Leadership Cases Analyzing: Companies Ethics

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Table of Contents

Abstract
Case 1
Case 2
Case 3

Abstract

This paper reviews the ethics of three companies as indicated in three textbook cases. In the first case, Joe’s choices are reviewed based on the deontological and teleological perspectives of ethics. The review also indicates instances of egoism and altruism in Joe’s options. The paper further identifies the pressures that Joe faced regarding being honest while seeking solutions to the challenges facing his company. The second case involves an organization that is differing from its lawyers on whether external safety audits are good for the company.

The paper identifies the moral philosophy and the ethical perspective held by the company and indicates the reasons why PPI and its lawyers have conflicting ethical perspectives regarding the external safety audit issue. This paper also re-examines a proposal given to David by a professional employer organization (PEO). The paper indicates the role that ethics should have played when PEO was writing the proposal. It also provides an assessment of the ethics involved in PEO’s actions towards David.

Case 1

Negotiating for an exchange where Joe would give up the company’s control for some financial exchange seems like the most ethical choice in case 1. Although this choice would reduce Joe’s control over the company, it would salvage the financial situation therein, and all stakeholders, including employees, suppliers, customers, and financiers would benefit when the company is restructured. Choices are self-serving, and as such go against the requirement of serving others. Service to others is a basic tenet in ethical leaders. For example, hiring managers and giving them the responsibility of turning the company around without fully compensating them, would be tantamount to wanting the best from the managers, and not willing to compensate them for their input in the company. The foregoing would go against the requirement of serving others, where a leader is obligated to empower his subordinates. The third alternative suggests that Joe can hire turnaround management without fully disclosing to them the real situation in the company. This alternative would be dishonest at best, and as such, cannot meet the requirements of ethics. Notably, ethical leaders can provide appropriate disclosures to their subordinates in specific situations, but this does not justify outright deception. Telling the new managers that the firm is performing well while it is not, would be dishonest and hence unethical.
Egoism in leadership is evident in cases where the leader makes decisions that benefit him the most. In case 1, Joe may choose the third alternative, which is deceptive, but if it works, would make him retain the company’s control. Additionally, he would have succeeded in turning the company’s financial performance for the better. Altruism on the other hand is evident in decisions that provide the most benefit to other people besides the leader. In the three options in case 5.1, the first option is most reflective of altruism. Specifically, it appears that Joe’s decision would be motivated by the need to salvage the company. Salvaging the company would enable the financiers, employees, and customers to continue being served (and serving) the company.
The first option in Case 1 falls within the teleological theory of ethics and would provide the greatest good for the greatest number of people. In addition to providing the financial capital needed to turn the company around, the first option would create room for hiring new employees. Such employees would be hired on prevailing market pay rates and/or individual effort. The foregoing is unlike the second option, where Joe would ask turnaround managers to work without the benefit of competitive salaries. This would be an egoistic move on Joe’s part because it would enable him to turn the company around, but he would end up benefiting the most from the recovery.
Joe faces pressure regarding honesty because although he desires to retain the control of the company, ethical decision-making requirements do not favor this position. Among the three choices provided in case 1, only the second option gives Joe the chance of telling the truth and retaining management control. However, choosing this option would expose Joe to the risk of having difficulties finding and recruiting competent managers, and this would delay his plans to turn the company’s financial performance around. If he needs a fast turnaround for the company, it seems he would have to negotiate with financial institutions, which would provide him the necessary capital. However, such an approach would force him to give up the company’s control. The other option requires Joe to deceive competent managers to take up positions in the company, but this would be an unethical approach to retaining the company’s control.

Case 2

Perfect Plastics Incorporated (PPI) has a moral philosophy, which is ingrained in its approach to guarantee safe working conditions in the company. While inviting outside auditors may expose the company’s safety practices to outsiders, the policy of inviting such auditors annually guarantees the company that any safety occupational areas that need improvement are identified. Consequently, PPI has been able to embrace annual improvements, hence ensuring that the company has a safe work environment.
The teleological theory of ethics seems best suited to describe PPI’s approach because the company seems determined to pursue what it considers as the best practice in ensuring the safety of its workers. Although the company is aware of the possible consequences of inviting external auditors to audit its safety in the workplace, such consequences do not dissuade it from inviting them over and over again. It appears that the company is motivated by the desirable outcomes, which are evident from the good safety record that the company has upheld over the years. Arguably, the company must balance the interest of its owners with the interest of its employees. Additionally, it can be argued that PPI has the moral obligation to choose a safety audit system that does not expose it to financial losses should litigation be filed against it in the future. However, it seems the company judges the rightness of its current audit approach based on the absence of major injuries in the workplace. Arguably, PPI considers the annual safety audits as morally obligatory, and this means that the company ignores (or does not consider as important) the risk that such external audits more expose it to increased risk should a case be filed against the company. In other words, the company does not seem perturbed by the consequences of such external audits; rather, it is motivated by the safer working environment and the moral obligations guiding their decision making.
Regarding safety issues, the management at PPI seems to see its responsibility as being related to making decisions that give employees the best. Arguably, managers have a responsibility to balance what is good for employees, shareholders, and the company at large. If they were to acquire such a balance, the management at PPI would most likely listen to its lawyers. The lawyers seem to think that external audits expose the company to a risk of losing any litigation that may be filed against it in the future. The lawyers seem to have a duty-bound responsibility. They specifically seem to believe that they must advise the management accordingly based on possible future consequences. The foregoing seems to fit within the deontological ethics theory, which indicates the need to do the right thing. Doing the right thing is a relative term, which in the case of the lawyers, could mean that the management is erring by failing to consider the future consequences of using external workplace safety auditors.
The ethics of PPI and its lawyers appear to conflict because the two have different perspectives about what is good for the company. While PPI gauges the rightness of its actions based on immediate (and perhaps past) results, its lawyers seem to be forward-looking. The lawyers seem to concentrate too much on the need to adopt an auditing approach that mitigates future consequences should a litigant file a case against the company. PPI on the other hand seems to be riding on the conviction that the audit is doing the right thing for most people (i.e. by ensuring the workplace is safe), and does not seem to give enough consideration to the likelihood that doing right may not be ideal for all involved. The lawyers seem to work with the deontological theory of ethics, while PPI seems to uphold the teleological theory of ethics.

Case 3

In writing a proposal similar to what was written in Case 3, ethics have a major role to play in that, the professional employer organization (PEO) should do what is good and right. During the first drafting of the proposal, the PEO arguably did not act ethically because, although it is indicated it has other clients in the printing industry, it gave David a quotation that contained prices that were too high. Ethically, although David had not started a company yet, the PEO was under obligation to do some research about start-up firms in the printing industry, and base its proposal on the findings thereof. Ethics should also be at play when reviewing a proposal because as is evident from Case 3, the prices for human resource services were overestimated, and even when this anomaly was discovered, the corrections that the PEO made put David at a disadvantage. The foregoing argument is informed by the fact that the prices offered to David were still higher than the average prices in the industry. Arguably, the PEO should have tried to make a similar amount of money that it makes from other start-up businesses in the printing industry when handling David’s case. Ethically, the foregoing would have related to the principles of equal justice, where there is equal share or treatment to people/entities of similar nature is a central tenet. Given a chance to be in PEO’s management, this writer would have advocated for a fair review of David’s proposal. To resolve the ethical dilemma involving the sales person who handled David’s case, this writer would have sought the collective opinion of all sales people in the company, and later insist on the ethical need of giving David a fair proposal and quotation.
From a deontological perspective, the ethics at PEO can be described as relatively unsatisfactory, considering that it had a duty to provide a fair proposal based on its experience making such proposals. PEO failed in this aspect and once it had discovered the overestimation of prices in David’s proposal, PEO had a duty to rectify the prices. It did not and instead, it chose to mitigate the consequences that such rectification would have on the motivation of its sales people. From a teleological perspective, the ethics at PEO can also be described as unsatisfactory. First, and although David signed the contract, and paid PEO for their services, PEO took advantage of the trust he placed on them and as such, can be said to have been deceptive towards him. Teleological ethics emphasize the need for desirable outcomes for people, and from David’s case, it appears that he got an overpriced deal. PEO might have gotten desirable consequences for the salesperson who handled David’s proposal, but it would appear that the company failed to consider the precedent it set for other sales people working in the company. In the end, the company may end up getting undesirable consequences, when salespeople insist that PEO should find a middle ground for every over-priced quotation. A teleological perspective of ethics would also argue that an overpriced quotation given to David led to undesirable consequences, which would become manifest in high operating costs and low profits in David’s firm.
The PEO’s actions towards David reveal that its ethical principles of respect could do with some improvement. The fact that PEO gave David an overpriced quotation knowingly, let him sign it, and even charged him for their services shows that the company was not sensitive to his needs and interests, something that could be considered as an act of disrespect. PEO arguably upheld the ethical principle of service when handling David’s case, in that they provided a proposal as requested by David. The only contention to the service aspect is that the proposal was not fair. As such, PEO did not uphold the justice principle since it did not give a fair quotation and failed the honesty test when it did not disclose the entire truth about prevailing market rates to David. The community principle in PEO was skewed because, much as the company considered the interest of its salespeople, it did not consider the interest of David as the consumer of services provided by PEO.
Like David, I would assess PEO’s actions as completely unethical; they were deceptive and did not handle their professional responsibility to research the market well, before writing a proposal. As part of PEO’s management, I would assess the company’s ethics as wanting, especially since such wrongdoing would paint the company as a compromised performer hence exposing it to possible loss-making. As a salesperson, I would assess PEO’s ethics as needing improvement, based on the understanding that, David’s case would possibly leak to the public (e.g. through litigation filed by David). Such information would have a negative implication on PEO, and that would affect the public willingness to purchase PEO’s services. As a member of the printing industry, I would assess PEO’s ethics as poor based on the argument that the company betrayed the trust that business people who purchase its services, have towards it.

From resolving these cases, one learns that ethics are essential to running a successful business since it determines the quality of relations that a business has with its customers, employees, financiers, and other stakeholders.

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Leadership Cases Analyzing: Companies Ethics

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