Legal and Ethical Issues that Students Should Understand

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Table of Contents

Introduction
Business Ethics
Recognizing Ethical Issues in Business
Conflict of Interest
Fairness and Honesty
Conclusion
References

Introduction

Business experts have constantly criticized the inability of colleges to address the ever increasing gap of what the market needs and what is actually taught in business schools.

Additionally, in a period of ethical lapses, moral and values uncertainty, selfishness of the free market economy and scandals connected to greed and unethical behaviors in organizations, business schools, as the main source of future businesspeople, are additionally blamed for much of the unethical behaviors in the market place.

For this reason, business schools are under pressure to cultivate a strong sense of socially responsible management among their graduates and reconsider their position as a moral force in shaping future businesspeople with the capability of making ethical decisions (Baucus, & Caryn, 2005).

The rising interest in the conduct of business students has been the subject of various studies. Indeed, recent research in this area established that the probability of business students engaging in academic dishonesty was higher than that of their non-business peers.

An example of this is a survey featuring over 15,000 students which showed that business students formed the bulk of those who cheated to attain higher grades (Light, 2008). Additionally, studies have proved that most business students believe that they require unethical behavior for them to be able to effectively bring to completion their degrees.

Ideally, the beliefs and values of most students are affected by the environmental background in which they grow up. Indeed, various countries and geographic regions and companies, develop different ethical values, principles, norms and individual moral orientations.

An example of this can be found in the words of Light (2008) who in a study established that Americans responded to bribery cases in a more ethical manner than their counterparts from Greece.

Business Ethics

In this paper, ethics will be defined as the principles and values that determine satisfactory conduct in business organizations. Customers, competitors, government regulations, interest parties, and the society, as well as the moral principles and values of each individual determine the acceptability of behavior in business.

An example of this can be seen from the example of Enron, which became one of the largest ethical disasters in the 21^st century. Two previous CEOs of Enron, Ken Lay and Jeff Skilling, were found guilty on all charges of colluding to hide the company’s financial situation (Ronald, & Johannes, 2003).

While determining the case, the presiding judge said the defendants could be found guilty of consciously avoiding knowing about unlawful activity at the organization.

Many other senior managers including Andy Fastow, the Chief Financial Officer of the organization were found guilty of misbehavior and are currently doing time in prison. Ideally, the collapse of Enron took many layers of management pushing the buttons and contentment on the part of employees who saw mistakes being committed but chose to do nothing about it (Ronald, & Johannes, 2003).

Indeed, Enron is not alone when it comes to condoning unethical behavior in organizations. Most unethical actions within organizations are propped up by an organizational culture that encourages employees to twist the rules (Ronald, & Johannes, 2003).

Recognizing Ethical Issues in Business

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Learning to identify ethical issues is one of the most crucial steps in comprehending business ethics.

An ethical issue according to Ronald & Johannes, (2003) is a problem, situation, or opportunity that is identifiable and calls for someone to choose from among various actions that may be interpreted as right or wrong, ethical or unethical. In business, such a choice usually entails weighing monetary profit in opposition to what an individual considers appropriate conduct.

The best way to evaluate the ethics of a decision is to examine a situation from the perspective of a customer or competitor. Some of the pertinent issues where the question of ethics might arise are: Should liquid-diet manufacturers make uncorroborated claims regarding their products? Should an engineer agree to divulge her previous employer’s trade secrets to guarantee that she lands a better job with a competitor?

Should a salesperson leave out facts about a products poor safety record in his demonstration to a customer? Such questions necessitate the decision maker to weigh up the ethics of his or her choice (Ronald, & Johannes, 2003).

Many business issues may appear straightforward and easy to determine on the surface, but in actuality they are very complicated. A person usually needs several years experience in business to comprehend what is ethical or adequate and that is why business students should endeavor to learn the laws governing business when they are still in school.

For example, if one is a salesperson, when does giving out a ‘gift’ – such as season football tickets – to a client become a kickback rather than just a sales observation? As it is, there are no clear and easy answers to such a question.

However, the dimension of the deal, the history of personal relationships within the organization in question, as well as a host of many other factors may establish if others will judge the matter as acceptable. Companies across the United States are starting to prohibit access to Internet-video services at the workplace.

At issue is the theft of time by employees who utilize You Tube and MySpace for two hours on average each workday (Light, 2008). Another issue is the use of company resources to give individual internet admission.

In order to understand some of the ethical issues that students should expect to encounter in the future, this research paper will deal with some of them in this section. Ethical issues are more complicated now than in the past. The immense number of news-format investigative programs has heightened consumer and employee awareness of managerial misbehavior.

On top of this, the large amount of pay TV and internet resources has improved the awareness of ethical problems in the society. A survey carried out by Light (2008) involving more than 3,400 U.S. employees concluded that workers witness numerous instances of ethical misconduct in their organizations. (Light, 2008).

The most common types of identified misconduct in the private sector were putting one’s own interests ahead of that of the organization, abusive behavior, and peddling falsehood to employees.

One of the main causes of unethical behavior in organizations is excessively aggressive fiscal or business objectives. Majority of these issues have to do with decisions that business executives handle on day-to-day basis. Ideally, it is not possible to discuss every ethical issue that rises in the business place.

However, discussing a few of them can help students to realize some of the ethical problems that they will have to deal with in their future workplace. Majority of the ethical issues in business can be classified in the context of their relation with offensive and menacing behavior, conflicts of interest, fairness and truthfulness, communications, and business dealings (Light, 2008).

Abusive or intimidating behavior is classified as one of the most ethical issues that employees have to deal with in the workplace. These concepts can refer to anything from physical threats, false allegations, being irritating, using swear words, verbal abuse, shouting, cruelty, to perverseness, and the meaning of these words can differ from one person to another.

Abusive behavior can be placed on a scale from minor disturbance to an interruption of the workplace. For example, what one person may term as shouting might be the manner of normal speech for another person. Courtesy in our culture is a concern, and the workplace is no exception. The productivity level of most organizations has been reduced by the time spent unraveling insulting relationships (Light, 2008).

Abusive behavior is hard to manage and judge due to cultural diversity and lifestyle. What does it mean to act in a profane manner? The question that one should ask themselves is if profanity is only related to specific terms or other related phrases that are commonly used in today’s business world. If one is using words that are normal in his language but others consider them to be abusive, does this constitute to unethical behavior?

Within the concept of abusive language, intent should be a concern. If the employee was trying to express a compliment but the comment was construed as abusive, then it was most likely a mistake. What students should understand is that the way they will frame their words (word intonation) while dealing with clients in their future workplace will be important (Baucus, & Caryn, 2005).

Another ethical/legal aspect that is most likely to crop up in the workplace is that of bullying. Bullying is linked to a hostile workplace when an individual or group is targeted and is threatened, disparaged, orally abused, or overly censured. Bullying may give rise to what some consider a hostile environment, a term commonly linked to sexual harassment.

Although sexual harassment has legal redress, bullying has little or no legal recourse at the present. Bullying is a widespread problem in America and can give rise to psychological damage that can as a result give rise to health endangering consequences to the victim.

According to a study conducted by Baucus & Caryn (2005), 34 percent of U.S. workers which is close to 54 million Americans have been bullied at one time and 12 percent of workers have witnessed cases of bullying. Although bullying might not have a legal recourse, employees should be wary of practicing it since it might be misconstrued as sexual harassment which definitely has legal redress.

Conflict of Interest

Conflict of interest which is one of the most prevalent ethical issue identified by employees, comes to be when a person must decide whether to advance his or her own individual interests or those of others. For example, a manager in an organization is required to make sure that the company makes profits so that the stakeholders receive value on their investment. Simply put, the manager’s first responsibility is to the investors.

If the manager instead makes decisions that make him/her to accumulate more power or money without advancing the cause of the company, then that manager has a conflict of interest meaning that he is acting to build himself at the expense of the organization and is not carrying out his responsibilities as an employee.

In order to avoid conflicts of interest, employees should be able to detach their personal financial interests with that of the organization (David, & Max, 1996). As discussed earlier in this paper, it is regarded as improper to give or receive bribes, payments, gifts, or special favors with the intention of swaying the outcome of a decision.

A bribe is considered a conflict of interest because it benefits an individual at the cost of an organization or community. Companies that conduct business overseas should understand that bribes are a significant ethical issue and are in fact not allowed in many countries.

An example can be seen from a case where three former executives of IBM Korea were jailed in Seoul after they were convicted of bribing business associates to win orders for computer parts (Light, 2008). While bribery is a serious concern in many countries, it is more rampant in some countries than in others (Kellerman, 2004).

Fairness and Honesty

Fairness and honesty are core business ethics and relay the general values of decision makers. At a minimum, business persons are expected to adhere to all set laws and policies. However, above obeying the law, employees are expected not to cause harm to customers, employees, clients, or even competitors intentionally through fraud, distortion, compulsion, or prejudice.

Honesty and fairness can be linked to how the employees utilize the organization resources. A survey carried out in the U.S. showed that more than two thirds of workers have taken office supplies at one time to use in their individual needs (David, & Max, 1996). In the same survey, 97 percent of the employees said that they did not consider taking office supplies for their personal use as something dishonest.

Additionally, the same survey showed that 3.7 percent have taken items like keyboards, software and memory sticks. Regardless of this, an employee should be aware of policies regarding taking items and recognize how these decisions relate to ethical behavior (Krawiec, 2000).

One characteristic of fairness relates to competition. Although many laws have been formulated to promote competition and make monopolistic practices illegal, companies sometimes acquire control over markets by applying questionable practices that harm competition. Bullying can also take place between companies that are strong contenders.

Even respected companies such as Intel have at one time been accused of monopolistic bullying. A competitor, Advanced Micro Devices (AMD), claimed in a court case that 38 companies including Dell and Sony were strong-arming potential customers into buying Intel chips except those marketed by AMD. In the case, AMD is seeking billions of dollars in a lawsuit that might take years to take legal action (Kellerman, 2004).

Conclusion

An ethical issue is an identifiable problem, situation, or opportunity that calls for an individual or company to select from among several actions that have to be weighed up as right or wrong.

Ethical issues can be classified in the context of their association with conflicts of interest, fairness and honesty, communication, and business dealings.

Businesses can cultivate ethical behavior by workers by reducing their prospect of engaging in misconduct. Formal codes of ethics, ethical policies, and ethics training forums lessen the frequency of unethical behavior by notifying employees what is expected of them and punishing those who fail to obey.

References

Baucus, M. & Caryn, L. (2005). Designing Ethical Organizations: Avoiding the Long-Term Negative Effects of Rewards and Punishments. Journal of Business Ethics 56 (4), 355.

David, M. & Max, H. (1996). Ethical Leadership and the Psychology of Decision Making. MIT Sloan Management Review 37(2), 76.

Kellerman, B. (2004). Bad Leadership: What It Is, How It Happens, Why It Matters. Boston: Harvard Business School Press.

Krawiec, K. (2000). Accounting for Greed: Unraveling the Rogue Trader Mystery. Oregon Law Review 79 (2), 309-10.

Light, P. (2008). How Americans View Charities: A Report on Charitable Confidence. Washington: Brookings Institution.

Ronald, R. & Johannes, B. (2003). Enron Ethics (Or Culture Matters More Than Codes). Journal of Business Ethics 45 (3), 243 – 252.

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