Business Ethics of Hardie Industries - Case Study Example

Name Professor’s Name Course Name and Code Date Business Ethics: Hardie Industries Case Study Introduction Businesses have to operate in an ethical manner. The ethical manner has to incorporate numerous fundamentals and operational requirements. However, some companies and businesses do not observe the requirements and directives of ethical operation including informing stakeholders on threats posed by their respective operations. James Hardie is an example of a business that did not consider the ethical requirements in accomplishing their objectives and aims. Hardie contravened numerous ethical requirements; for example, Hardie Industries did not inform the workers about the risks of asbestos. In addition, Hardie did not provide protective materials and equipment while appropriate labeling was not included on asbestos products until 1977, and took a longer period until Hardie ceased production of asbestos products. Hardie did not compensate the employees without coercion from different government agencies including courts and regulatory bodies and to avoid compensating; Hardie relocated the headquarters to Netherlands to avoid compensating or improving the compensation funding. Furthermore, Hardie Industries claimed CEO Peter Macdonald had resigned, but the CEO continued receiving benefits including the send-off package of more than $8.8 million. The management of the Hardie refused to take personal and professional responsibility. Hardie Industries contravened numerous regulations, and legal legislative includes Corporations Act. Industries are required to consider the impact of their actions and decisions to the wider society and community. In analyzing the Hardie ethical concerns, ethical theories play an important. The theories enable identification of the unethical behaviors, and how some theorist’s views ethical behaviors and actions. The theories employed include utilitarianism, Kantian deontology, justice, rights, and normative ethical relativism. Utilitarianism Utilitarianism is a form of consequentialism because it depends on the results of actions or consequences of actions, policies or even laws that determines whether they are right or wrong, good or bad. Utilitarianism requires choosing the option that maximizes utility (Basu and Tapan 361). In utilizing the theory, it is important to know what things are good and bad, whether the actions are made wrong or right based on their respective consequences and who’s good should be targeted or maximizes good. Answering these questions enables identification of the appropriate action and the ethical perspective of a given decision. Utilitarianism can be further divided into Act Utilitarianism and Rule Utilitarianism. Act utilitarianism looks are individual act consequences and calculate the utility of each act performed while Rule utilitarianism premises the decision on consequences of a rule that has to be followed and calculates the utility based on the utility of rejecting or accepting the rule. In the case of Hardie, analysis of the ethical scenarios raises numerous issues associated with utilitarianism. The aim of the company is to generate income, but it is not advisable to generate income while other stakeholders suffer. Based on the Act utilitarianism, exposing the employees to asbestos raises health and safety concerns, but Hardie Industries did not consider the consequences even though numerous information regarding the threats of asbestos. Based on Rule utilitarianism, the rules on health and safety exist where companies are required to protect their employees and provide employees with clear information regarding the exposures and threats at work. The compensation was also important, but Hardie created hurdles meaning the employees utilized numerous approaches to receive the compensation. The compensation fund was discussed and accepted, but Hardie refused through providing minimal funding and resources. In addition, utilitarianism theory seeks to maximize utility through determining who benefits (Basu and Tapan 359). In the current scenario, Hardie needs to generate additional income while the employees require compensation based on the exposure. Additional income can be seen as an individual benefit which is less compared with supporting the employees which target a larger community. For example, the employees’ medical expenses are contributed by the community rather than Hardie, which has generated high income, should have contributed. Utilitarianism theory requires firms to protect their respective stakeholders through provision of information regarding the products and weighing the significance of a decision against the wider stakeholders’ requirements. For example, accepting the health and safety issues associated with asbestos would have created an environment that supports an understanding of compensating or assisting the different stakeholders. However, the continuous debates and arguments are not appropriate for the stakeholders. Kantian Deontology Kantian deontological ethical concepts address the reason behind a decision or action. The reason assists in discovering the right moral principles, and the reason has to be objective. For example, happiness is not the highest good rather the reason behind the action. The good should act from duty rather than conforming to duty. Thus, the intention behind any action rather than consequences is what Kantian advocates (Christie, Louis and William 56). The categorical imperative is used to determine the ethics and is a composite law that has three separate parts. The three are universalisable e.g. can be made consistently (tell the truth, respect rational humans, and autonomy of rational beings. Lying is an example of a morally wrong thing because it is not universalisable acceptable. In general, if an action is morally correct for a situation, it should, therefore, be morally correct in other situations to accomplish the requirements of consistently universalized. The Kantian perspective presents a clear analysis of the reason rather than the consequences. The reasons should be acceptable even if applied to a different context. Hardie relocation of the head office and later refusing to fund the compensation fund is against the moral reasoning because the outcome is not important but the action. The action of relocation is to avoid Hardie from compensating the employees and also to create legal challenges because it operates from a foreign country (Christie, Louis and William 55). In addition, Hardie understood the asbestos created health and safety concerns but continued to utilize the chemicals without informing the different stakeholders. Putting information on the products and informing other stakeholders and taking corrective actions were the appropriate actions. However, Hardie lied and hid the information, and also lied and move the head offices, and also lied on the resignation of Hardie’s CEO raising numerous moral concerns. Hardie should not lie but present the information and discuss the way forward. Hardie is not within the moral and ethical definition of upholding their respective actions because there are numerous instances of poor actions, which are not universalisable acceptable. Kantian deontology requires companies to review their actions/reasons. The actions define the consequences, but consequences are not important. For example, companies have to consider the universalisable, respect and autonomy in decision making. Hardie contravened numerous processes because of lying and creating hurdles preventing implementation of stakeholder requirements. Hence, firms have to analyze the reasons/actions because making a decision to incorporate aspects of ethical requirements. Justice Theory Justice perspective considers the ethical behavior has been fair and impartial in treating stakeholders according to guiding standards and rules. Five types of justice exist which are compensatory justice that targets compensation for past harm or injustice; retributive justice that results in the imposition of punishments to wrong-doers; procedural justice which discusses the fair decision, commutative justice addresses transactions and distributive justice that targets fair distribution of society’s burdens and benefits. Justice theory addresses numerous ethical considerations when it comes to operations of the business (Schmidt and Ann 13). For example, compensatory justice targets the way in which individuals are compensated because of the shortcomings of a firm. However, procedural justice is integral because it defines the steps and strategies employed in arriving at the given conclusion. In addition, retributive justice addresses the shortcomings and actors of the shortcomings in causing unethical issues. Rawls also addresses distributive justice through advocating for universal, rational and respect, which to some extent borrowed from Kantian. Rawls state that all the people are the same so, inequality should not be acceptable. Libertarian view focuses in the acquisition process. Justice perspective and Rawls discusses the distributive justice where decisions made should be universal, rational and incorporate respect. Hardie understanding on the threats of their actions and the requirements of compensation should have proceeded and compensated the stakeholders. The reason is that Hardie had generated huge income and understood the treats of the problems. It is supported by the compensatory justice in which compensation is important for past injustice and harm but Hardie, to some extent, had refused to compensate the people (Schmidt and Ann 27). The procedural justice and retributive justice also address the concerns and shortcomings of Hardie in addressing the requirements of the different stakeholders. Hardie shortcomings should include penalization and require Hardie to accept their shortcomings in managing labor force and production purposes. According to justice theory, a firm should create mechanisms and modalities to address the shortcomings of the firm. It includes adhering to the regulations and also imposing disciplinary actions to address the problem. In addition, effective compensation mechanism is appropriate to address harms and other forms of injustices visited on the stakeholders. Hence, the firms have to address the consequences of their respective actions. Rights Theory Right is something that an individual is entitled. The right of an individual gives an obligation to a third party to treat the individual appropriately. Right, can be negative or positive depending on the circumstances. A negative right is to be left alone without disturbance while positive rights are the entitlement to be given to an individual based on something done (Donnelly 43). For example, a negative right is freedom of speech while positive rights are welfare rights. Rights are important in fulfilling stakeholder requirements but defining rights based on different scenarios is important in arriving at appropriate conclusions. Hardie was supposed to treat the employees in the right manner through the provision of medical assistance, and to allow the employees to work in an environment that has effective health and safety structures. In addition, Hardie should have compensated the employees without numerous debates and court cases because evidence indicates Hardie caused the medical problems (Donnelly 71). It is the right of the employees to be compensated and also the right of Hardie is to create a good working environment that considers the numerous requirements of the employees and other stakeholders. The right theory requires the stakeholders to capitalize on their respective rights. Each has a right and responsibility. The right of the employees is to work in a conducive environment while the obligation of Hardie is to provide the conducive environment. It is imperative for Hardie to give their stakeholders their inherent rights including the right to compensation due to shortcomings. Normative Ethical Relativism Normative ethical relativism states that there is no universally valid moral/ethical principle. It states that moral wrongness and rightness of actions differs from culture to culture, and there are not definite universal standards. Each culture is required to establish principles and values that guide moral framework (Dion 242). Therefore, each culture will make its own ethical and moral rules. The current society is requiring the stakeholders to collaborate to achieve good for each other. The society has defined rules on the way organizations have to operate, and Hardie lack of integration of the processes and regulations creates ethical challenges. Therefore, Hardie should champion the widely held principles of determining the righteous or wrongness of an action about the widely held assumptions/conditions. Conclusion Numerous ethical theories exist and each theory complements or present a different view on an issue. Hardie Industries have created numerous ethical concerns because the company did not integrate safety and health requirements, did not adhere to legislative and regulatory directives creates hurdles in implementing compensation regime and continued to lie about the status of the CEO and other internal processes. Utilitarianism theory discusses the consequences of an action, and based on the actions of Hardie; it is evident that most of the decisions made are against the ethical framework. The other theories including Kantian, rights, justice, and normative ethical relativism analyzes the actions without considering the wider impact of the consequences because the consequences can be viewed through different lenses. For example, the justice theory aims to address the requirements of compensation and distributive justice in the decision making an approach. The rights theory also states the right of an individual, which includes the right to compensation based on the shortcoming of an entity. Even though numerous theories exist, the theories indicate that Hardie did not uphold the requirements of ethics in fulfilling its obligations. Hardie should understand the challenges the employees are facing and create frameworks to advance the requirements of the employees and other stakeholders. Waiting for the death of most of the employees to commence compensation strategy is inappropriate because the employees would not benefit directly. Works Cited Basu, Kaushik, and Tapan Mitra. "Utilitarianism for infinite utility streams: a new welfare criterion and its axiomatic characterization." Journal of Economic Theory 133.1 (2007): 350-373. Christie, Timothy, Louis Groarke, and William Sweet. "Virtue ethics as an alternative to deontological and consequential reasoning in the harm reduction debate." International Journal of Drug Policy 19.1 (2008): 52-58. Dion, Michel. "Corruption and ethical relativism: what is at stake?" Journal of Financial Crime 17.2 (2010): 240-250. Donnelly, Jack. Universal human rights in theory and practice. Cornell: Cornell University Press, 2013. Schmidt, Peter, and Ann D. Witte. An economic analysis of crime and justice: Theory, methods, and applications. Chicago: Elsevier, 2013. Print. Read More

In the case of Hardie, analysis of the ethical scenarios raises numerous issues associated with utilitarianism. The aim of the company is to generate income, but it is not advisable to generate income while other stakeholders suffer. Based on the Act utilitarianism, exposing the employees to asbestos raises health and safety concerns, but Hardie Industries did not consider the consequences even though numerous information regarding the threats of asbestos. Based on Rule utilitarianism, the rules on health and safety exist where companies are required to protect their employees and provide employees with clear information regarding the exposures and threats at work.

The compensation was also important, but Hardie created hurdles meaning the employees utilized numerous approaches to receive the compensation. The compensation fund was discussed and accepted, but Hardie refused through providing minimal funding and resources. In addition, utilitarianism theory seeks to maximize utility through determining who benefits (Basu and Tapan 359). In the current scenario, Hardie needs to generate additional income while the employees require compensation based on the exposure.

Additional income can be seen as an individual benefit which is less compared with supporting the employees which target a larger community. For example, the employees’ medical expenses are contributed by the community rather than Hardie, which has generated high income, should have contributed. Utilitarianism theory requires firms to protect their respective stakeholders through provision of information regarding the products and weighing the significance of a decision against the wider stakeholders’ requirements.

For example, accepting the health and safety issues associated with asbestos would have created an environment that supports an understanding of compensating or assisting the different stakeholders. However, the continuous debates and arguments are not appropriate for the stakeholders. Kantian Deontology Kantian deontological ethical concepts address the reason behind a decision or action. The reason assists in discovering the right moral principles, and the reason has to be objective. For example, happiness is not the highest good rather the reason behind the action.

The good should act from duty rather than conforming to duty. Thus, the intention behind any action rather than consequences is what Kantian advocates (Christie, Louis and William 56). The categorical imperative is used to determine the ethics and is a composite law that has three separate parts. The three are universalisable e.g. can be made consistently (tell the truth, respect rational humans, and autonomy of rational beings. Lying is an example of a morally wrong thing because it is not universalisable acceptable.

In general, if an action is morally correct for a situation, it should, therefore, be morally correct in other situations to accomplish the requirements of consistently universalized. The Kantian perspective presents a clear analysis of the reason rather than the consequences. The reasons should be acceptable even if applied to a different context. Hardie relocation of the head office and later refusing to fund the compensation fund is against the moral reasoning because the outcome is not important but the action.

The action of relocation is to avoid Hardie from compensating the employees and also to create legal challenges because it operates from a foreign country (Christie, Louis and William 55). In addition, Hardie understood the asbestos created health and safety concerns but continued to utilize the chemicals without informing the different stakeholders. Putting information on the products and informing other stakeholders and taking corrective actions were the appropriate actions. However, Hardie lied and hid the information, and also lied and move the head offices, and also lied on the resignation of Hardie’s CEO raising numerous moral concerns.

Hardie should not lie but present the information and discuss the way forward.

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