Ethical Theories in Business Organizations - Coursework Example

ETHICAL THEORIES IN BUSINESS ORGANIZATIONS By Student’s Name Code + Name of Course Professor/Tutor Institution City/State Date Ethical Theories in Business Organizations Ethics is defined as the discipline concerning moral obligation, moral duty of humans on what comprises what is termed as “good” or “bad.” Ethics can also be looked as a set of moral values or principles or a system or theory of moral values of people in different settings. It enables organizations to decide on when the action is right or wrong, and what constitutes morality or immorality. Business ethics or ethics in business is a facet, which considers the application of the ethical theories, discipline, or principles in different organizational settings. Business ethics cannot be looked at separately from the common the general ethical theories that relate with business ethics. Examples of employee-related issues, which need to be examined using the ethical theories, include situations where businesses are charged with breaching their employee’s moral obligations, or when workers of particular firms are being examined for misconduct. Thus, ethical theories such as normative ethics, utilitarianism, Kantianism, virtue ethics, etc. can be applied in business to manage the behaviour of employees. In this essay, the utilitarianism principle will be analysed in managing employee behaviour. Moreover, this essay will consider Kantianism as an alternative for management of employee behaviour. The theory of utilitarianism is arguably a useful ethical theory in business because it accords an objective perspective, which is not based on self-interest. The utilitarianism principle well-grounded as a decision-making model in business organizations. Philosophers John Stuart Mill and Jeremy Bentham espoused the utilitarianism principle during the nineteenth-century. The Utilitarian theory holds that moral behaviours are those, which generates “the greatest good for the greatest number” (Mill 1957, pg.6.). Similarly, to egoism, utilitarianism advocates adjudicating actions by their results. Therefore, it is the ends, which determine the goodness of an act and not the act itself (or actor’s intent). This is the reason why most utilitarian’s hold the ground that moral choices must be assessed by computing the net benefits of every present alternative action. In the utilitarian method to ethical logic, one stresses the utility, or the general amount of good, which might be generated by a decision or an action. For instance, the management of a company can decide to take certain decisions concerning their employees. They can do this by estimating how much good will be expected from the decision as well as the harm. If the good seems to outweigh the harm, the decision due to the employees may be considered as ethical according to the utilitarian principle. The utilitarian ethical theory is probably the most extensively understood and commonly used morality principle. In an organisational setting, utilitarianism primarily states that a decision regarding business conduct is appropriate if and only if that decision generates “the greatest good for the greatest number of persons” (Mill 1957, pg.9.). “Good” is normally defined as the net gains, which accrue to those entities affected by the decision. There are different factors, which influence individual ethical decision-making in the business environment. The utilitarian approach recommends ethical standards for employees and managers in the areas of common interests, individual goals, and efficiency. The model judges behaviour and decisions by their constancy with a fair, impartial, and equitable distribution of rewards and benefits and costs amongst groups or individuals. These qualities apply in organizations because of the interaction amongst people are bound to exist. In order for the business management to undertake suitable actions, there is need by the management to add up all costs and to compare them with the results, if the benefits surpass the costs, and then the decision may be regarded ethical (Trevino 1986, pg. 601). According to Trevino (1992, 445), Bentham failed to allow for differentiations in the quality of the ‘good. ‘According to his thinking the objective of Utilitarianism was to explain or justify normal views on morality. It can be affirmed that the utilitarian ethical strategy for Human Resource Management is more concerned with the ends or outcomes. Its aim is to increase profits and two methods are employed i.e. the business leader’s plans to attain the greatest benefit and the rules in the business for the workers. These strategies may generate anxiety in the personnel because the managerial viewpoint assumes that the individual right in terms of fairness or privacy contravenes on the benefits to the business. Utilitarianism considers the entire welfare of the organization as opposed to the welfare of an individual employee. For instance, an organization would endorse, which would increase the overall welfare of the organization even if one individual would be unfairly treated. However, this principle does not take the idea that all persons should be treated similarly. Research generally differentiates two variations of the principle of utilitarianism: rule utilitarianism and act utilitarianism. Act utilitarianism encompasses increasing benefits in relation to charges for a particular option that affect the behaviour of employees now (Valentine & Fleischman 2008, pg. 159). It pays attention to the action, which has been taken, examining it along the dimensions of whether the chosen action generates more good than bad results. Rule utilitarianism entails following rules established to get the highest disposable appropriate results (Velasquez 1998, pg. 10). It therefore examines whether the choice or option conforms to a rule, which seeks to augment the overall utility. Rule utilitarian organizations normally pay attention to the rules for acting as opposed to the individual activities themselves in determining the behaviour of their employees. For a rule utilitarian, an instruction is morally right when it gives more social good than any other optional rule. For act utilitarian’s, laws and rules are mere rules of thumb; rules determine right or wrong behaviour. Both of these variations have been applied in managing employees in the public policy context for dissemination of benefits or distribution of scarce resources but have been rarely used in Human Resource practice. For instance, electronic surveillance of workers to detect and prevent their `abuse' of electronic mail could be warranted in terms of the broader business benefit, but this may be at an unknown and significant cost to individual workers, both in terms of anxiety and stress over intrusion of personal privacy (Trevino 1992, pg. 456). The possible frequently applied use is utility analysis of assessment and selection methods, or cost benefits examination of interventions in training and development. However, even in these situations, the managerial perspective is predominant, as an individual's utility ‘right’ in terms of fairness or privacy is dependent on the gains to the entire organization. This has been the reason for the current compulsion of most organizations towards Human Resource auditing with its attention to the greatest gains for the highest number provides a foundation for a rationalisation of the utilitarianism policies (Valentine & Fleischman 2008, pg. 159). This utilitarian approach also includes what has been denoted to as cost-benefit analysis. By applying this, the costs and gains of an action, decision, or a policy are compared. Sometimes these can be computed in emotional, economic, human, or even social terms as regards to the demeanour of employees. A decision could be made, which considers only the persons who are directly influenced by it and not those who are affected indirectly. The utilitarian ethic is documented as the foundation for recent trend witnessed among firms to police employee individual habits such as tobacco and alcohol consumption on the job, and in some instances after hours because such demeanour affects the entire work place. Likewise, many firms argue that monitoring how workers spend their time on the Internet is essential to maintain the organization’s workplace productivity and ethical climate. If workers are visiting racist chat rooms, viewing pornographic sites, or spending days or hours shopping or trading online, the whole organization will suffer. In the Oregon state in the U.S., the utilitarian ethic was the center for the decision to extend Medicaid to 500,000 formerly ineligible recipients by objecting to pay for high-risk, high-cost procedures like bone marrow and liver transplants. Though a few individuals in need of these processes have died due to the state’s failure to pay, numerous people have gained from the medical services they would otherwise have been compelled to go without (Victor & Cullen 1988, pg. 101). Business leaders commonly embrace the utilitarian principle in solving ethical problems because it is compatible with classical business thinking. The reason for this is that this results-based ethical theory seeks to augment the good or happiness for business owners who wish to increase share price, maximize profit, or increase returns. If a business draws the wider conclusion that the highest good is equivalent to the greatest profitability and this situation generates the most gains for society, these real and act utilitarianism can be seen with ease as being both oriented to ensure optimum consequences that are philosophically compatible (Velasquez 1998, pg. 10). Another reason why business executives are so accepting of utilitarian reasoning lies in its elasticity in responding to different issues. Utilitarianism accommodates multifaceted situations as regards to employee behaviours in more absolute, more easily philosophical approaches. The issues considered in a utilitarian approach can be conveniently mixed from the short term to the long term or from monetary to non-monetary criteria. Whereas conflicting stakeholder claims can be identified, managers typically weigh shareholder or business owner goals linked with corporate profitability as more essential than the objectives of other groups including the community or its employees. A strong charm of the utilitarian method in analysing employee behaviour is its cost-benefit trait. Business managers constantly weigh the pros and cons of other managerial or economic actions. This method of solving business challenges is deep-rooted in the psyche of most managers. Business managers appreciate the idea that most utilitarians acknowledge that not all people will benefit from a certain action. The business owners also recognize that their business decisions must be constantly placed in the “win-lose” context. This means that the outcomes of a business action are rarely singular; instead, they are manifold and may “cut both segments.” Organizations, which monitor their employees, can be seen as policing in ensuring that stealing and misuse does not happen. Within the realm of the organization setting, the principle of utilitarianism supports employee monitoring in pursuing the “greatest good for the highest number” of employees (Trevino 1986, pg. 602). Firms must ensure that they maintain compliance with any laws and avoid theft and any kind of liabilities. The companies should also verify the resources and time workers may be using to maintain success. There are many costs that occur to organization because of unethical acts of financial and human resources. These include employee morale, a bad public image, and lawsuits against the organization. However, the utilitarianism ethical theory with the difficulty of predicting possible outcomes and the relative weights to be linked to diverse individual attributes within the organization. Managers who use the utilitarian approach in arriving at their decisions are needed to establish the outcome of all alternatives on all parties associated, and to select the one, which enhances the gratification of the biggest number (Victor & Cullen 1988, pg. 111). However, there is one criticism of this method is it is hard to accurately establish costs and benefits. Another difficulty is that the rights of the people comprising the minority may be disregarded. Other critics argue that utilitarianism is unreliable on the grounds that it usually accords the wrong ethical solution when assessing individual actions. An Alternative Ethical Theory in Managing Employee Behaviour The Kantian theory by Immanuel Kant is an alternative ethical theory in examining decision making as regards to employee’s conduct. The theory acknowledges that actions ensuing from desires cannot be free (Sullivan 1989, pg. 4). According to the Kantian theory, the only way to find freedom is through ‘sensible action. Additionally, that, which is necessitated by sense must be claimed of all people; thence, rational act cannot be based the wishes of one person, but must be done in tandem with something, which he or she can will to be a ‘universal law’ (Sullivan 1989, pg.4). The most typical contribution of Kant to ethics was his persistence that human’s actions have moral value only when the actions are done as a duty. The theory is applicable managing the behaviour of employees, which considers that they should act in duty in their endeavours at work. Kant initially introduced this concept as something approved by human beings’ mutual moral consciousness, which can be shown as an important attribute of a rational moral. Kant’s philosophy was equally in objection to those who perceive sympathetic or benevolent feelings as the foundation of morality. Kantian ethics is coined on his differentiation between hypothetical imperative and the categorical imperative. He referred any act grounded on wishes as a theoretical imperative: an instruction of reason, which applies only if it is desired. For instance, employees can choose honesty, so that other persons can reason well of them (Weber 1992, pg. 138). It is an imperative, which applies only when an individual wants people to think well of them. Kant affirmed that the instructions on morality ought to be a categorical imperative i.e. it must be applicable universally to all rational beings, irrespective of their feelings and wants. Kant's second formulation contends that employees in business associations should not be betrayed, used, or forced and that the business acts should be aligned so that they contribute in the improvement of human and moral rational capabilities. Given that nothing else apart from rationality is left to develop the moral law, the only way this law can apply is the universal concept of reason. Therefore, the major principle of the Kantian moral principle is "Act only on that maxim through which you can at the same time will that it should become a universal law" (Sullivan 1989, pg. 4). An example to demonstrate Kant's position is theft by customers, employees, and managers are a major challenge in business. In a situation where an employee is angry with his employer for some justified purpose, and therefore regards stealing from the firm, Could the maxim, which allowed stealing be a universal law? In this scenario, it cannot. This is due to the fact that the goods and services are in short supply and universal common ownership is difficult, the private property’s organization has developed. If a maxim that allowed stealing, were universal, there could lack reserved possession. If all individuals were at liberty to take from other people, then there would be no private property. Therefore, if the worker pinches from the employer, then the stealing act is morally wrong. The Kantian Theory is regarded as a right based framework for Human Resource Management. The principle advocates that what is right for one individual is right for everyone else, so it is essential that workers do onto other as the law of universality would do them. Moreover, this principle considers the principle of respect for individuals, in which they have to be considered as ends in them and not as “means to an end” (Wimbush & Shepard 1994, pg. 638). As a deontological ethical mechanism to business ethics, the principle lays its focus on duty, and this is a viewpoint, which links ethics to things, which are good in themselves. The Kantian theory proposes several rights, which concern issues that affect employees such as the fundamental right to safety and life for employees (Premeaux 2004, pg. 261). This theory provides a foundation for employee behaviour and their human rights to privacy. The theory also touches on the employee’s freedom of conscience as far as their behaviour is concerned. Additionally, it considers their and the freedom to speech. Presently, the rights-based approaches continue to be pertinent to human resource management in different areas, which have concern with the selection of the personnel, equality, occupational testing, employee development, working schedules, etc. Nevertheless, in general at the human resource level, these approaches are not being entirely applied because they are recognized as not practical and not lucrative for the organization (Rachels 1999, pg. 10). In conclusion, ethics comprises what is termed as “good” or “bad. Business ethics on the other hand is a facet, which considers the application of the ethical theories, discipline, or principles in different organizational settings. Different employee-related issues, which need to be examined using the ethical theories, include situations where businesses are charged with breaching their employee’s moral obligations, or when workers of particular firms are being examined for misconduct. The theory of utilitarianism is arguably a useful ethical theory in business because it accords an objective perspective, which is not based on self-interest and it holds that moral behaviours are those, which generates “the greatest good for the greatest number.” This utilitarian approach also includes what has been denoted to as cost-benefit analysis. By applying this, the costs and gains of an action, decision, or a policy are compared. Kantian ’s typical influence to ethics was his insistence that human acts have moral worth only when the actions are done as duty. Therefore, the ultimate prescribed principle of Kantian morality is persons to act only on the maxim that allows them will that it ought to be a universal law. This principle considers the principle of respect for individuals, in which they have to be considered as ends in themselves and not as the way to an end.” Bibliography Mill, J, S 1957. Utilitarianism. Indianapolis: Bobbs-Merrill. 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Victor, B & Cullen, J 1988. ‘The Organizational Bases of Ethical Work Climates.’ Administrative Science Quarterly, vol. 33, no.11, pp. 101-125. Weber, J 1992, ‘Scenarios in Business Ethics Research: Review, Critical Assessment, and Recommendations.’ Business Ethics Quarterly, vol. 2, no. 2, pp. 137-160. Wimbush, J, C & Shepard, J 1994, ‘Toward An Understanding of Ethical Climate: Its Relationship to Ethical Behavior and Supervisory Influence.’ Journal of Business Ethics, vol. 7, no. 13, pp. 637-647. Read More