Business Ethics Cases

Part A: Ethical Dilemma Essay

Description of the dilemma

Ethical dilemmas are rampant in both small and large business enterprises. The majority of people in the business field are always faced with decisions to make, and some of these issues test their ethical standards. It is, therefore, prudent understanding existence of such dilemmas and the best course of action. For instance, as finance director of a small household retailer I was faced with a dilemma while finalizing the year end accounts for the company (Salladay & Bell, 2009). The company’s warehouse manager has recently given insights on the significant level of slow-moving stock in the enterprise which is valued at $ 5 million. This stock has been there for more than nine months and should have been written down sometimes earlier.  In the meantime, the shareholders of the company are in efforts to sell the company, and the managing director is suggesting that the stock should not be written down in the year end accounts (Fraedrich, Ferrell & Ferrell, 2013). This implies that there will be inflated stock valuation and hence the prospective buyer will have to pay more. Also, the director has also promised a pay increase if the deal becomes a success. The fate of other employees in the organization also depends on whether the deal will be successful.

This is a very challenging situation and forms an ethical dilemma that requires wisdom to overcome. As an accounting professional, I have the responsibility of representing all financial statements in agreement with the set accounting standards. Nevertheless, the managing director is piling pressure on me to account for the stock at a higher value than what I am comfortable with. A choice to agree with the proposal made by the managing director will be against the professional code of ethics in the accounting field. This is a choice that will have adverse effects on my career as a professional accountant. The prospective buyer is also expected to carry out due diligence and there are high chances that this misrepresentation will always be unearthed at a certain point in time.  Although I agree that this is against the accounting standards, I am tempted by the fact that the managing director is proposing a salary increment and better terms of service upon successful completion of the deal. It is also prudent noting that the choice will have a significant impact on the future of other employees in the organization. As an accountant, I will have to make the right choice that will be morally and ethically correct. It is however imperative noting this will not be easily realized owing to the many considerations involved in this case making it a dilemma.

Justification of the dilemma

As aforementioned, I have to make a choice on whether or not I will act according to the will of the managing director or as provided for in the work ethics. It is imperative to note that the existence of moral considerations, in this case, makes it an ethical dilemma. There are several types of ethical theories that can explain the ethics involved in the decision making.  For instance, the consequentialist theory is concerned with the consequences of the choices made.  Ethical decision making will require us weighing the consequences that will follow the choices we make. In this case, the utilitarianism approach will be an option in making a decision. This is an approach that is concerned with making decisions where the consequences involve a large group of people (Ferrell, Fraedrich & Ferrell, 2010). It is imperative to note that the decision I make in this case will have consequences that will affect various groups of persons. My interests, those of the managing director, other employees and the prospective buyer of the business empire will be affected by my choice.

It is worth noting that any of the action I take will have either bad or good outcomes to the people mentioned. It will be essential ensuring that the choices I make will have a balance between the good and harm caused by the decisions. It vital ensuring that the choices I make will offer the best good and least harm to the interested parties. For instance, if I chose to overstate stock valuation and favor the director, I will be doing a disservice to the prospective buyer. The managing director will be pleased by the actions since it will be possible to sell the company at escalated prices.  Although I will get a salary increment and better terms of service, it is worth understanding that this will be against the professional code of ethics. It will also do great harm to my professional career if by any case the truth is revealed. It is a requirement that I work with professionalism and maintain high ethics and integrity in administering my services.

On this note, I am also concerned with the other employees of the company. The director has emphasized that the future of these employees will depend on the successful purchasing of the business. It is argued that their jobs will be at risk if the deal fails to go through. The store manager and other people involved in the company will also be affected by the decision that I will make (Abiodun & Oyeniyi, 2014). The utilitarian approach requires one to make a decision that will have the greatest good and does the least harm to all the interested parties. It is nevertheless keen understanding that reaching an agreement on the choice that will have such traits.

An egoistic approach is one variation of the utilitarian approach. This is an approach that is concerned with self-interest with total disregard for the plight of others. It is an approach that uses a utilitarian calculation to produce the greatest good for oneself. Proponents of this approach argue that self-interest is a prerequisite for the respect to others. They argue that pursuit of self-interest will be critical to the overall good of the people involved. For instance, if I succumb to the pressure of overstating the stock as directed by the managing director, I will be assured of better payments and job security (Garity, 2008). If i base, my decisions on these facts, then this will be a decision from an egoistic ethical position.

On the other hand, a non-consequentialist approach would also be essential in the solving of this dilemma.  This is an approach whereby decision making is not influenced by the consequences resulting from such decisions. In most cases, the a deontological approach is often used in solving ethical dilemmas. Duty based approach is involved in acting as it is provided for in the job requirements. For instance, in this case, the accounting officer has a duty of presenting the financial information of the organization in agreement with the accounting principles. If I make a choice of making the appropriate stock valuation and report the managing directors of the auditors, then this would be a deontological decision. On the other hand, one may opt to sensitize the managing director on the negative repercussions of financial misrepresentation, and this would be acting upon one’s virtues.  It is, however, wise understanding that none of the above choices is easy to make.

Solution to the dilemma

As aforementioned, the case at hand presents an ethical dilemma that must be solved with a lot of professionalism.  As an accountant, I must make a decision on whether or not I should conform to the demands of the managing director of the company. I will either decide to act professionally and lose my job or agree to the pressure from the managing director or enjoy financial benefits.  As an accountant guided by the principles of integrity, it will be wrong to be associated with information that I strongly believe represents false representation (Monga, 2007). The potential buyer is also expected to conduct due diligence, and if he unearths the truth, it is likely that this will jeopardize my profession.  It is imperative that I act professionally and give an honest presentation of the company’s accounts.

On this note, it is wise that I take necessary measures to ensure that the consequential and non-consequential theories of ethical decision making are addressed. I will ensure that I follow the company’s basis of stock valuation and give the best financial information regarding the company. Discussing with the warehouse manager and sales director on the slow-moving stock would help the organization make proper arrangement on how to deal with this issue. After gathering the relevant information, I will inform managing director and make the correct advice. If the managing director insists on inflating the stock, then I will raise the matter with other board members and reach an amicable solution (Rossy, 2011).  It will be appropriate raising the ethical requirements involved in the accounting field and ensure that I inform that I cannot contravene the requirements of my profession.

If the problem fails to have an internal solution, then I would seek intervention from external bodies such as auditors and other accounting bodies. I will ensure that I act according to the professional code of ethics provided by the accounting body. It would be inappropriate to put overvalued stock in the financial statements of the company. In case the conflict persists, I will resign from this position to ensure that I am not involved in providing misleading financial accounts. Although it is not an easy decision, resigning from my position would be the ultimate price to pay to ensure that my integrity is not compromised (Bateman, Valentine & Rittenburg, 2012). This decision-making will be guided by deontological ethics. It is my duty to give financial information that represents the true picture of the organization. This responsibility should not be passed to the managing director or the potential buyer. It is always good to do the right thing despite the consequences. Deontological ethics requires that we act according to the rules and regulations that govern our duties (Maclagan, 2012). It will, therefore, be wise if I fulfill my duty without considering the consequences of my choices.

 

References

Abiodun, A., & Oyeniyi, J. (2014). Ethical Dilemmas In Management: An African Perspective. Journal Of Business Systems, Governance & Ethics, 6(2). http://dx.doi.org/10.15209/jbsge.v6i2.203

Bateman, C., Valentine, S., & Rittenburg, T. (2012). Ethical Decision Making in a Peer-to-Peer File Sharing Situation: The Role of Moral Absolutes and Social Consensus. J Bus Ethics, 115(2), 229-240. http://dx.doi.org/10.1007/s10551-012-1388-1

Byrne, T. (2014). Ethical Dilemmas in a California City: Lessons in Leadership, Transparency, and Accountability. California Journal Of Politics And Policy, 6(4), 1-22. http://dx.doi.org/10.5070/p26k5n

Ferrell, O., Fraedrich, J., & Ferrell, L. (2010). Business ethics. Mason, OH: South-Western Cengage Learning.

Fraedrich, J., Ferrell, O., & Ferrell, L. (2011). Ethical decision making for business. Andover: South-Western Cengage Learning.

Knake, R. (2008). Resolving Ethical Dilemmas in James Welch’s “The Indian Lawyer”. American Indian Law Review, 33(1), 13. http://dx.doi.org/10.2307/20455374

Litschka, M., Suske, M., & Brandtweiner, R. (2011). Decision Criteria in Ethical Dilemma Situations: Empirical Examples from Austrian Managers. J Bus Ethics, 104(4), 473-484. http://dx.doi.org/10.1007/s10551-011-0922-x

Maclagan, P. (2012). Conflicting obligations, moral dilemmas and the development of judgement through business ethics education. Bus Ethics Eur Rev, 21(2), 183-197. http://dx.doi.org/10.1111/j.1467-8608.2011.01645.x

Monga, M. (2007). An ethical dilemma. Monash Business Review, 3(3), 34-35. http://dx.doi.org/10.2104/mbr07046

Piercy, N., & Lane, N. (2006). Ethical and Moral Dilemmas Associated with Strategic Relationships between Business-to-Business Buyers and Sellers. J Bus Ethics, 72(1), 87-102. http://dx.doi.org/10.1007/s10551-006-9158-6

Rossy, G. (2011). Five questions for addressing ethical dilemmas. Strategy & Leadership, 39(6), 35-42. http://dx.doi.org/10.1108/10878571111176619

 

Part B: Portfolio of Evidence

The Ethical Leadership Debate (in Seminar 4)

The ethical leadership debate as described in seminar 4 is a very insightful experience. The debate provides insights on the role of directors and other stakeholders in a business entity. It is worth noting that issues of corporate governance and its overall social effects are also adequately addressed in the debate. The debate involved four characters who had varying opinions regarding ethical leadership. For instance, according to Mike, the firm influence of ethical leaders in an organizational set up will influence the culture of the organization.  On the other hand, Jan is of the idea that employees should take up the social responsibility that to a great extent help in developing them substantially (Byrne, 2014). Mei-Hua, on his part, is of the opinion that ethical leadership entails following set codes and rules that define moral obligation. The last character in the debate, Deshi, views ethical leadership as a hindrance and sees no point of taking time to such a concept.

Normally, the directors’ responsibility is ensuring a smooth and successful running of the organization through effective and prudent management. It is nevertheless wise to note that the issue of corporate governance has been a notch higher through the introduction of specific guidelines that offers framework upon which the directors are supposed to act.  The provision of these guidelines is aimed at safeguarding the interests of all stakeholders within the organization. It is, however, prudent to note that, despite the introduction of codes of corporate governance, much of these ideas are susceptible to personal interpretations (Bagus & Howden, 2013). From the debate, it is clear that some people would be like Mike and Jan who have strong belief in ethical leadership. Others would be like Mei-Hua is worried about compliance while others are expected to be like Deshi, who has no value for ethical leadership (dela Rama, 2011).  From this point of view, it is clear that there could be inconsistencies while dealing with ethical issues in corporate governance.

The debate gives insights on the varied opinions and justifications to these views regarding codes of corporate governance. People have different views on matters of ethical leadership. The intention of the codes of corporate governance purpose is to offer guidelines for regulation and supervision of the director’s actions (Litschka, Suske & Brandtweiner, 2011). They have the responsibility of protecting the interests of the employees and stakeholders in the organization. It is nevertheless imperative to note that the varied interpretations from different people could hinder the effectiveness the provided codes of corporate governance.  To deal with such cases, it is prudent to have institutions to promote transparency and accountability to reduce misunderstanding and instances of unethical behavior. It is, however, imperative to ensure that these institutions are enhanced to ensure that accountability and transparency are sustainable. Strong institutions will prevent characters like Mei-Hua, who are only concerned with compliance and are likely to take advantage of any loopholes that may present itself (Garity, 2008).  I am of the opinion that ethical leadership will only be achieved through instilling ethical education to employees and other stakeholders. Moral values should be cultivated daily through extensive screening of the potential employees before recruitment. In essence, true ethical leadership is a collective responsibility that involves daily learning and practice to perfection.

 

References

Bagus, P., & Howden, D. (2013). Some ethical dilemmas of modern banking. Bus Ethics Eur Rev, 22(3), 235-245. http://dx.doi.org/10.1111/beer.12025

dela Rama, M. (2011). Corporate Governance and Corruption: Ethical Dilemmas of Asian Business Groups. J Bus Ethics, 109(4), 501-519. http://dx.doi.org/10.1007/s10551-011-1142-0

Fraedrich, J., Ferrell, L., & Ferrell, O. (2013). Ethical decision making in business. Mason, OH: South-Western.

Garity, J. (2008). Resolving Ethical Dilemmas Using Debates. Nurse Educator, 33(3), 101-102. http://dx.doi.org/10.1097/01.nne.0000312179.13272.4e

Salladay, S., & Bell, K. (2009). Facing Ethical Dilemmas. Journal Of Christian Nursing, 26(1), 55. http://dx.doi.org/10.1097/01.cnj.0000343931.93927.08

Sora, S., & Natale, S. (2004). The ethical dilemma of merging the roles of CEO and chairman of the board. Corporate Governance: The International Journal Of Business In Society, 4(2), 64-68. http://dx.doi.org/10.1108/14720700410534985

 

The Seminar Case (in Seminars 1 and 5)

As aforementioned, people in the business world are always faced with instances where they have to make crucial decisions. It is imperative to note that some of these decisions are dilemmas since they involve making a value judgment.  The decision-making process should be guided by principles that that uphold the values essential to the organization. For instance, there is a case of a financial accountant who has recently gotten a job in a five-star hotel (Derbyshire, 2008).  The company is owned and managed by a couple who are fully involved in running the business. The first few days in the new workplace were very peaceful until recently. A few days ago, the managing director of the hotel came with a cheque for $, 5000 demanding a counter signature. The managing director claims that this money is to make payments for furnishing and design works carried out in the hotel. However, the accountant suspects of ill intentions from the director since he had no idea those outlays planned for (Moon, 2001). A few days later, the director comes with another cheque for $ 25000 for the design studio. After questioning, the director says that there is urgency in making such payments and only needed the counter signature only because his wife was not within. The accountant realizes that the amount was to offset some outstanding director’s loan. He is faced with a decision to make on whether or not to agree to the director’s will or act in morality.

Solving ethical dilemmas remain a major challenge in the business world. To reach a worthy conclusion, it is worth investigating all of the morally relevant facts that apply in the moral situation. Normative ethical theories have been constantly used to solve ethical business dilemmas. Normative ethics is comprised of two approaches namely teleological and deontological approach. These two approaches have different definitions of what constitutes moral status of the action. For instance, the teleological approach is also referred to as consequentialism (Sora & Natale, 2004). This is an approach whereby the moral position of the actions taken is influenced by the consequences of the action. It implies that an action is either right or wrong depending on the outcomes resulting from the choices (Allan, 2009). Ethical egoism and utilitarianism are the traditional forms of approach involved in teleological theory. For instance, in this case, the accountant may decide to act in a way that serves his interests. When such decisions are reached at, implies that the accountant has adopted egoism approach. On this note, utilitarianism approach requires that the course of action taken should offer well to the majority. Utilitarianism advocates for actions that do the least harm and are of great benefit to the affected parties.

It is, however, worth to note that the deontological approach is against the teleological approach. Proponents of deontological approach advocate that moral status of an action should not be guided by the consequences of the action (Piercy & Lane, 2006). Instead, human rights must be respected, and moral obligations must be fulfilled with little concern for the consequences of the actions. As an accountant, one has a moral obligation of making truthful and honest financial dealings. The accountant may decide to take decisions not based on consequences but the integrity and objectivity of his duty. Professional competence will be essential in solving this ethical dilemma.  A deontological approach requires that respect for persons should be the ultimate guide for making moral decisions (Knake, 2008). The accountant must stand firm and refuse to countersign the cheque.  This will ensure that the company’s reputation, that of the design company and his reputation remains intact. Such decision will uphold respect for humanity and put money issues behind. It is imperative ensuring that he is not part of a fraudulent activity engineered by the managing director since by so doing he will be doing injustice.

References

Allan, B. (2009). Study skills for business and management students. Maidenhead: McGraw-Hill/Open University Press.

Derbyshire, S. (2008). The Ethical Dilemma of Ethical Committees. Sociology Compass, 2(5), 1506-1522. http://dx.doi.org/10.1111/j.1751-9020.2008.00143.x

Mathew, T. (2015). Ethical Dilemma Faced by General Motors India. JOEBM, 3(1), 76-82. http://dx.doi.org/10.7763/joebm.2015.v3.158

 

Interpersonal and Team-working skills

The module has been very engaging where interpersonal, and team working skills have been very useful throughout.  Working as a team has helped a lot in understanding major concepts involved in business ethics and solving of ethical dilemmas. For instance, good communication skills among the team members have been instrumental in the success we have realized in the module. The majority of the team members were able to deliver their views and opinions regarding the topic. This was made possible by the excellent communication skills among the team members (Leila Trapp, 2011). It is also worth noting that the issue of effective communication skills is evident during the debates and seminars where members have been actively involved.

Also, the ability to be coherently focused on the objectives of the team is also evident. Besides having excellent communication skills, the team members have been very attentive and have a tendency of listening to each other. The team would always have open sessions where members would contribute freely towards the objective of the team (Agius, Esposito & Farrugia, 2012). By having a clear goal among the team members has enabled us to get to greater heights during the module. Commitment and ability to solve conflicts have also been essential for the effective teamwork. Every team member has remained committed to the objective of the team. Everyone has been striving to ensure that they are of high value to the team. Besides, the team members have been proactive in managing conflicts that are likely to happen during teamwork (West, 2012). The effective communication between the members was the strength upon which a successful teamwork can thrive.

 

References

Agius, V., Esposito, T., & Farrugia, M. (2012). CPR team work, interpersonal skills and team efficiency audit. Resuscitation, 83, e118-e119. http://dx.doi.org/10.1016/j.resuscitation.2012.08.306

Interpersonal skills. (2007). Libyan Journal Of Medicine, 2(3). http://dx.doi.org/10.3402/ljm.v2i3.4719

Leila Trapp, N. (2011). Staff Attitudes to Talking Openly About Ethical Dilemmas: The Role of Business Ethics Conceptions and Trust. J Bus Ethics, 103(4), 543-552. http://dx.doi.org/10.1007/s10551-011-0879-9

McMillan, S., Duska, R., Hamilton, R., & Casey, D. (2006). The Ethical Dilemma of Research and Development Openness Versus Secrecy. J Bus Ethics, 65(3), 279-285. http://dx.doi.org/10.1007/s10551-005-5495-0

West, M. (2012). Effective Teamwork. Hoboken: John Wiley & Sons.

 
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