Identification and Analysis of Unethical Actions
The report here does an analysis of a case study on Galvatren based on three specific questions. The first question deals with the identification of two unethical actions or decisions of the company based on which an analysis as to why the actions and decisions seem to be unethical. In this section, there are also suggestions of better alternative of the actions or decision taken. The second question in the report however justifies the reasons for the failure of Galvatren’s efforts at preventing unethical behavior. The third question deals have two parts. The first part is a discussion on whether Galvatren’s board and CEO bear any responsibility for the company’s failure in promoting the ethical behavior whereas the second part discusses the measures of preventing unethical behavior in future.
The discussion here focuses on Galvatren which is a Houston based consumer products company operating under CEO, Chip Brownlee. However, presently, the company is facing accusations and lawsuit for manipulation of the sales. This came as a sudden shock on the part of the company as it grew from midsize firm running on hierarchical and authoritarian style to a company with increased product portfolio in healthcare and personal beauty under Chip Brownlee. Moreover, the company also experienced a change in culture strategies focused on not only building relationships with business partners but also the customers and on day-to-day operations (Shu & Gino 2012). However, there were illegal schemes in the company responsible for inflating sales. In addition to this, there was termination of employees like Mike and Greg who tried to report this misconduct through confidential reporting implemented by the company. Further, the company manager Harry never followed up with Arch Carter, the lead director of Galvatren, in informing him about the illegal schemes in circulation. Instead, he always reported to Terry Samples, the vice president of sales that finally resulted in termination of his job (Gino, Ayal & Ariely, 2013).
Three behaviors cause an ethical person in making potentially illegal and unethical choices. These are as follows:
- Need: Perceived pressure of a person acts as driving force in making a shift from ethical to unethical behavior (Lu, 2015). The need described in a various forms. In this case, the need to convert the company from a mid size firm to a bigger one has forced the company CEO to hire managers like Terry Samples who big time indulged unethical activities through illegal schemes. Thus, the need sets the ball rolling from making unethical choices.
- Opportunity: The need becomes vague if there is no opportunity for satisfaction. Thus, lack of opportunity provides no chances of implementation of unethical behavior. However, in Galvatren case, CEO Chip Brownlee, trusted Terry Samples and ensured him the opportunity of becoming the vice president of the sales (Pendse, 2012). Moreover, the company CEO also recruited employees like Greg believed to coordinate with Arch Carter, the lead director of Galvatrens. In doing this, the CEO never could comprehend that would support an unethical activity just for mere gain in sales.
- Rationalization: The prevalence of the unethical activity happens due to the persistence of ability of rationalizing the wrong for the right. This was the scenario in Galvatren case where the CEO had no clue of the illegal activities taking place in the company for inflating the sales (Eastman, 2013). Everything came to the forefront when only a former employee, Mike who tried to uncover the activities through the confidential reporting system implemented by the company, filed a lawsuit against the company.
However, a more ethical alternative for each of these actions or decisions adopted by the following means:
The common mistake amongst the employees in making weak ethical decisions poor are ruled by overconfidence, complexity in issues and weak or nonexistent structures of the corporate governance(Thiel et al., 2012). Thus, confidence in business is a necessary component but overconfidence may sometimes lead to rationalization that overlooks the complexity of the problems and issues. In this context, the urge to expand Galvatren, made the CEO so overconfident that he missed the issues that resulted in filing a lawsuit against the company.
Justification of Galvatren’s Failure in Preventing Unethical Behavior
Recognition of an unethical request is important at the first place. Therefore, the employees made clear of the code of ethics adopted by the company and the kind of behavior expected of them (Sheldon & Fishbach, 2015). In the case of Galvatren the human resource and the legal professionals of the firm should have properly conveyed to the employees about the open door policy and the code of conduct followed by the company.
The CEO and the leaders of Galvatren should understand and adopt the code the ethics in manner so that they act ethically. There is a general understanding that states working for a boss who is unaware of the unethical means of the employees or is himself missing some of the ethics would force the employees in conducting and rationalizing their unethical code of conduct according to their own understanding (Yoder-Wise, 2014). In this regard, Galvatrens had senior members who did not take initiative in properly conveying the ethics code to the employees lead to innumerable terminations due to some unethical decisions.
The case study on Galvatren introduces a 24-hour toll free hotline number that was available for reporting violations in ethics but not utilized in a proper manner. Moreover, the proposals of the company on hiring of an ombudsman and board of directors for ethics over sight were not accepted. Such policies adopted in the interest of the employees who might not feel comfortable in raising the concerns to the formal management channels (Carroll & Buchholtz, 2014). However, there was other unethical intention influenced by individuals, issues and at the same time environmental factors that led to the failure in the efforts for prevention of unethical behavior. These are as follows:
- The Presence of Bad Employees
- Presence of Illegal Schemes
- Emphasis on Short Term Revenue
- Absence of Written Code of Ethics
- Desire for Quick and Fixed Solutions
- Financial Concerns taking Precedence over Ethical Considerations
- Lacking Clear Procedures for Dealing with Ethical Problems
However, individual characteristics remain an important predictor in determining the unethical behavior of an employee emphasized mainly on self-gain. This implies the tendency of using the interpersonal relationships in an opportunistic manner and possesses lesser concern for others. Unethical behavior may also arise when an employee feels that their actions will not be harmful for a victim and their peers will not condemn their actions. Unethical behavior also persist in a company an ambience that emphasizes. They will engage in behavior that is more unethical when the company promotes an atmosphere where the employees keep to themselves.
I believe that Galvatren’s board and CEO bear some amount of responsibility in failing to promote the ethical behavior. This is because of the following reason:
Responsibility of Galvatren’s Board and CEO
Majority of ethical decisions in most companies tied to money in some way or the other. There is so much focus on Galvatren’s expansion to make it improved and explore in unknown sectors like beauty and heath care resulted in neglecting for means for creating a strong ethical background of the company. Moreover, the CEO also relied on the decisions of the consultants to discard the implementation of ombudsmen and board of directors who would be responsible for ethics oversight (Wheelen & Hunger, 2017). More importantly, training procedure related to the open door policy that never was completed.
The company though implemented policies but they remained unclear to the employees, since there was no written format. The policy manual or ethical code of conduct of the company normally helps in establishing the standards ethically and focuses on the consequences of the poor decisions (Webb, 2012). Moreover, the ethical guidelines provided also remained vague, inconsistent and unclear.
The culture of a company is comprises of the shared values and norms amongst its workers. Thus, the ethical nature of the company’s forms the basis of its culture. There are businesses where peer also demands ethical behavior and standards amongst the colleagues. In the case study of Galvatren’s there has been prevalence of certain unethical practices by some of the employees that finally landed the company in soup.
The work of a good manager involves careful planning for the purpose of marketing, budgeting and product placement. However, implementing ethical behavior at a workplace also involves careful planning (Ford & Richardson 2013). This will result in creating ethical employees for ethical company that will help it to earn benefits due to its good reputation. When a company operates on strong ethical guidelines it will not only attract more consumers but will also retain and entice a skilled workforce.
Thus, Galvatren’s in order to prevent unethical behavior in future should the following programs:
- Compliance based Ethics program: This program driven by law and aims at preventing, detecting and punishing violations. The program also emphasizes surveillance, control and penalties and adheres to 1991 guidelines for Federal Sentencing. However, the characteristics of the program include:
- Follows compliance procedures and standards
- Mentions the right and the wrong in the Code of ethics
- Ensures Mechanism for Oversight
- Ensures Training for Communication of Standards
- Availability of employee hotlines for reporting violations
- Monitoring Audit for Tracking Compliance
- Mentions Disciplinary and Preventive Measures
- Integrity-based Ethics Programs: This program is management driven and aims at defining values and conduct (Van, Beck & Twijnstra, 2013). Further, the program also emphasizes on a culture or ambience that promotes ethical behavior. However, the characteristics of the program are as follows:
- The code of ethics embodies the values of the company
- Ensures training for promotion of ethical values
- Ensures Leading by example
- The Ethical Standards remains embedded in the culture and policies of the firm that includes employee evaluation and incentive systems and criteria for decision-making.
Conclusion:
The report ends by suggesting measures to the board of directors of Galvatren’s for prevention of unethical behavior in future. There are also reasons describing the role of Galvatren’s board and CEO in failing to promote the ethical behavior. There are also justifications on the failure of Galvatren’s Efforts in preventing unethical behavior. The report also identifies two unethical actions or decisions of the company and explains why the decisions or actions are unethical. The report also put forward more ethical alternative for each of the actions and decision made.
References:
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
Eastman, W. (2013). Ideology as rationalization and as self-righteousness: Psychology and law as paths to critical business ethics. Business Ethics Quarterly, 23(4), 527-560.
Ford, R. C., & Richardson, W. D. (2013). Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer Netherlands.
Gino, F., Ayal, S., & Ariely, D. (2013). Self-serving altruism? The lure of unethical actions that benefit others. Journal of economic behavior & organization, 93, 285-292.
Lu, K. (2015). Two-Way Partial AUC and Its Properties (Doctoral dissertation, School of Statistics, Renmin University of China, Beijing, China).
Pendse, S. G. (2012). Ethical hazards: A motive, means, and opportunity approach to curbing corporate unethical behavior. Journal of Business Ethics, 107(3), 265-279.
Sheldon, O. J., & Fishbach, A. (2015). Anticipating and resisting the temptation to behave unethically. Personality and Social Psychology Bulletin, 41(7), 962-975.
Shu, L. L., & Gino, F. (2012). Sweeping dishonesty under the rug: how unethical actions lead to forgetting of moral rules. Journal of personality and social psychology, 102(6), 1164.
Thiel, C. E., Bagdasarov, Z., Harkrider, L., Johnson, J. F., & Mumford, M. D. (2012). Leader ethical decision-making in organizations: Strategies for sensemaking. Journal of Business Ethics, 107(1), 49-64.
Van Montfort, A., Beck, L., & Twijnstra, A. (2013). Can integrity be taught in public organizations? The effectiveness of integrity-training programs for municipal officials. Public Integrity, 15(2), 117-132.
Webb, W. N. (2012). Ethical Culture And The Value?Based Approach To Integrity Management: A Case Study Of The Department Of Correctional Services. Public administration and development, 32(1), 96-108.
Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.
Yoder-Wise, P. S. (2014). Leading and Managing in Nursing-E-Book. Elsevier Health Sciences.
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