Essentials of Business Ethics - Creating an Organization of High Integrity and Superior Performance - Essay Example

Running Head: Business and Ethics Name Institution Professor Course Date Business and Ethics People are required to make decisions or take a certain position in their everyday lives. In business, moral behavior and ethics always transcends throughout the organizations. Managers, employees and all stakeholders are expected to make their decisions by adhering to the set ethical standards of the company and what is considered as morally ‘right’ by the society. In everyday life, an individual is required to make a decision in a certain situation that may both involve and affect family members, friends, peers or society at large. In places of work, making business decisions that are ethical in a consistent manner is important to long-term viability and success of the organization. In this essay, I will describe a situation in my previous place of work in which I witness and experienced an action and decision being taken that was of moral gravity. Organizations are one of the places where people of diverse backgrounds can be found. All these people are expected to make decisions and take certain actions that are in tandem with the ethical standards of the organization. While I was working in a company that involved itself in manufacturing process, I witness and experienced a situation that involved my departmental manager and some top employees in the department which was of moral gravity. In this company, all departments are required to present their budgeted goals to the top management every fiscal year. The departmental manager was responsible for supervision of all of the employees in preparation of the budget of our department. Since the company mainly deals with manufacturing of household products, our responsibility in the department was to forecast how much sales would be achieved by the company at the end of the year. The forecasted sales prepared in our department are then transferred to the whole organizational budget. At this point, the budgeted goals of every department are transformed into entire organizational objective. While I was working for this company, I was required to make certain decisions in undertaking of my work. Due to work pressure, sometimes I almost took certain actions that were of moral gravity and of unethical standards but I never did. Ethical standards of the company guided me in not doing so as well as my moral and religious values that I cherish and uphold at all the times. My departmental manager and two senior employees padded the budget by setting low sales estimates which was unrealistically low. According to the budgeted sales that we submitted to them for approval before they submit to the top management, I found out that they changed some figures. Although their work entails scrutiny of the budget before they can approve it, they were nevertheless required by the organizational procedures and policies to send back the budgeted goals to us for any changes they deemed fit to be made. This never happen as the manager and the two senior employees submitted the departmental budget with the changed figures without input from the rest of the departmental employees. It is evident from this situation that companies have employees who are both ethical and unethical. In this case, the manager and two senior employees were unethical while the rest of us in the department were ethical in performance of our jobs. Organizations employ people who will bring unique jobs skills to its workforce. These individuals not only bring their job skills, but they also bring their ethics to the workplace. Collins (4) defined ethics as a set of principles that an individual uses in determining whether a certain action is either good or bad. Every stakeholder interaction in a company including owners, employees, suppliers, lenders and government officials is permeated by ethics. The decision and action that the manager and two senior employees took in changing the budgeted figures affected many stakeholders. First, the rest of the employees in the department were affected by this action as we felt that our inputs were of no significance since the top management in our department disregarded our contribution. I felt demoralized and dejected by this decision and so were the rest of my colleagues. Lenders are important to any business as they provide part of the resources for running of the organizations. This group of stakeholders was also affected by the manager’s action. Lenders use the organizational financial statements to gauge whether they can furnish a company with their money or not. Through padding of the budget by the senior personnel in the department, the financial performance of the company was therefore skewed hence judgment of the lenders are compromised. The top management, entire organizational employees and the public in general were also among the stakeholders that were affected by the manager’s action and decision. Businesses have the power in choosing the way they operate that can either profit the owners only or benefit the whole society. Working in an ethical manner means that businesses are undertaking its operations in way that is both honest and fair to all stakeholders. Moral awareness is crucial in identification of ethical issues at places of work (Gilliland, Steiner and Skarlicki 215). Managers and employees are more likely to engage themselves in unethical and illegal behaviors when ability to identify ethical problems is non-existent. The unethical behavior that the manager and the other two employees took occurred due to the fact the budgets in the organization was used as a yardstick of giving bonuses to the managers. The ‘right’ outcome in this situation is making and submission of the budget to the departmental manager by adhering to all the organizational procedures and policies. The ‘wrong’ outcome is the manipulation of the budgeted figures by the manager together with other two senior employees in total disregard of the company policies. Another ‘wrong’ outcome is failure by me and my colleagues to report this malpractice to the top management even though we had full knowledge of it. Decisions in a company in most cases are made in addressing a number of issues which include cost control, revenue growth or customers-specific issues. It is important for every decision-making making personnel to realize and consider the wider implications that their decisions have. In making of the decisions, individuals adhere to certain ethical principles. In this situation, the manager and the two senior employees took their action by adhering to ethical relativism principle. Ethical relativists reject the moral rules that are fixed (Dolgoff, Loewenberg and Harrington 44). The ethical decisions are justified on the basis of situation or context in which those decisions are made or on the basis of the resultant consequences. Moral authority in this case is determined by an individual or cultural customs, self-interest or religious principles. An action is considered to be morally right when it serves one’s self-interests and needs. The manager underestimated the sales figures to make the attainment of the budgeted goals relatively easier in order for him to receive the bonus at the end of the year. Ethical principles guides individuals in making their decisions but biases also affects the decision making. There are a number of weaknesses and biases that affects and prevent people from making the best decisions; and cognitive biases and weaknesses is one of them. It is characterized by tendency of making decisions on basis of self-interest (Trevino and Nelson 88). The action of the manager in underestimating the sales budget was not the best action made because of cognitive bias. Self-interest bias prevented the two senior employees and manager from submitting the budget without manipulating it. They were motivated by achievement of an outcome which was favorable to them at the expense of the entire organization. Another bias that prevented proper decision to be undertaken was social-harmony bias. The expectation of conformity and reward for support and agreement precipitated these three individuals in taking their action. Organizations can put mechanisms in place that can prevent and/or remedy the occurrence of biases and actions of moral gravity from happening. Ethical leadership is important in prevention of unethical behaviors. The top management should have ensured that the budget making process does not elicit any room for unethical behavior and actions of moral gravity from taking place. Furthermore, the link between bonuses reward and budget sales goals attainment should be analyzed further as it is a clear avenue where moral gravity actions occurred. An organization can identify the causes of unethical behavior which helps in preventing future occurrence. Promotion of positive behaviors of all organizational members by the management could have prevented sales budget manipulation by the departmental manager and the two senior employees. It also ensures that there is no future occurrence of the same behavior. Works Cited Collins, Denis. Essentials of Business Ethics: Creating an Organization of High Integrity and Superior Performance. Hoboken, N.J: John Wiley & Sons, 2009. Print. Dolgoff, Ralph, Frank M. Loewenberg, and Donna Harrington. Ethical Decisions for Social Work Practice. 8th ed. Belmont, CA: Thomson Brooks/Cole, 2009. Print. Gilliland, Stephen, Dirk Steiner, and Daniel Skarlicki. Eds. Managing Social and Ethical Issues in Organizations. Greenwich, CT: Information Age Pub. Inc, 2007. Print. Treviño, Linda K, and Katherine A. Nelson. Managing Business Ethics: Straight Talk About How to Do It Right. 5th ed. New York: John Wiley, 2011. Print. Read More