Ethics can be defined as the code of moral principles that sets standard of good or bad, or right or wrong, in one’s conduct (Schermerhorn 2005). Ethics is important for a manager’s decision because every decision they made, they had to consider who will be affecting and the outcome of the decision to the company. Different managers had different concept of ethical decision. Thus, there are four views of ethics in influencing a manager’s ethical decision for the best of the company that is the utilitarian view, rights view, theory of justice and lastly integrative social contracts theory. This essay will discuss on the four views of ethics and relate each of the views with a recent example.
The first view is the utilitarian view of ethics. Most of the company will choose to use this view because it does not contradict with such business goals as efficiency, productivity and gives high profits (Robbins et al. 2003). It is defined as a means of making decisions based on what is good for the greatest number (Gomex-Mejia et al. 2005). In other words, it only concern on the majority people who are benefiting from the decision rather than the minority people who are affected by the decision. Ethics uses quantitative method like calculating the costs and benefits of the decision made in decision-making. This concept is suitable for companies who are concern on the outcome for the greatest number, which is best for the company as a whole.
To illustrate this view more clearly, we look at the decision-making on the production of the new Ford car, Pinto in the 1960s where the Ford managers had to decide whether to impose the lowest cost and the greatest benefits would be to leave the design to be unchanged (Velasquez 1998). They finally decided to go ahead with the current design. One of the reasons is because of the cost and benefit calculation as they calculated that the costs of preventing losses are lower than the costs of changing the design of the new car. Therefore, this view encourages efficiency, productivity and consistent with the goal of profit maximisation as in the case of the Ford managers (Robbins et al. 2003). However, some of the benefits and cost of the action are not reliable and it ignores the rights of some stakeholders (Robbins et al. 2003). In this case, the Ford managers did not take into account on how many people who suffers when they bought the car and had an accident.
The second view is the rights view of ethics. It is a decision that best maintain and protects the fundamental rights and privileges of the people affected by it (Jones & George 2004). It means that this concept ensure that the companies employees are always protected in rights to privacy, free speech, free consent, health and safety, and freedom of conscience (Schermerhorn 2005). For example, in the case of Coca-Cola executives and the Guatemalan Union Leaders in May 1984, the workers argued that for the past six years, the company refuse to obey the human rights and the labour rights. Moreover, the union organiser are receiving treat like kidnapping, murder and others around the area.
This indicates that the unions are arguing for their rights in the company. The company had to no choice to settle this problem immediately. The benefit of this view is that it provides individuals with equity in the free pursuit of interest (Velasquez 1998). Moreover, it also provides a basis for justifying one’s action and for invoking the protection or aid of others (Velasquez 1998). On the other hand, companies will face problems on productivity and efficiency because they are more concern on their employee’s performance rather than the outcome of the company.
The third view is the theory of justice. It is based on the belief that ethical decisions treat people impartially and fairly, according to legal rules and standards (Schermerhorn 2005). This concept concern on how equal the ethical decision of the manager for everyone. To illustrate this concept, we look at the case of U-Haul and James Horner where Horner, a manager in U-Haul claimed for his overtime pay. The company claimed that Horner is a manager and therefore no need to receive the overtime pay. However, Horner belief that the company’s action is unfair for him as he does the same work as what the others do but the only thing different is that he is a manager and they are not. Therefore, he should get the overtime pay as what the other worker gets. The benefit of the concept is, it recognized the standard of fairness on the individuals (Gomez-Mejia et al. 2005) and protects the interest of stakeholders (Robbins et al. 2003). Despite of the facts, it reduces employee’s risk-taking, innovation and productivity (Robbins et al. 2003).
The last view is the integrative social contracts theory. It is a newer approach that proposes that decision should be based on empirical (what is) and normative (what should be) factors (Robbins et al. 2003). The benefits and drawbacks are determined by the manager’s decision on what is right or wrong. This is because the decision of the managers are determined solely on what he or she thinks is right or wrong for the company although it brings a disadvantage for their workers and others. For example in the case of Levi-Strauss in the early 1990, the company found out that two of their suppliers in Bangladesh, uses children below fourteen years old as their worker.
This matter is common in Bangladesh because their salaries are cheap and they are forced work for longer hours. As a result, the children ignored their education and chooses to work to support their family’s financial problem as most of them come from a low-income family. Thus, producer in Bangladesh can cut their cost of production and sell for cheaper price in the market. However, this practice violates the company’s principles (Donaldson & Dunfee 1999). Since then, Levi-Strauss is willing to pay for the children’s education expenses and promised them to provide them a job as they reach the age of fourteen years old. This is a good example of the decision makers to the society.
In conclusion, ethics is important for decision making in the business environment. This is because manager’s ethical decision not only involves the utilitarian criteria such as effects on efficiency and profit, but also the individual rights, social justice and lastly the community standard (Robbins et al. 2003). Usually, ethical companies perform well financially and are better off as compare to the companies who are rather not ethical in their decision-making. For this reason, every company should adopt one of the views of ethics depending on anyone, which is suitable for them, as they are beneficial for their company.