What is an ethical dilemma?
Ethical dilemma refers to a tricky situation where by an individual, a company or an organisation is faced with two action courses from which a choice has to be made. Either of the choices transgresses a moral principle. It is necessary for managers of companies and organisations to handle ethical decisions with a lot of concern. Wisdom plays a very important role in ensuring that right decisions are arrived at. In the event that such courses of action are not handled correctly then unethical issues are likely to arise. Managers and chief executive officers should involve all their stakeholders in decision making in their organisations. Involvement of such people often eliminates cases of unethical decisions. In the past few years there are a number of organisations that have been in the news for cases of an ethical dilemma
In 2015, Volkswagen automobile manufacturing company was announced as the world leading car manufacturing company, a position that was previously occupied by Toyota Company. However, the celebration didn’t last long. Before the end of the year, environmental protection urgency of the United States of America raised a concern with the company. It accused the giant car manufacturing company of having involved itself in unethical activities. The environmental protection urgency found out that Volkswagen created in emission tests that were carried out in the US.
It was established that the German based company had software that was installed in their cars diesel engine such that it could not be detected that they had some malfunction during tests. The programming which had been done on the vehicles enabled them to meet that set standards that had been set in the United States. The US regulatory authority had set a threshold for Nitrogen oxide emission which must not be exceeded by vehicles that would operate in the country. The “defeat device” that was installed in the cars greatly reduced the amount of Nitrogen oxide that was emitted by the vehicles only during the tests. However, the cars engines emitted an amount of nitrogen oxide gas that was 40 times the permitted amount (Eben, 2015).
The findings by EPA established that about 482,000 cars that were already in use in the US were affected. The discovery created a lot of tension across the world given that Volkswagen Company had exported millions of cars to several countries spread across the world. The rising concern of the situation immediately forced the management of Volkswagen to come out in the open and provide clarification of the unethical act that had been discovered. Volkswagen on its part surprised the world when they admitted that the allegations that had been raised by the US environmental regulation authority was indeed true (Eben, 2015). They provided data that showed that a total of 11 million diesel engine cars had been fitted with the famous “defeat gadget”. The Chief Executive officer of the company clarified that all the 11 million cars have since been sold to customers across the world. He went on to express their sorry. They wanted to maximise profits while on the other hand, they were expected to observe ethics in all their activities. Balancing the act hence became very tricky.
The Volkswagen scandal
Out of the huge number of cars, eight million of them were in Europe (Eben, 2015). Since then, multiple countries drawn from all across the world initiated investigations to establish the exact number of Volkswagen cars that had the “defeat device” and had been imported into the countries. The topic generated a lot of debate in the European, Latin America, Asian and African countries. The stock price of Volkswagen Company immediately recorded a huge drop in value. The giant manufacturing firm announced a loss of £ 2.5 billion in a quarter year for the very first time in a period of 15 years. Until this moment; the total cost that was involved in the recall of vehicles that had been sold by the company has never been made public (Eben, 2015).
The giant car manufacturing firm tarnished its image that it had made over a very long period of time. Car owners had the chance of taking possible legal action against the company for having sold such vehicles to them (Eben, 2015). As a result of the scandal which reduced the huge automobile manufacturing company to its knees, the company CEO, Mr. Martin Winterkorn resigned. Other top managers at the company such as those who headed the department of manufacturing Audi and Porsche were suspended to give room for an internal investigation. The heads of research in the departments were also not left behind. Volkswagen Company then embarked in a thorough internal audit to establish what might have fuelled the unethical move. The investigative audit was also aimed at identifying all the people who were behind the idea.
The company immediately announced that they would release the results in a period not exceeding six months from the time that the issue came to the public domain (Eben, 2015). Consequences from the act increasingly exceeded the company’s scope. Awareness was created over other air pollution that occurred as a result of emission of toxic gases and other fumes that were released by cars from other manufacturers. It was discovered that car manufacturing companies have made a lot of fortune over the past decade from the manufacturer of diesel powered cars. The scandal forced some governments to come up with some drastic actions. There are countries that have since limited the use of diesel powered cars in heavily populated areas such as cities and major towns.
The scandal that Volkswagen got involved in is a pure case of business ethics. There was a clear deception from the company. The company managed to make a lot of sales over a short period of time and surpassed the sales of Toyota to become the leading car producing company (Eben, 2015). However, the company had managed to sell a such number of cars through unacceptable means.
Consequences of the scandal
The theory is based on the ability and capacity of individual people, organisations and companies to predict the consequences that the world is incurred. According to utilitarianism, what is considered as ethically correct is the choice that is likely to benefit most people in the community (Kokemuller, 2016, p. 5). Volkswagen management decided to engage in an activity that was aimed at benefiting the company alone. By producing substandard automobiles, the company enjoyed a reduced production cost. Volkswagen Company produced many and cheap automobiles to the extent that its production exceeded that of Toyota which held the position for a long time. The aim of Volkswagen was to rip a lot of money from the sales of the defective cars to customers who would later use them without knowing their defective nature. The customers on the other side would foot the bill of living with the defective cars (Kokemuller, 2016).
Revenue from the sales of the cars is meant to benefit just a few people within the company. However, customers would bear the consequences of using the cars. The aim of Volkswagen Company was to steal from its customers. The move of fixing gadgets that prevented the vehicles from detection is not in any way good for a company of Volkswagen’s calibre. The company management didn’t take into account that it is their responsibility to protect their customers (Gulati, Tush, & Henderson, 2015). They should also provide them with the best assistance and technical support if there may be a need. The number of all the people who are employed by Volkswagen cannot exceed even one million. However, the company involves itself in an activity that has since affected about 11 million people spread across the world. Volkswagen Company failed to observe that the activity in which they had involved themselves in would negatively affect millions of people, drawn from almost every region of the world (Gupta, 2017).
The theory of virtue ethics judges people and organisations based on their character and not a single action that may have just deviated from what is expected of them. In order to rate a person or a company’s behaviour as unethical, the morals, motivation, and reputation of the people and the entire organisation is taken into account (McWiliams, Siegel, & Wright, 2006). Customers all over the world have over the past regarded the Volkswagen automobile company as one whose aim is to ensure customer satisfaction at all cost. They have developed trust and belief in the company. When the company was announced to have surpassed Toyota in sales of cars, the company employees, sales agents, and customers were equally very happy. They believed that they had equally made a lot of contribution in ensuring that the company rose to the position (Gabarro, 1991). However, they were later on disappointed by the news of the scandal. The majority of the company employees, sales agents, and customers could not believe that a company that they have all along served with a lot of dedication would involve itself in such activities. The activities were aimed at robbing customers of their hard earned money. Volkswagen Company sold cars to customers yet they knew very well that the cars were unworthy for use. The amount of nitrogen oxide gas that was emitted by the cars into the environment was very high. The management of Volkswagen Company knew very well the maximum amount of nitrogen oxide emissions that is acceptable in the various countries of the world. However, despite having the information the company devised their way such that they could cheat the regulatory authorities that their vehicles had met the set standards, yet that was not the case (Chonko, 2016).
Utilitarianism and the scandal
The amount of emitted nitrogen oxide that would later be emitted by the cars was several times higher than the acceptable level. The behaviour of the company was enough evidence that it didn’t care about the health conditions of their customers. The use of cars that released a lot of nitrogen oxide gases into the environment meant that their customers were likely to suffer from respiratory diseases and hence their lives would be at great risk. However, Volkswagen Manufacturing Company seemed not to care about that. They only had one concern. They wanted to maximise profits at all cost without considering the lives of their customers. In addition, they were not conserved about the good reputation that they have struggled to build over the years. The company tarnished its reputation following the scandal. Many people have over the past regarding the company with a lot of esteem (Raczkowski, 2016).
There are areas of the world where people have developed a belief that the Germany-based company was the best in car manufacturing. Such people purchased all their cars from the company. It was regrettable that such customers also had to pay the wrath of Volkswagen Company. The car manufacturing company failed to pay back the trust and faith that such customers had in them. Instead, they devised methods that were aimed at slowly destroying their lives as they used the cars that they had bought from the company (McWiliams, Siegel, & Wright, 2006). Nitrogen oxide gas is poisonous and should not be inhaled. It is for that reason that many countries have set regulatory measures to ensure that their nationals are protected from inhaling the gas.
All diesel powered engines are thoroughly tested to ensure that they meet the set standards before they can be accessed by customers. It is unfortunate that Volkswagen Company disregarded the efforts of all these people who are working day and night to ensure that the lives of their nationals who are customers of Volkswagen are highly protected (Gulati, Tush, & Henderson, 2015). The employees of the company were equally disappointed. They worked tirelessly hard in the designing and manufacturing of the vehicle. Their aim was to ensure that their customers got value for their money. They didn’t have any idea that the company had some hidden agenda that was aimed at injuring the lives of their customers while maximising profits. (CHOWDHURY, 2002)
A similar situation was faced by the company’s sales agents. They had all along carried out marketing campaigns in different countries. During the campaigns, they explained to customers that the products of Volkswagen Company were of very high quality. They, therefore, managed to convinced many people to keep off from buying other companies’ products and instead purchase the cars that were manufactured by Volkswagen (Palmer, Akin, & Dunford, 2015).
Virtue ethics and the scandal
The scandal meant that the agents had unknowingly deceived their customers into believing that Volkswagen was the best car manufacturing company in the world. The business of the agents had equally been compromised by the scandal since customers would no longer believe in the information that they share. They would henceforth record losses in the event that they are not able to convince the aggravated customers that they had no idea about the activities of the company. The agents and employees were very innocent because they were kept in the dark (Yu, Sengul, & Lester, 2008).
The company didn’t consult them before it decided to deceive its customers by manufacturing dubious cars. They carried out their daily duties with a lot of diligent. However, it is quite unfortunate that their customers and the rest of the people across the world would never appreciate their effort following the scandal. Many people believed and would still believe that they were part of the deal. It has become relatively difficult to convince the world that they too were equally surprised by the news that the company cheated in its production of cars (Chonko, 2016).
The ethics of justice states that people who make decisions should ensure that their actions are fair to all the people who would be affected. It hence means that all the decisions that are made in any organisation should be well thought of before they are finally implemented (Yu, Sengul, & Lester, 2008). Volkswagen Company didn’t administer justice to their customers. The customers had developed a lot of trust in the company. They purchased a car from the company to an extent that the company surpassed all their competitors end finally emerged as the best car selling the company in the world. The feat would not have been achieved by the company in the event that their customers were not loyal (Chonko, 2016).
Everyone expected Volkswagen to show an appreciation to their customers for their effort that enabled the company to emerge in the first position. Instead, it was discovered that the company participated in an activity that threatened the lives of their loyal customers. The company produced cars that emitted nitrogen oxide fumes to an extent that exceeded the legally acceptable level in various countries (Raczkowski, 2016). The company showed little concern for their loyal customers across the world. Justice was also not served by the employees and sales agents of the company. It was necessary for the company to inform the employees and the agents regarding their intention. The sharing of such information would give room for the employees and sales agents to make informed decisions on whether to stick with the company and engage in the activity or to part ways with the company so that they don’t become part of the deal. However, that was not the case.
The company regarded their employees and agents as minors who didn’t deserve to be consulted before decisions are made (Chonko, 2016). The company didn’t factor in that the efforts of the employees and agents had been very crucial in the success in its success. The scandal equally tarnished the image of the employees and agents. They had worked tirelessly hard in the past in building their brands such that any other company would wish to hire them. However, that would never be the case again. Other companies would shy away from seeking their services. They would believe that the employees and agents of Volkswagen had been directly involved in the scandal. The management of Volkswagen Company ought to have been held responsible for the injustices that they did to their customers, sales agents and employees. Their behaviour was very unacceptable (Chandan, 2015).
It is important for organisation leaders to involve all stakeholders in decision making (Jonsson, Greve, & Fujiwara, 2009). Stakeholders include the top managers, employees, sales agents, customers, community members and all other people who are directly or indirectly affected by the operations of the organisation or company (Kokemuller, 2016). Stakeholders would never ratify unethical decisions because they are the ones who would finally be affected by such decisions. They would, therefore, consider many aspects before a decision is finally approved. In addition, leaders should attend world forums that are aimed at improving the rights and living conditions of human beings across the world. Organisation leaders would acquire very important knowledge and skills from such forums.
There are activities that organisation leaders participate in because of ignorance. A good example was the Volkswagen’s case. The Chief executive Officer immediately accepted that his company had cheated by installing some “deceive gadgets “onto their cars such that they could not be detected during tests. Following the scandal, the CEO willingly resigned. He must have realized his undoing and felt very sorry for the affected customers. The scandal would have never happened in the event that all the company stakeholders would have been involved in the decision-making process. Customers and sales agents, in particular, would have totally objected the move.
Conclusion
Leaders are responsible for all the actions within the organisations that they lead. The leaders should seek for ways that would enable them to ensure that ethical decisions are made within their organisations. Unethical decisions are unacceptable anywhere in the world. Such decisions are likely to course harm or discomfort to some particular group of people somewhere. Organisations that engage in unethical decisions are likely to face repercussions that would not be health for the successful operations of such organisations. Leaders must therefore critically analyse situations before they come up with final decisions. If possible, organisation stakeholders should be brought on board during all decision making meetings.
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