Ethical Arguments
Choose a recent news/media article that has been published within the last 3 months that concerns a business ethics issue/s.
Business ethics is a behavior that all businesses follow. Social responsibility refers to the role of an organization in the general well-being of a society. The paper discusses the current business ethics issue in the article “Wells Fargo continues to test Regulators”, it gives a summary of the arguments made concerning Wells Fargo business ethics, the key ethical issues raised by the problem, the decisions made and identification of the relevant ethical moral philosophies.
According to the article, Wells Fargo Company was reportedly accused of altering documents related to certain business owners. Besides this, the company has been sanctioned by federal regulators over its problems. For instance, it was accused of massive fake-accounts scandal which erupted in 2016. The sanctions imposed include capping of the bank asset growth for it to improve its corporate governance structure (Ahmed & Mohamed, 2017).
Corporate Governance
According to Adi, Dorith & Shlomo (2013), corporate governance is made of specific moral obligations that the board of directors and the company abide by. Corporate governance ensures that the company operates on high ethical standards to build its reputation and protect the rights of the shareholders. A good corporate governance structure ensures that all parties exhibit best practices and adherence to the ethical regulations formed. In many corporations, corporate governance involves voting in of directors by shareholders giving them the responsibility to protect their (shareholders) interests.
This governance involves the flow of power from the chief director officers to employees at the lower level. There are various rules, principles, and policies put in place to ensure good governance, ethical conduct and smooth running of a company’s operations. The Wells Fargo company, in 2016, was sanctioned by the federal regulators to have its bank asset growth capped while it was working to restructure its corporate governance. This led to a reduction in the company’s stock to 1.7 % at $54.10 per share.
Corporate Social Responsibility
This refers to the role of an organization in the general well-being of the society. Ethical responsibilities refer to those obligations which an organization owes back to the society (Crane, Matten & Moon, 2008). An organization is said to be ethically responsible by being environmentally friendly, ensuring good customer relationship, providing goods and services that are legible and not harmful to the customers, promoting employee welfare facilities as well as paying fair wages and other remuneration, in addition to engaging in legal business practices. It can also assume philanthropic responsibilities as part of the ethical corporate responsibility. This can be exhibited when a firm donates services to the community and charitable organizations as well as engaging in projects that promote environmental conservation. The Wells Fargo company lacked corporate social responsibility. This is shown when the employee’s altered documents of a thousand customers thus violating customer relationship ethics (Brian & Tracy, 2015).
The Key Ethical Issues Raised in the Article
Corporate Citizenship
Byung, Francis, Andrew & Tony (2014) argue that corporate governance involves the social responsibility of business firms and the extent they are entitled to meet legal and ethical responsibilities as per the shareholders’ requirements. The main goal of corporate citizenship is to ensure good and better living standards, improved quality life for the surrounding communities as well as maintaining high profitability level for the stakeholders. For a business firm to be successful, it should establish a strong corporate citizenship as well as balance the two goals equally. A company can rise to higher levels of corporate citizenship depending on its ethical practices to the surrounding community or the customers. This is normally achieved by incorporating credible citizenship with the culture and general structure of the firm.
Corporate citizenship involves steps such as the complaint stage, engagement, innovative, integrated and lastly transforming stage. However, the case of Wells Fargo company is different, this is shown where the employees were alleged to have altered some information on certain clients’ documents. This shows lack of ethic responsibility conferred to them by the shareholders. It also shows customers’ disloyalty (Claudia & Painter-Morland, 2014).
Leadership Ethics
According to Elaine & Dawn (2011), leadership in business ethics is a broad area. A manager in any organization is in a position to improve the credibility and reputation of the firm by using efficient leadership skills and strategies. The manager can implement ethical decisions, models of behavior and ideas that best suit the operations of a firm. The leadership decisions made act as a benchmark for employees to ensure adherence to those decisions in their quest of making personal decisions pertaining the organization’s duties. The management leader should incorporate ethical values and decisions that are significant to all members of the organization. Business ethics values are likely to be strengthened when employees exhibit self-respect, dignity, and pride about their position in the organization.
For instance, the management leader could implement an ethics policy outlining the essential ethical standards on issues such as customer service, information, and data handling among others. The employees could then read and sign as an approval. The employees of the Wells Fargo company altered information and data on certain documents and the management pointed out that they learned about the behavior of the employees, initiated an investigation and reported the matter to the regulators. This shows the efficiency of management skills the firm practiced (Kelly, Martha & Annie, 2013).
Corporate Governance
Ethical Decisions
According to my opinion, appropriate ethical decisions were made pertaining the Wells Fargo ethics issue. For instance, the federal regulators capped the firm’s asset growth in a bank in an attempt to ensure that the firm improved its corporate governance structure. Also, the Federal Reserve had ordered the bank to stop growing the assets of the company beyond $1.95 trillion until when the company could improve on its risk-management operations and would no longer endanger its customers (Kemi & Emem, 2016).
Furthermore, the regulators implemented new ways to protect documentation so that the data cannot be easily altered through the Treasury Department’s Financial Crimes Enforcement Network. Another example of ethical issue manifests itself when the Oil Giant company was exposed in the year 2001 because of misrepresenting the company’s profits as well as inaccurate bookkeeping of the accounts records. This resulted in changes in the prices of the stakeholders and loss of large amounts of funds by the public shareholders.
The organization became bankrupt but later on the public shareholders gained protection from the Sarbanes-Oxley Act which was established in 2002. The Oil company could have been closed down were it not for the Sarbanes support. Basically, a business firm should always ensure proper maintenance and accurate record of the books of accounts as well as conducting ethical accounting practices for it to operate efficiently without closure or running bankrupt (Cohen, 2010, p. 762).
For instance, the American Aluminum Company uses a compliance approach which ensures that nobody in the company (including the managers and directors) goes against the laws, guidelines or procedures put in place. This approach is reinforced by the corporate administration and it is helpful because it ensures the firm operates in an ethical manner. It also helps in protecting the firm from closure or bankruptcy thus increasing both productivity and profitability levels (McManus, 2011).
Relevant Ethical Moral Philosophies
Moral or ethical philosophies refers to a branch of philosophy which concerns the right or wrong. It is encompassing morality and contemplates how people should relate to each other. The following moral philosophies are relevant to the Wells Fargo company and any other business entity.
Confidentiality and Truthfulness
These two concepts are likely to be encountered in daily activities. Truthfulness refers to telling out the truth about something to individuals or person without lying. On the other hand, the concept of confidentiality refers to the ability to keep or maintain secret about somebody or information concerning another person. In business, the professional obligation is that company’s management and employees are entitled to keep information and data without any alterations and maintain clients’ privacy. The Wells Fargo company violated the rules on this philosophy when its employees altered some of the customers’ documents, then the management protected them claiming that the documents were used for internal purposes.
Corporate Social Responsibility
Autonomy
According to Rüdiger & Daniel (2014), autonomy principle lies on every person’s right of self-determination, independence, and freedom to make their own choices. The principle is essentially an anti-discrimination principle that there are no parties whose interests do not matter. It plays a major role in analyzing business obligation to its employees and requires them to honor all the terms of their contract.
Informed consent
According to Seleshi (2011), informed consent refers to the ethical and legal requirement for either a research or access to other person’s data. In a medical context, it is the process where a participant is informed about all aspects of a trial for them to make a decision and voluntarily confirm their willingness. Obtaining consent involves informing the subject of their (participants) rights and procedures to be undertaken and the benefits or risks associated. In business aspect, this refers to non-alteration of a clients’ documents without their consent. Also, consumers should be informed about the nature of products and services an organization produces before consumption. The Wells Fargo company employees violated this concept by altering thousands of customers documents without their (customers’) knowledge.
Common Good
This philosophy promotes the moral and ethical issues in a society based on culture and beliefs. Firm owners and managers should implement this according to the society’s culture because it is easily accepted and understood by the particular society.
Conclusion
Consistent with the Wall Street Journal of 2017, the employees of the company’s wholesale unit altered information and data including Social Security numbers on a certain document without the customers’ knowledge. The company denied the allegations claiming that the matter only involved internal documents and not external. The federal regulator (SEC) reduced the bank’s stock to 1.7% at $54.10 per share and ordered the bank to stop growing its assets beyond $1.95 trillion. The bank altered documentation received from a thousand customers and even stepped-up efforts to provide the necessary documentation to meet more rules from another regulator. The different ethical dilemmas outlined in this essay are will help managers make informed decisions.
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