Ethical Terrain, Challenges and Solutions in Business Studies

I am a student of Economics and Business studies in one of the most prestigious universities in Pakistan and we have a significant part of our course that outlines the ethical issues and dilemmas that are faced in this line of work and the best ways to tackle them without losing credibility.

Businesses and companies are all across the globe nowadays and amount to a major part of human activity in our current world. A perfect world would have all the companies and businesses making all the right and morally correct decisions in the face of any problems they might encounter. However, this is not a perfect world and businesses/companies do not always make ethically correct decisions due to the inevitable, very real and always persisting drive for profit maximization.

An ethical dilemma is a situation where the businesses are faced by a moral situation which demands a choice between two options and usually both of the options are almost equally undesirable. A business dilemma is the same but the choice would have different effect on its stakeholders or its competitiveness and its possible and current profitability. These are the situations in which the decision makers should act very cautiously. Decision makers might consist of workers too who would have to be trained and informed to make correct decisions ethically because good employees should be able to help the company achieve its targets while making all the ethical decisions and resisting the temptation of taking a wrong shortcut.

There are a number of reasons why a business might face an ethical issue/dilemma.

It can be due to the pressure given by the management of the company. Each company's culture is totally different, however some firms stress profits and results in particular. In these environments, management might turn a blind eye to moral breaches if an employee who produces results, given the firm's mentality of 'the end justifies the means' (Consequentialism). Whistle-blowers could also be reluctant to come forward for having a concern of being considered undependable and not a team player. Therefore, moral dilemmas will arise once individuals feel pressured to try and do immoral things to please their bosses or after they feel that they can't tell on their coworkers' or superiors' unhealthy behaviors. A common problem in public trading companies is what you call “cooking the books”. There are number of big examples of such issues such as the scandal of Enron. The employees were forced to do corrupt accounting that led to big profits. Volkswagen designed a software to provide wrong emission result etc. This should be taken upon by the leaders to solve by providing proper motivation and most importantly a sense of anonymity that the person or the “whistle-blower” will be given as to make him comfortable and still respectful in work environment.

It can also be due to the feeling of discrimination or an ambitious nature. Individual employees can also be under monetary pressure or they might just hunger for recognition. If they can't get the rewards they look for through accepted channels, they will be desperate enough to try and do something unethical, like falsification of numbers or taking credit of someone else's work to urge ahead. Management should delegate tasks and provide recognition where due to boost up morale and work towards better efficiency without going through unethical decisions.

Just like that, diversity is a very important part of business, some individuals might not be accepting with people from completely different backgrounds and will probably be reluctant to treat them fairly. This type of discrimination is also expensive and according to the EEOC, it cost about $372.1 million to the US in 2013. This sort of discrimination is unethical and prohibited yet still remains common. It might be posed as a leadership problem due to the upper brass not providing a nondiscriminatory work environment and not clearly stating the importance of equality.

Sometimes, ethical issues are also used as negotiation tactics. Doing business with different companies may present opportunities for breaches in the moral wall. The continuous pressure to achieve the best possible deal from any other business will cause the staff to negotiate in an unhealthy behavior or mislead the other party to get a concession and a good deal. Dealers might even try and bribe their way to a better deal. It is an illegal act in many developed countries like the US. However, in other nations, it's much more common, and normally even expected, which may place employees in a very tough position during a deal too.

It mostly comes down to how much the company values ethical behavior. These moral dilemmas may be tough for employees to grapple with particularly if they do not understand what the company’s official morals are. Therefore it is in an organizations best interest to give moral training to its workers to assist them in determining unethical behavior and provide them with tools to abide by. Each company should have a moral policy that spells out its punishments for infractions. Moreover management should lead by example showing that the corporate takes ethics seriously and that violators are going to be penalized in line with the organizations policies as well as potential suspension or termination.

The prospects to behave unethically in an organization are limitless and sadly, this potential is usually realized. Why do ethics matter? Ethical firms will recruit candidates with efficiency, selecting those recruits that can match the existing moral values. Namely, individuals typically wish to work for a high-quality organization with a wonderful reputation. Customers wish to deal with an honorable company and business partners search for famous firms with such companies, it is possible to foster trust induced relationships. Why do people (leaders and followers) in organizations not behave as morally as they should? According to young managers, as a result of the pressure to follow with four powerful managerial commandments: performance is what counts at last; by all possibilities show that you simply are loyal and a team-player; never break the law; do not over-invest in ethical behavior. These rules are hardly adequate to produce a moral organization. What is even more fascinating is that only a minority of young managers believe that ethics pays in terms of career advancement.

For majority of workers speaking up concerning a moral issue is tougher than disagreeing in beginning a conflict. That’s why it is the leader’s job to foster a moral climate that allows sincere and open communication and culture that promotes and rewards ethical behavior. Of the values that structure an organizations culture those referring to ethics are the most necessary. Leaders ought to form moral values primarily through ethical leadership each through their personal behavior as well as structure policies and processes. Ethics committee’s chief ethics officers moral training programs revealing mechanisms and code of ethics will support workers in raising issues concerning moral practices as long as the leaders at the highest set the moral bar. It’s necessary that the leader shows and encourages staff to speak up because if employees do not understand that they can voice their values they are not going to even try attempting.

I think 5 values are crucial for moral leaders of a business:

• Pride: Not having vanity a moral leader is very less likely to receive command and respect from followers. Ethically strong leaders demonstrate healthy pride not a lack of vanity as the differentiating line between them is very thin due to strong egotistic tendency in people in general. Ethical leaders acknowledge that unreasonable self-infatuation could be a vice not a virtue.
• Patience: within the method of implementing ways that change a company to succeed in its objectives a leader is challenged with obstacles from both the inside and the outside atmosphere reluctance and lack of commitment from the employees and workers. Because it takes time to beat the barriers that come patience is of utmost importance.
• Prudence: Prudence could be a virtue that refers to using sound judgment in practical affairs. It is thought-about as the measure of ethical virtues as it provides a model of ethically smart actions. A leader in the habit of working prudence and bravery is not inclined to resort to unethical practices even in times when things don’t go as planned.
• Persistence: it refers to the leader’s effort for goals and his continuing quest to take all the mandatory steps to attain them even if they involve sacrifice and personal risk. Persistence lies in making an attempt to overcome the practice of justifying unethical conducts once one feels flooded by mounting pressures due to a sense of duty to others.
• Perspective: It is understood because the capability to understand what is actually necessary in any given state of affairs.

Can an ethical company or a business be successful? In my opinion, yes. There is no doubt in my mind that ethical decision making can lead a business towards success as more and more focus on ethics is being done and a good amount of awareness is also increasing of ethical problems that exist in our corporate world. A short cut is not always the right line of action and a business grows internally and externally if the right decision is made even if it means sacrificing a few not deserved immediate profits.