Business Ethics, Ethic Dilemma, Manual of conduct - Essay Example

Business Ethics Thesis: The Ethical Manual of Conduct of Chiquita Brands Introduction Decision-making is a process whereby different s of action are evaluated and the most profitable option is chosen among the several alternatives. To reach an ethical outcome one must be intimately aware of the various facets that business ethics are comprised of. In short, however, business ethics are the standards and regulations by which organizations must operate. Key stakeholders within the sector are responsible for determining these policies; which may change over time.

 It must also be taken into account that when ethical guidelines are not properly adhered to conflict may occur. The conflict mainly occurs when dubious decisions are made within an organization and these decisions can lead to major disputes that might even demand legal resolution. Therefore, the ethical requirements that organizations must abide by should be properly and clearly defined to give business owners the opportunity to properly follow them and avoid any legal repercussions that may otherwise result.

Put simply, the ethical decision making process is therefore a set of well-established procedures within any given organization that helps in evaluating the best course of action among several options, while working within the ethical requirements of the industry in question. For our research into ethics we have chosen Chiquita Brands. Chiquita Brands has, in the past, embarked upon ethically questionable actions that we have chosen for our case study dilemmas. These dilemmas include the child labor that Chiquita employs on their banana plantations in Ecuador and the funding of a right-wing paramilitary group in Colombia.

Both of these predicaments are equally appalling acts that contain a number of loopholes that release Chiquita from guilt. Chiquita Brands Chiquita is a leading global produce company involved in the banana trade. Our company is headquartered in Charlotte, North Carolina, but Chiquita Banana and our subsidiaries employ over 20,000 people located in over six continents. Although our company is now dedicated to our core values of Integrity, Respect, Opportunity and Responsibility, over the many years we have been in operation, like any other organization, we have been forced to deal with multiple ethical dilemmas in a business environment.

These have even resulted in the organization having trouble with the law. Among such issues were the use of child laborers in our methods of production and the possible payment of multiples sums of money to criminal organizations in South American countries for protection. The last issue, in particular, was a serious violation of the industry’s ethical codes and laws. This resulted in the organization facing serious fines from the government. To avoid shameful and immoral actions such as this one, a proper approach to decision making is thus essential.

Dilemmas Child Labor Around seven percent of Chiquita’s bananas come from the nation of Ecuador; however, Chiquita does not directly own the land on which the bananas are grown. Instead, the exporters own the land which relinquishes Chiquita of direct responsibility for any illegal activities that might occur. Chiquita maintains that their company abides by international law even when the country of operation employs regulations that fail to meet international standards. According to Human Rights Watch, the conditions experienced by the children who work on these plantations are below not only international standards but also the standards set by Ecuador.

In their report, Human Rights Watch spoke to many children who have given detailed accounts of working twelve hour shifts with no potable water or proper restroom facilities and a meager compensation of $3.50, roughly 60 percent of the minimum wage for plantation workers in Ecuador. In addition to the egregious accounts given by the child workers, the bananas were often sprayed with harmful chemicals while the children were working; more than a few instances of sexual harassment were also reported.

Chiquita has, so far, claimed no responsibility for the atrocities that are committed on what they are referring to as private land.Colombian Paramilitary Bribes According to CBS News, Chiquita Banana has paid thousands of dollars towards right-wing paramilitary groups in Colombia to protect their banana plantation from left-wing guerillas. Chiquita has paid a previous fine of $25 million for their actions. Experts have suggested, however, that if the prosecutors had succeeded in their original lawsuit then the fine would have been in the billions.

Currently, Chiquita is continuing to pay paramilitary groups in Colombia despite the recent efforts of Colombia’s government to combat such actions. The situation with these terrorist organizations are a cause for much bemusement as Chiquita claims they were blackmailed into paying off these groups with the hope that it would protect their banana workers. Stakeholders: The first and the most important step to take when one intends to make a decision, is to identify the problem. Once the management is able to determine what has caused the problem and why it became so big without having pulled the plug earlier, management can look at the decision making process.

This involves gathering many facts about the situation and evaluates them in an objective manner. (Fraedrich et al 2012, p. 120). Also, in such a situation, where a company finds itself in an ethical dilemma, management has to consider some questions. Does it need an immediate solution, will the problem go away by itself, or even whether management could ignore the problem.Once the problem has been identified and properly defined, arriving at the solution will be much easier. In the scenario of child labor at Chiquita Banana, a proper analysis on the issue would be necessary.

First steps, for example, could be to identify why children are forced to work instead of attending school. What are the circumstances that exist in the society that make the children want to earn a living, what is the motivation for the employer to want to employ children? Once these have been identified and well-defined finding a possible solution to the problem becomes easier (Fraedrich et al. 2012, p. 28). A manager should also determine if the problem is affecting all the stakeholders of the business.

Making a decision will have various consequences on the key players within and out of the organization. The impact of the intended decision on each of these parties then has to be clearly thought through. It will be important to analyze the problem from the perspective of each of the stakeholders. This will give an in-depth perspective when the time to make the decision comes. The stakeholders in the case of child labor are the parents to the children, the authorities, the children themselves and the organization.

(Fraedrich et al 2012, p.28). But furthermore, the Stakeholders would also be the customers buying the bananas, and in this case, sales might reduce. At last, a detailed analysis of all the possible consequences has to be done. What will be the effect of making a decision to all the stakeholders, will every individual be able to benefit from the decision or will others suffer. Once this has been clearly determined we can proceed to make the decision well aware of all the possible consequences.

Child labor would mean that the organization is massively reducing its cost of production as the children are obviously paid lower amounts of income. Also, children will not be able to attend school and get educated. A conclusive analysis of these issues should be done before the company embarks on a decision making process (Fraedrich et al. 2012). It should be noted that when looking for the solution for issues related with ethical dilemma within the company, several consequences must be attached to all the stakeholders.

One sure fact is that code of conduct for company operation was to be maintained and proper decision was to be arrived at to solve the dilemma. In this regards, some stakeholders suffer following the ethical decision arrived at. It is clear that when stakeholders for example the media gain access to the information that Chiquita Banana Company was hiring children, the name of the company would be tarnished negatively and its future business would be compromised. However, following teleological perspective, stakeholders like managers and supervisors who were involved in hiring children should bear the consequences as a result of ethical decision reached.

Human rights and child rights activists would not spare the company from the act. Code of Conduct and Decision Making Process One pillar of Chiquita Bananas business today is the code of conduct they introduced. Chiquita Banana is setting a standard for the behavior and the attitude their employees need to show every day working in this company. Basically the code of conduct is sort of a guideline for Chiquitas ethic and compliance policy. The content of their code of conduct is a reflection of the company’s core values and further it sets the key areas of compliance requirements which are relevant to the company.

The code of conduct shows the goals Chiquita is reaching for. Chiquita Banana tries to lead their business with the mind of improving other people’s life. This is one cornerstone of their policy. They want to have a positive impact on their employees and clients by setting ethical standards like good work conditions for their employees. Another concentration for Chiquita is to behave correctly to the natural environment they are surrounded. Loving and caring for the planet is an outspoken goal and value Chiquita sets for themselves.

The third cornerstone in their policy is of course leading their industry and maximizing profit. Chiquita Bananas code of conduct is presenting four core values the whole company has to follow. One is integrity. Chiquita is expecting everyone associated with the business to act by the law and ethically correct, further integrity means to communicate honest and without any fear of consequences. The second core value is respect, which means that all have to respect each other irrespective of race, religion, gender, sexual orientation or position within the company.

Respect means more than that it is the importance of family which should be respected and further it is the right for individual expression and a sense of belonging to the company which is expected there. Third is the value of opportunity, which basically means an encouragement for teamwork and improvement each and every day. Last core value in Chiquitas policy is to take responsibility. Taking responsibility for themselves and the people they are surrounded and working with. Further it means to be responsible for the whole company and to behave like that.

These core values are a guideline for all the people associated with the company should follow and respect.Chiquita listed points out which show how the Chiquita Banana employees need to behave in terms of legal situations and in their working life. “Live our Core Values of Integrity, Respect, Opportunity and ResponsibilityFollow the law and company policiesSeek guidance and ask questions when we are unsure of what to doRaise issues and concernsCooperate with investigations.”In terms of breaking these rules Chiquita fears the consequences they may have to carry.

That is why they are expecting their employees to report every violation of the code they recognize. Chiquita shows in their code of conduct the consequences the company may have to take for their actions. Damage to our good name Civil or criminal liability for the company, its employees or its officers or directorsGovernment intervention through investigations, monitors, monetary Fines or court orders.When it comes to their employees Chiquita sets a frame in which the treatment to their employees is cleared.

Chiquita relies on several rules and orientations for them to have a respectful and friendly work environment in their company. Chiquita wants to treat their employee’s fair which means they are not paying attention on race, gender or other visible and invisible differences between their employees apart from qualifications and professional skills. Since Chiquita is following the human rights they are not having child or forced labor in their company. Chiquita gives their employees the freedom of associations and unions so that their employees are able to communicate with the directors on the same level.

In the code of conduct there is a clear prohibition of mobbing and harassment. Sexual harassment for example is a reason for Chiquita to immediately dismiss the employee and think about legal penalties not depending on which position the person commit the mistake is in. That shows how serious the company handles situations which affect their employees negatively such as mobbing or harassment in any form. An important point to Chiquita is the health and safety for their employees. Chiquita keeps their workplaces always safe and clean for their employees to give them the best circumstances to work with.

Chiquita commits them to eliminate injuries which were happened through work for their employees. The code of conduct sets standards for privacy and information security such as client information or trade secrets. Therefore Chiquita´s employees are not allowed to send the data through internet to their private email accounts for example. Further Chiquita is setting standards for their production and quality of their products. Additionally, when it comes to make a decision Chiquita is guiding their directors and employees with an introduced decision tree which shows the right way of making a business decision.

If somebody is not sure what to do now and needs to make a decision he has to follow this guide. First thing is the question of legality. To behave legally correct is very important to avoid fines and investigation which is very bad to the reputation and business of the company. If someone wants to make a decision and knows that this action is illegal he has to stop this immediately. If he is not sure he has to ask his supervisor or manager for an advice. The clarity of the legal situation is the first step of the decision tree.

If the action is legal the next step would be to handle the question with the company´s policy and their code of conduct because this is the legal frame all people working at Chiquita have to accept and there is not tolerance for acting against it. The action someone wants to make cannot be against the code of conduct and should be stopped immediately if so. If not the next step would be to think about the stakeholder and how it would affect them if this action affects them negatively the action needs to be stopped here then.

But if this action would have a positive impact on the stakeholders it would be correct to take the next step and ask what the society would think about that if they would hear it in the news. The reputation of the company and their image in the society is very important to Chiquita therefore they cannot be associated with negative news in the society. Would they think positive or negative about this action and what will their customers think. If the feedback in the society would be positive there is nothing against it and the action is free to make.

A serious evaluation of the ethical issues surrounding the matter should be carefully considered. The code of conduct that governs the industry should carefully be analyzed. Does the code of conduct spell out something on the matter, does it prohibit the matter or is it silent on the issue (Fraedrich et al 2012, p. 120). After having considered all these facts, the process of getting a decision will be well on course. For the case of child labor, the law does not permit anybody below the age of majority to be gainfully employed.

The decision on the issue will thus be very easily to make though other factors still have to be considered. On the case of paying criminal organizations for protection, the cord of conduct governing the issue may not be very precise and loopholes may exist. To better understand these issues, it would be pertinent to frame them within the context of Chiquita Banana’s business ethics framework. The framework begins by addressing the dilemmas in terms of their individual ethical issue intensity from the vantage point of the individual, organization or work group.

Once this has been established, the individual employ must establish which individual factors well and organizational factors will affect his decision. Lastly, possible opportunities are established and listed. Once this groundwork has been laid these factors go through business ethics evaluations and intentions and then we arrive at the final conclusion of whether the course of action is ethical or not.Determining the ethical issue intensity is ultimately “personal and temporal in character to accommodate values, beliefs, needs, perceptions, the special characteristics of the situation, and the personal pressures prevailing at a particular place and time”.

(Fraedrich et al 2012, p.229). However, whether an ethical issue reaches the level of critical awareness is very much the responsibility of managers and people in positions of power within the organizations. For example, in the case of Chiquita Banana’s problems with accusations of child labor or payments to armed forces in Colombia, it is most likely fair to say that individuals in charge in the countries where this occurred placed more importance on other priorities such as meeting profits, deadlines or increasing production.

While this may not necessarily be known at the headquarters in North Carolina, the persons in administrative power are still at fault for not ensuring that the successive managers in charge placed enough importance on stringent and good working conditions as well as fair wages. The individual factors in the decision making process include such things as personal values that are gained through socializing with groups such as family members, social groups, religion and formal education. They are subjective by nature and can be very different depending on the individual’s culture.

It must also be taken into account, however, those other forces from the environment such as organizational and social forces. For example, first line managers in either Ecuador or Colombia might be having been raised with values that promote children in the workforce. Similarly, organizational forces such as Chiquita demanding high outputs and profit margins might cause workers to pay their subordinates less or use harmful, cheaper chemicals to coat bananas in. To avoid these problems Chiquita must promote ethical values as an integral part of their corporate culture.

This is termed a values-based ethics culture and is a lot more inclusive than a compliance culture. Additionally, while acts such as whistle blowing should be protected and handled with objectivity it is more beneficial for the company to set up an internal system for reporting misbehaviors because “The results of a study show that three internal actions – confrontation, reporting to management, and calling the company ethics hotline – were positively correlated to several dimensions of an ethical culture.”. For any such queries or reporting ethical or legal concerns, Chiquita’s Helpline can be reached 24/7 at 1-888-749-1952.

Reports are accepted in any language. Establishing a positive ethical culture touches on the organizational factors that influence individuals during the decision making process. Chiquita Brands attempts at fostering a good corporate culture by employing the Social Accountability 8000 labor rights standard developed by Social Accountability International. These measures help company remain above labor standards in the various countries in which the company operates and encourages workers from different nationalities to develop similar values.

Chiquita’s corporate culture also plays an important role in our daily operations. It is clear from the bribery accusations that Chiquita’s attempts at instilling ethical beliefs in every individual worker have not been wholly successful. As mentioned earlier, Chiquita Brands’ core values are Integrity, Respect, Opportunity and Responsibility. These values are reinforced at mandatory work retreats and are part of every workers introductory course in the values of the company and facing moral dilemmas.

It is important for the company to root out the cause of serious breaches in ethical standards such as the two dilemmas included in this manual. It cannot be ruled out then, the amount of power obedience to authority and significant others within the company have in skewing the values of our workers or affecting how moral decisions are reached. Perhaps Chiquta Brands’ emphasis on respecting their superiors can create instances where an unethical manager was not questioned or a superior’s demand for higher production quotas lead to such questionably moral actions as bribes or forced child labor.

Ultimately, we come to the opportunities which “describes the conditions in an organization that limit or permit ethical or unethical behavior. Opportunity results from conditions that either provide rewards, whether internal or external, or fail to erect barriers against unethical behavior” (Fraedrich et al 2012, p.234 ). To establish proper opportunity we must look at the immediate job context of the company’s workers. As mentioned earlier, after the labor accusations levelled at Chiquita Brands, the company the SAI’s labor standards.

These standards include enforcing: Prohibition of child laborProhibition of forced and compulsory laborMonitoring of health and safety measuresFreedom of association and right to collective bargainingProhibition of discriminationDisciplinary practicesThese are some of the proverbial carrots and sticks that Chiquita employs to promote a higher level of ethical conscience within the company. Additionally, Chiquita must always be on the lookout, for without proper oversight even a large amount of established rules, codes and polices that are not continuously enforced can bring numerous opportunities to not follow ethical conduct.

Once the ethical issue intensity, individual & organizational factors, and opportunity have been established, the individual comes to business ethics evaluations and intentions. Before anything it must be said, that an ethical dilemma is a problem with no clear cut solution. Many well-meaning businessmen can fall prey to the vagaries of ethical decisions. Even the outcome of an ethical decision is often unknown till much after the fact. For these reasons, the individual cannot look to others for a magical solution.

Critical thinking is essential and, in the case an unethical decision was made, taking responsibility is everything. This is what Chiquita Brands stands by to and guides their employees towards as well.Leadership Style The organizations management should consult other key players within the sector on the issue; these would include the government, other organizations and experts who have an opinion on the matter and out of experiences know possible solutions. But first and foremost, the management should publically admit to their mistakes in order to win back the trust of their customers and not loose their faces.

The above process culminates in the determination of one possible cause of action. This cause of action should be legal, match to the ethical requirements and be considerate to all the stakeholders’ interests. This decision will then be implemented. Once a decision has been made, a follow up activity should be carried out to assess the possible impact of the decision. Has it remained within the ethical and legal framework, does it conform to what the law requires and are all the stakeholders pleased.

To maintain integrity and have a good performance the business should follow these procedures when making all their decisions. In the banana production industry, the managers’ face challenges on a daily basis. These are on numerous issues some of which include, use of packaging that than can be recycled to protect the environment. Issues on the methods of production, proper location of the plant, use of renewable sources of energy that limit emission of carbon dioxide and the approach of transportation used for transport of all the output.

When faced with such challenges the management should make use of the ethical decision making model to arrive at a solution (Fraedrich et al 2012, p.144). The employees should also be properly enlightened on how to make ethical decisions. This would involve holding seminars with the employees to educate them on importance of our ethical decision making process. Finally, the leadership of any organization has to create an organizational culture where adherence to ethics is a key component. This culture will enable the organization to stand by its ethics when decision-making is concerned (Fraedrich et al 2012, p. 88).Ethical leadershipThis is fundamentally very essential skills that leaders in Chiquita Banana Company should posses.

This is because ethical leadership contains skills and knowledge meant to lead while knowing and doing what is right (Fraedrich et al 2009). For the case of Chiquita company which is already face by security threat and bridging of ethical policy by hiring little children to work; new leadership with capability to make sound ethical decision is required (Fraedrich et al 2009). It is important to note that ethical leader should be role model and lead as an example (Fraedrich et al 2009). In addition, Chiquita Banana Company has to develop measures that will ensure the vice of bribery is eliminated.

Ethical leadership within the company will also oversee moral and ethical conducts on every employee hired (Fraedrich et al 2009). The main focus from the leader perspective will be positive work output. Ethical leadership is also accompanied with knowledge of the law and code of conduct of companies as required by the law. When it comes to decision making, ethical leaders before making a decision, they make sure that they have assessed how the decision will impact on others related stakeholders (Fraedrich et al 2009).

In pursuit of a common goal, ethical leaders have people oriented activities where employees are motivated and directed to achieve a sense of personal competence in order to be self sufficient (Fraedrich et al 2009). Conclusion: In todays world it is very important to be able to recognize and also to cope with complicated ethical issues. Even small scandals can result in massive public outrages, which can not only damage the organization finances but also all of their stakeholders, including employees, customers, the media and so on.

Therefore, ethical issues might destroy the trust of the public but again, also the entire organizational environment. Having a good ethical manual of conduct is a very important part in being a successful and profitable business and as one can see from many media hypes as well as what happened with our bribe issue, being unethical can be very expensive. The step to completely curb this is by having a management leadership that understands ethical code of conduct and operation. This leadership will ensure that all decision make are compliant to the company rules and code of conduct required by the law.

Moreover, proper ethical leadership will help the company in balancing decision making therefore protecting all the stakeholders when an ethical dilemma arises (Fraedrich et al 2009). In summary, Chiquita Banana Company has to invest heavily on strong ethical leadership and protect its image from unethical scandals. Cheap deals like bribing rebels to gain security is more expensive than thought. Before accepting such a decision, there is need to assess possible consequences likely to emanate and how it will affect every stake holder.

How is it going to affect the customers, national security and other stakeholder (Fraedrich et al 2009)? ReferencesFraedrich, J., Ferrell, O. C., & Ferrell, L. (2009). Ethical decision making for business. Mason, Ohio: Southwestern Ethical Decision Making. (n.d.). Ethical Decision Making. Retrieved April 29, 2014, from http://www.ethicaldecisionmaking.net/Ethical Decision Making: How to Make Ethical Decisions in 5 Steps. (n.d.). Ethical Decision Making: How to Make Ethical Decisions in 5 Steps.

Retrieved April 29, 2014, from http://www.mftrou.com/ethical-decision-making.htmlWhat Codes of Conduct Tell Us: corporate social responsibility and the nature of the multinational corporation. (n.d.). Academia.edu. Retrieved April 28, 2014, from http://www.academia.edu/5249685/What_Codes_of_Conduct_Tell_Us_corporaChiquita Brand Websitehttp://www.chiquita.com/Our-Company/Meet-Chiquita.aspx