Ethics In The Workplace - Essay Example

Ethics In The Workplace A Case Study on the Pinto Car Model of Ford Motors Co. In 1978, Ford Motor Co. faced a problem that would result to loss for the company. In person of its leader, Lee Iacocca, an ethical decision must be made that would likely affect the lives of the organization and its consumers. In the process, the management decisions would affect the standing of the company on the market and either way, the result is inevitable – a negative streak on Ford’s name. The symptoms of the problem were manifested by the several cases filed against Ford Motor Co. as a result of fatalities and death due to rear-end collisions that sets the Pinto Model on fires. These are due to the unsafe design of the Pinto’s fuel tank, which were known to the company’s engineering when they conducted a trial or test collision of said car model. Yet still, the management wanted to release the Pinto car to the market despite glitches on the car’s structure. They had identified alternative solutions in improving the design but did not implement it due to the additional $11 cost on its building expense. In process, this would mean higher cost of the Pinto car, which would be against Iacocca’s set goal of “the limits of 2000”, meaning cost would not exceed $2000 and would not weight more that 2000 pounds. Iacocca set the said goal in the assumption that Pinto buyers are extremely price conscious. The most severe symptom of the problem was when charges of reckless homicide against Ford Motor Co. were filed by its consumers. Assessing the situation, the root problem can be linked to several actual problems and these are 1) Ford leader’s response to rigid competition in the car market, 2) Ethical values of the leaders of Ford that affects their decisions, 3) Lack of Total Quality Management (TQM) and 4) Lack of strict guidelines by the government during 1968 to 1977 that would protect the consumers or general public. One of Ford leaders’ responsibilities is to maintain the competitiveness of the company to the market and its employees. During the stringent competition in motor industry, Iacocca may have thought or felt the stress in maintaining Ford’s being on the forefront of motor industry market. In his decisions, he needed to think of creative ways of producing a car model that would exceed the cars released by competing company like the Germans that cost less both for the buyers and Ford, and would benefit the largest number of people. His decision was consistent with business decisions called Utilitarian theory, where costs and benefits can be calculated in dollars and this framework are guided by ethical decisions of generating greatest benefits for the largest number of people (Daft 1992). Iacocca was described as a type of leader who understood that successful leaders have to maintain an attitude of sacrifice in order to turn around an organization (Maxwell 1998). However, in this instance, the question was what would you sacrifice – Loss of the Company that would affect people working within it or Loss of lives of your consumers? Would you value profit more than the integrity of the company? The same case happened to Lear Jet designed by Bill Lear. In 1964, the first Lear Jet was released to the market. But as a result of three crashes, despite passing the inspection, Bill Lear put his life in danger by testing it by himself just to find out the real cause of technical problems. He was able to determine the problem as electrical failure and he grounded 150 planes for the safety of his clients. Grounding the planes cost Lear a lot of money and planted seeds of doubt to potential customers but he was willing to risk his success, his fortune, and life to ensure safety of his customer – but not his integrity (Maxwell 1999). When Ford Motor decided to launch the Pinto in just over two (2) years (standard production time is three and a half year), by cutting on the production time they sacrificed the quality of the product. As a result, when they discovered through crash testing that the Pinto’s fuel tank often ruptured during rear-end impact, it was too costly to do redesigning. What the company lack was the Total Quality Management (TQM), which is adopted and put into work only in carefully planned manner and usually takes three years to ten for full adoption, depending on where the organization is at the beginning of their business process (Barrett 1996). Accordingly, a true TQM company is not concerned only with what is going on inside its offices, plants, and laboratories but its attention is toward what is going on in the outside world, in the lives and families of its customers, the suppliers the community and its institutions, in the government and the market. Ford can be characterized as more of inward-looking company, concern of being number one in the market and too focused in the battle with foreign suppliers. If they had been more of an outward-looking company and if there had been TQM during the design of Pinto model, this incident would have not happened, because TQM involve prevention and detection. The Lack of strict implementation of the guidelines established by Federal Motor Vehicle Safety Standard 301, as proposed by the National Highway Traffic Safety Administration (NHTSA) also contributed to the problem. During 1968, if said guidelines were fully enforced, the value of human life would have not been sacrificed. It could have stopped Ford from releasing Pinto car whatever it may cost. As a result of the presented problems, the unresolved issues are the corporate social responsibilities, ethical decision making of leaders of Ford, and the proper conduct of business. The decision of releasing Pinto affected not only the lives of the customers but also the people within Ford Motor Co. The loss as a result of legal trial was a taint in the name of the company and loss of customers trust and lives of those who met accident while riding the Pinto. A good result, if one would consider it would be the enforcement of NHTSA’s set guidelines though it may be late for the lost of human lives. If the management have considered alternative solutions like releasing the Pinto later than what was targeted, loss would not be so big. Ford may not be able to compete immediately and may not gain much share of the market but a better product – safer, would have sell more and in the long run would meet their goal of being competitive in the market. Also, there would lesser lives lost if Pinto model were safer. Not cutting on the production process would not need redesigning and a better market share would have been established and the name of Ford would have not been tainted, which resulted to loss of potential buyers. Quality would have not been sacrificed. Another alternative solution would be the recall of sold Pinto cars. If Ford Motor recalled their Pinto cars, the management may have lost significant amount but not the integrity of the company. The integrity is much more of a bed-rock assurance of getting a bigger market share than profit because it establishes the trust of customers and the character of the company would be of one that is concerned with the welfare of its users and the public in general. What better advertisement than making Ford a company that cares for the need of its consumers as well as their safety. The recall of Pinto would have result to loss in company’s expense but it is less compared to the loss of integrity and loss of lives. The company could have explained their motive for the recall and could also have established their integrity by doing so. Admitting to public that the initial design needed to be fixed and by giving them a better product, though it may be above the original cost would be safer and could gain a fair share of the market. On the other hand, a late release of the Pinto would mean that Ford Motor would be left behind in market race or standing against foreign companies. But a continuous strong promotion of the product within a year may have established the Pinto as a better car compared to those released by competing manufacturers. This, in the long run would lead Ford to catch-up or even excel in the market. Manufacturers and companies have relevant obligations to the consumers. And this has been acknowledged now by more companies as evident in the occurrence of new business practices like some companies included in their mission-vision statement their concern for their customers and another is the practice of TQM. The corporate culture and values reflects the kind of products that a company releases to the market. The customers know when a company is concern with their clients. The success of the company is dictated by its patrons. Work Cited Page Barrett, Derm. The Portable Guide to Effective Management. Singapore: World Executive’s Digest Limited. 1996. Daft, Richard L. Organization Theory and Design. Singapore: Info Access & Distribution Pte Ltd. 1992 Maxwell, John C. The 21 Irrefutable Laws of Leadership. Nashville, Tennesee: Thomas Nelson, Inc. 1998 Maxwell, John C. The 21 Indispensable Qualities of A Leader. Nashville, Tenessee: Thomas Nelson Publisher. 1999. Read More