Managerial Ethics - Book Report/Review Example

We investigate the ethical issues raised in this article and analyze them in the light of business ethics theory. The approaches analyzed in this paper would be the Kantian and Utilitarian ethics. The first ethical issue raised is at the organization level. The nursing home investigated, "Habana," was recently acquired by a private investment firm. Within a period of few months, the nursing home was showing good profit margins. However, these profits were achieved by severe cost cutting measures in all operations of the home.

Within months, the number of clinically registered staff was reduced to half, budgets for nursing supplies, resident activities, and other services were reduced. The maintenance of the home itself was completely neglected, so much so that there was a malfunctioning fire door, unhygienic kitchens and impaired medical support equipment. Furthermore, the onus of responsibility in the event of any mishap - quite frequent in the investment group owned firms - did not lay with the investment firm. The structure of the firm was designed so that no single firm could be held directly responsible for payment of compensation.

The private investment firms invested in this industry solely for the purpose of making profits, regardless of its consequences on the stakeholders, customer or society. This type of management is called immoral management (Reidel). This type of management is run solely for the profit motive, without any legal, ethical, philanthropic responsibility or only token consideration of them. Management is completely selfish and does not think beyond company gains (Reidel). The legal standards are just barriers, which need to be overcome in the pursuit of success.

There is no concern for the customers or employees. This is one ethical issue raised by the article. Another issue, brought forth in the article, is on a personal level. The issue deals with the insensitiveness of the managers of the investment firms, which invest in such core healthcare sector, and the employees of the nursing homes as well, who work only as employees, and hence, ignore the plight of the sick and the elderly. The firms, which are investing in these nursing homes, do not have any interest or experience in this sector.

The managers simply focus on increasing profits of the firm without regard to the human lives involved in the industry. Soon after acquiring a nursing home, they cuts costs, even essential ones, layoff people, and increase profits. Then they resell the "profit making" homes again at a considerable profit. They have made billions of dollars in a very short time with this strategy. The managers ignore any issue that is brought to their attention by the staff or customers/residents. These managers are thus, indulging in immoral or unethical business practices.

Another ethical issue is the reduction in legal responsibilities of the private investment firms through creation of complex corporate structures, and distributing ownership within a layer of firms, even though they take away the largest profits from the enterprise. The firms are able to easily avoid litigation due to such complex structures of ownership. They are able to shun their legal, ethical and business responsibility in this way. They are able to conceal ownership from the regulators as well.

The private investm