Addison Ventures Company’s Minimum Wage vs. Ethics

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How to address the Minimum wage versus ethical perspectives

The main problem at Addison Ventures arises from the fact that the company is finding t quite challenging to balance between the cost of labor in terms of the minimum wage for its employees and the ethical standards it is supposed to uphold throughout its business operations overseas.

Alternatives

1. Status Quo.
2. Upholding ethical standards.
3. Increasing the current wage level.
4. Reducing working hours.
5. Adding overtime dues after deduction.

Facts Considered

1. Addison Ventures runs a joint venture with an overseas company in China.
2. The company opted for the overseas location due to the availability and relatively low cost of labor.
3. However, Chris, the company’s Chief Executive Officer was vehemently opposed to the ideas from the very beginning.
4. He feared horrible stories he had heard on how some of the foreign companies were not consistent with ethical standards when hiring their workforce.
5. His main concern was the minimum wage that would be payable to workers should Addison Ventures expand overseas.
6. He had insisted on a wage level above the recommended minimum wage.
7. Chris felt that the overseas working conditions would not align with Addison’s core operating principles.
8. Nonetheless, Chris felt a lot more at ease and reassured after a survey carried out indicated that the company would still cut down on operating costs while at the same time manage to pay its employees above the recommended minimum wage.
9. As a result, Addison Ventures went ahead and formed a merger with a local company. The condition was that workers would be paid above the minimum wage and also the overtime hours would be minimal.
10. However, it came to pass that employees were working up to fourteen hours per day when Chris visited the Chinese facility some months later even though company records showed that they were earning above the minimum wage.
11. When the company payroll was closely scrutinized by an external auditor, workers seemed to be at a comfortable earning zone only because o what the company’s auditor noted as ‘creative payroll’.
12. In any case, employees were earning 350 Yuan per month with a 100 Yuan deduction for expenses.
13. Although they were still left with 250 Yuan which was above the minimum wage, the working hours were far much above the expected levels. Also, the deduction was being effected after adding the overtime hours.
14. Addison Ventures is now at dilemma especially if the auditor’s report finds its way to the media. It may jeopardize its business status.

Recommendations

It is highly recommended for the management at Addison Ventures to either reduce the overtime working hours of its employees or increase its current wage level. Since the company may need to operate at its peak throughout the year, it may not be advisable to cut down on working hours (overtime). Therefore, it would be advisable for Addison Ventures to draft a policy plan for increasing the current wage by the same proportion of overtime hours or treat the overtime pay as a separate entity and therefore not subject it to any form of deduction.

Assumptions

• Upholding acceptable business ethics translates to organizational profitability.
• Addison Ventures will still be able to remain competitive even if the current minimum wage is revised upwards.
• The company should not be tied by the minimum wage standards, rather, it should stand above the rest in the market since it is a member of some of the organizations that promote and oversee ethical practice in business operations.
• Addison Ventures has the capacity of maintaining its reputation in the market irrespective of the current situation.
• Similar audits can be still be carried out within the payroll system to establish latent mistakes and corrective actions taken.
• The CEO of the company can take this as a turning point through better services and better pay will be offered to employees, active clients as well as potential investors.
• A well-paid worker is more productive than an overworked and underpaid employee.
• This may be just one of the challenges to be faced by Addison Ventures in its overseas operation. Therefore, the company ought to remain steadfast in its operations and tackle the emerging intriguing situations from time to time.

Statement of the Problem

Primary Problem

As a result of expanding its business operations overseas, Addison ventures have found it challenging to balance between minimum wage and the required ethical standards which also forms one of its core principles.

Satellite Problems

• Addison Ventures is at risk of losing out on current clients as well as potential investors.
• The company may end up cutting down on its profit margin to redeem its business principle.
• The company may miss out on its market potential if the audit reports are leaked out in the media.

Implications

Organization

• Addison Ventures will stand at a high risk of the declined capacity of production if investors and current clients withdraw from its business portfolio.
• Due to the likelihood of reduced production capacity, the company will also experience a decline in the reduced profit margin.
• It is possible that if the audit report finds its way into the public domain, consumers and other stakeholders of the company may turn to other optional companies who have managed to uphold ethics in their due process of production.
• The company may be compelled to close down its overseas operations due to tinted public image.
• It is also highly likely that Addison Ventures may face a lawsuit emanating from the foreign country of operation has not fully complied with the working terms and conditions of its employees.
• Finally, the company may lose out on its membership in associations that steer up ethical behavior in business operations.

Personnel

• In terms of personnel, it is no doubt that the staff at Addison Ventures will feel cheated should they have access to the audit report, especially through the media. Meanwhile, there are myriad of negative effects that arise from long working hours.
• Long working hours that are not commensurate to wages being paid will lead to a stressful working among employees. Consequently, employees will start lodging complaints largely due to dissatisfaction in their various roles and responsibilities.
• The longer working hours that do not seem to pay off accordingly may compel some staff members to seek ‘greener pastures’ in other competitive organizations. Quite a several employees may feel overwhelmed by the stressful work environment and therefore be compelled to move out of the company.
• If the threat posed by the long working hours is not addressed (which has been most likely caused by fewer workforce), it implies that there will be some form of disorganization when allocating duties to the limited number of employees. For instance, some employees may need immediate leave from work due to emergencies such as sickness and consequently cause a breakdown in the delivery of various roles and duties.
• Finally, Addison Ventures will experience a shift in its productivity bearing in mind that the limited workforce will hardly be in a position to meet the production demands of the company regularly.

Alternative Solutions

1. Status Quo.
2. Upholding ethical standards.
3. Increasing the current wage level.
4. Reducing working hours.
5. Adding overtime dues after deduction.

Status Quo

Description

If Addison Ventures is to maintain the Status Quo of the company, then it implies that Chris, the Chief Executive Officer of the company will ignore the current concern on ethical production and move ahead with the business operations as usual. While this may be considered as a possibility, it may not be the best alternative for the current management dilemma at Addison Ventures. It is imperative to note that the company needs to maintain its reputation in the market at all costs to remain relevant.

The Status Quo option will also mean that the company will still stand at a high risk of breaking down its business principles and core values of operations. As such, the company will operate with a lack of ease despite the impressive profit margin that may ruin its future. The following are some of the pros and cons of embracing the Status Quo at Addison Ventures:

Analysis

To solve the current situation facing Addison Ventures, the Status Quo is not a practical solution to the primary problem. As much as the company wishes to maintain an ethical practice in its business portfolio, there is a need to seek other alternative solutions. From the experience gained throughout the business course, ethics is essential in facilitating the strategic management of organizations (Barnett & Sean, 2004). Moreover, they add value to the sustainability of businesses even in the future. Besides, the expansion of multinational organizations triggers a diversity of ethical principles to increase homogeneity among interacting companies. In this case, business ethics are crucial in enhancing the level of trust by customers and other investors (Trevino & Brown, 2004).

Upholding ethical standards

Description

When ethical standards are upheld at Addison Ventures, it will be a better alternative to solving the management headache facing the company at the moment. There are moral considerations that are expected from corporate organizations and businessmen. This insight was arrived at after discussing the right codes of ethics by which businessmen should depict when executing their duties. Furthermore, ethical principles have been positioned high above the motive to gain huge profits (Barnett & Sean, 2004). Meanwhile, for one to exercise such ethics, there is a need for one to have social responsibility. By so doing, one demonstrates his commitment to the success of the business. Centrally, the operation of an organization or business is subject to social responsibility.

there are challenges associated with the tendency of organizations to remain committed to the set code of ethics (Trevino & Brown, 2004). For instance, competition in the job market can be challenging especially when an organization is not willing to compromise its ethical values for profits. The following are some of the pros and cons of upholding ethical standards when doing business of any nature.

Analysis

A well built ethical standard will indeed positively impact the company. Business ethics and social responsibilities are not new in the world of business operations. However, these words and concepts have been changed several to match contemporary forms of business operations. Moral responsibilities explain the concepts of business ethics and social responsibilities as acting right. It is a positive self-consciousness and can be used in the management of organizations.

Different people have different understandings of business ethics and social responsibilities. However, the major issue in virtually all arguments is that leadership should exercise identified good business practices. This includes being responsive to the needs of employees and the entire organizational environment. As for the case of Addison Ventures, the company should consider ethics as the backbone of its operations.

Increasing the current wage level

Description

Effective enforcement of the Minimum Wage has become one of the most important steps that governments have embarked on to ensure that the rights of employees and grass-root laborers are protected. Studies point out that many employees’ payable wages at their wage period and for the total number of working hours have over the years failed to meet the statutory minimum wage requirement. Tran and Abate indicate in their publication that statutory minimum wage should cover employees regardless of whether they are part-time, casual, daily-rated, or monthly rated and whether or not their employment contract is continuous as defined by the employment ordinance (Murphy, 2010).

Although Addison Ventures is fast-tracking the minimum wage levels in its overseas operation, it is imperative to note that the company factors in the overtime dues in the total wage earnings of its employees. Eventually, employees received below the minimum wage without their knowledge. The recent audit at the company was enough proof that employees need to be paid more than they are receiving at present if they are to earn above the minimum wage. The following are some of the pros and cons of increasing the basic wage level of employees at Addison Ventures.

Analysis

This alternative can solve the problem by a larger margin. Gillette (2007) posits that all employees should be paid according to the total number of hours they have worked and in line with the statutory minimum wage rate. In essence, the wage that an employee gets for every work period which can be monthly or weekly should not fall below the required Standard Minimum Wage (SMW). In case of any difference, employees should be entitled to certain payments. This may be in form of increases in their wage level.

Reducing working hours

Description

Addison ventures may also opt to reduce working hours for its employees especially those who go for fourteen hours. In any case, this working duration goes far much beyond the expectations and core values of the company. The following table gives the pros and cons of embracing this alternative.

Analysis

As already tabulated above, this alternative may generate both negative and positive effects at Addison Ventures. While the pros and cons seem to balance each other, it is profound to note that the economic benefits of adopting this option outweigh the demerits in several ways. For instance, research studies on human resource development indicate that an overworked employee is less productive in an organization compared to the counterpart who works within the acceptable limits (Wood, 2005).

Recommended Solution

Increasing the minimum wage level for its employees is the best solution the company can pursue to redeem its image in ethical operations. This solution has been arrived at after careful consideration of all the pros and cons of the other alternatives aforementioned. Addison Ventures will be able to operate within its core business principles while at the same time maintain its profitability in a long term.

Implementation

Although increasing the wage level has been singled out as the best solution out of the current dilemma facing the company, how it will be implemented will determine its success or failure. The following section outlines the time frame within which this alternative can be successfully implemented.

Immediate (zero to six months)

1. The management of the company should start by carrying out a survey or audit of employees’ wages in terms of categories. These are the upper level, middle level, and lower level or casual employees.
2. Within the 2^nd-4^th week, Addison Ventures should draft an increment plan for wages which should be based on skills and competencies of employees in various categories, levels of experience, ability, and compliance to the company’s rules and regulations.
3. During the 5^th week to a period of about 6 months, the management at Addison Ventures must have completed a full draft plan for increment ratios which should also consider the output of the company at the moment and near future.

Short Term (six months to one year)

1. Increments should begin in phases. For instance, overtime payments should be hiked by a given percentage.
2. The maximum number of hours an employee can work on a single day should also be stipulated.
3. The maximum working hours should not go beyond 10 hours per day.
4. The second phase should involve the introduction of fringe benefits such as travel allowances for employees who need transportation especially at odd hours.

Long Term (one year and above)

1. The monthly wage-earning should now be increased from the current level.
2. It is also important to evaluate changes in revenue for the company bearing in mind that this will be the ceiling upon which wage increments will be based upon.
3. Besides, the overall performance of the company should be audited regularly to ensure that the set objectives are fully achieved.
4. It is also pertinent for the management at Addison Ventures to expand its product portfolio as part and parcel of boosting growth in revenue.

References

Barnett, T., & Sean, V. (2004). Issue Contingencies and Marketers’ Recognition of Ethical Issues, Ethical Judgments, and Behavioral Intentions. Journal of Business Research, 57, 338–346.

Gillette C. (2007). Local redistribution, living wage ordinances, and judicial intervention. Northwestern University Law Review 3 (101): 1057-1122.

Murphy, P. E. (2010). The Relevance of Responsibility to Ethical Business Decisions. Journal of Business Ethics, 90(1), 245-252.

Trevino, K. & Brown, E. (2004). Managing to Be Ethical: Debunking Five Business Ethics Myths. Academy of Management Executive, 18, 69–81.

Wood, J. C. (2005). Peter F. Drucker: Critical evaluations in business and management: Volume 1. New York: Taylor & Francis Group.

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