their wages are below par. They must increase their wages and offer affordable health insurance plans. But this can only be possible if their strategy on “Every Day Low Prices” is revisited. This means they may be forced to offer high priced products so that the increase in prices raises the profit margin and this may give them a reasonable figure to pay raised wages.

Right thing to do according to my “gut”:

Wal-Mart cannot continue to operate in such an environment where criticism is so high. They should apply a strategy that aims at favoring all Wal-Mart stakeholders. They should look at what the competitors are paying their employees and increase their wages accordingly (Stanley, 2009). A good market player tries to offer better wages than competitors. Promotions should be done fairly in terms of gender and pay should be uniform.

Ethical approach: Consequentialism

Wal-Mart in its response applied Consequentialism approach since they were maximizing utility that was produced by their decision. In this approach, rightness of the act depends on the consequences. By trying to use aggressive TV ads featuring employees with explanations on how they have been assisted by Wal-Mart’s health insurance plan and how it’s good to work for Wal-Mart, they want to capture all stakeholders and ensure that benefits are accruing to a good number of them. They have looked at the benefits and harms to their multiple stakeholders. Their decision to state that they will increase wages is an ethical act whose favorable consequences outweigh the negative ones. They have looked at the total good rather than focusing on average per individual (Dunn, 2009).

An ethical dilemma calls for selection of the best resolution to solve it. A proposed resolution must be legal, be in compliance with company’s ethics code, something that should allow Wal-Mart to live with it and its stakeholders and respectful for Wal-Mart consciences, that does not irresponsibly pose harm to others and can be defended in public. In my opinion, Wal-Mart didn’t respond appropriately since even today people are still criticizing its low wages. Wal-Mart decided to use TV ads to show how good they are instead of offering competitive wages. Their health insurance plan is still unaffordable to most of its employees and gender discrimination is still rife. If they could have responded appropriately, this criticism could have ended. Continued criticisms show that there are still unethical to most of their stakeholders and especially the community.