Introduction to Ethical Decision Making
Discuss about the Ethical Decision Making Of MMC Corporation.
Ethical decision making is nothing more than the ethical arguments a management of any organization uses to solve an ethical dilemma. An ethical dilemma is a situation where there is no clarity between right and wrong. Three aspects are examined by ethical decision making: the ethic of care, the ethic of obedience and the ethic of reason. Empathical and emotional intelligence are engaged in the decision making by the ethic of care. Letter of law along with the moral and spiritual values are looked into by the ethic of obedience. Thirdly, the rational brain is engaged by the ethics of reason. In other words, this three-dimensional approach engages both emotional and intellectual intelligence and requires slow thinking. The social dimension is also considered to be an important ingredient for the process of ethical decision making (Cianci, Hannah, Roberts & Tsakumis, 2014).
This report provides details regarding the interview conducted with a middle size organization for gaining knowledge about ethical decision-making steps adopted by it. The steps used within the organization are compared with the eight steps of sound ethical decision making suggested by Trevino and Nelson. Furthermore, the responsibilities of the employers in the areas of company reputation, resources, financial resources and information/ data have also been looked into in this report.
The company reviewed for this paper is a public company founded in the year 1976. The company is also listed on the board of Bursa Malaysia. It is the leading performer of the infrastructure industry having fundamental capabilities of engineering and construction. A 50-50 joint venture was also created by this company with MMC Corporation Berhad whose main activity is the construction of large-scale infrastructure. The vision of the company states more precisely that it aims to provide solution to large-scale property development and public infrastructure. Its mission is to bring the needed improvement in the living standard of the customers by developing the infrastructure facilities. It further emphasizes on creating added value, innovation and superior quality products for the business. The main projects undertaken by the company are bridges, management of storm water, railways, airports, dams, bridges and properties (Gamuda, 2015).
The company believes in offering employment to people irrespective of their social background, gender or race. Approximately 70,000 jobs have been generated by the company. It provides opportunities for highly trained professionals, skilled workers, less skilled workers, students, coming from all parts of the world (Lam, Jaaman & Lam, 2017). The company received many awards such as the Excellence Award for Property Development, top rank Developer of the year 2017 and Malaysian Best Managed Property Award. The company further maintains a separate complaint department for the perfect grooming of the company’s employees. It also considers the social responsibility required to be undertaken by investing in energy and waste management. Furthermore, the 3C’s approach (Competitiveness, Capability and Capacity) is followed by the company for the achievement of sustainable growth. The company aims to strengthen its delivery capacity with the help of making investment in plants and technologies. It also develops the workforce for the purpose of enhancing its plant capabilities along with innovation and implementing new information technologies for construction purposes. Competitive approach has been adopted by the company along with effective innovation, improved productivity and reliable services.
Case Study: Ethical Decision Making in a Middle-sized Public Infrastructure Company
Gathering and analysis of the data – the entire procedure of understanding the areas where the applicability of the ethical principles can be undertaken. It first gathers the information that might explain why a decision necessary. Understanding the data helps a company in assessing how their decision will change the functioning of the company or its relationship with its stakeholders. It is the foremost important step in the decision-making process through which the company analyses all the data and tries to understand it. This step is imperative since the decision might lead to changes in work processes and service for and to customers. Before taking any decision related to their business, the company analyses in depth the data and information on which decision is based.
Consulting Resources and Seeking Assistance – After understanding the necessity of taking a decision, the gathered information need to be evaluated. In many cases, information can be gathered from internal sources. However, in many cases company need assistance from outside environment. It might also be a good idea to contract an external expert to put the data in perspective and interpret the information without bias or prejudice. In this next step, the company prepares a strategy with the help of people and resources around them. A strategy for the effective tackling of the issue can only be created after consulting from other sources irrespective of the presence of qualified HR professionals, co- workers or policies and handbooks (Dane & Sonenshein, 2015). After analyzing the information, the company develops various options regarding the decision it must make. Having various alternatives helps the company to choose the best solution for its problem. Alternatives help companies in enhancing their understanding of various things. After identifying various alternatives, each alternative is assessed based on their merits, based on their positive and negative impact. This step helps the company in identifying those options that offer the greatest chance of success in a particular context. Sometimes it is possible that two options are providing the same level of benefit, in this case, company access with executive leaders to decide which choice is best for the company.
Thinking About the Lasting Effects – During the identification of the problem and seeking viable resources, the important point to be considered is the effect it will have on others. For example, if employees are having issue in reaching office on time, then the manager can introduce a policy that will change the reporting time of the workers. However, it will result in the detrimental impact on the clients and other workers (Iphofen, 2016).
Responsibilities of Employers towards Company Reputation, Financial Resources, Resources and Data/Information
Considering Regulations in Other Industries – The development of ethical strategies is undertaken by the company by considering the standards, regulations and good practices established by other companies in their sector. The company considers how specific issues are handled by other companies which assist in learning from their successes and failures. This plays an important role in making informed decision by the company. The company can also benchmark itself with similar companies.
Decision Making – After making extensive research, consulting the experts and assessing the alternatives, final decision is made by the company. According to these experts, a decision is only a choice until they put it into action. It is advisable to see if the required resources are indeed available. Before taking any decision, the company conducts a meeting with managers and leaders of the team to explain the decision to them. It is imperative to share the decision and to make everybody understand how this decision will affect the customers or other impacted stakeholders. For the purpose of resolving widespread ethical issues that have turned into a major problem of the workplace, decisions are brought to the team at large (Heyler, Armenakis, Walker & Collier, 2016).
Implementing and Evaluating – The last step in decision-making process, is the evaluation. Did the company get the outcome it expected and hoped for? What can it learn from the experience? The lessons learned become sometimes the first step of a new round of decision-making, especially when the outcome was not to the company’s satisfaction. Selected company checks the impact of a decision on affected parties as well as on the company. They see whether the goal is achieved or not accordingly. Based on their findings, they will continue, adjust or abort. In the last two cases, a new decision-making cycle will be made.
Trevino and Nelson developed a guide to effective decision making which has incorporated the basic tests found in other ethical tests. The steps are as follows:
Gathering the facts – Gathering the relevant facts should be given first priority at the time of making an important business decision. Information regarding a number of aspects should be obtained such as the legal issues involved, rules and regulations of the company governing the decision. Person making the decision should also have the authority for the same (Goodwin & Wright, 2014). Gathered facts must be accurate and free from bias. An authorized person needs to be appointed for gathering facts (Brennan, 2013). The responsible person must be loyal in gathering facts. Gathering facts is necessary for an informed decision. Based on collected information, organizations further move to next step (Joebrennan, 2013).
Trevino and Nelson’s Eight Steps for Sound Ethical Decision Making
Defining the Ethical Issue – The ethical issues involved in the decision-making process have the possibility of being more complicated than expected. The concerned authority making the ethical decision should consult with other person in order to get some help. Common ethical problems involved in the ethical issues are job discrimination, lying to customers, sexual harassment, using corporate resources for personal advantage, overstating the capabilities of the product or service, accepting or offering bribes or kickbacks (Holtzhausen, 2015).
Identifying the Affected Parties – While taking any decision, it is necessary to identify those people who will be impacted by the effects of the decision. Decision-making can affect the customers, suppliers as well as employees of the organization. This step helps in defining which parties will benefit and suffer from the decision. Decision making in an organization can affect thousands of people. For example, if a company is taking the decision to shift the plant to a low-wage country or a country with less stringent environment or labour laws. In this case, many employees lose their jobs, and even suppliers lose their customers (Trevino & Nelson, 2016).
Identifying the Consequences – Once identified, the next step is to analyze the consequences of the decision for each affected party. It is not possible to identify all consequence. It is however feasible to identify most consequences that have maximum probability and have high negative impact. The consequences having the highest probability of occurrence and potentially the most damaging outcomes should be identified with utmost priority. In this analysis, both long-term and short-term consequences must be quantified and taken into consideration. A short-term risk or negative result sometimes can turn into a benefit for longer term. It might be possible the company that is closing a plant now, will lead to the survival of the company in the future (Harper, 2015).
Identifying the Obligations – Obligations are those actions to which companies are bound to legally. The obligations and reasons for each complex decision should be identified. The obligations dependent on the nature and type of business. The company’s goal can only be achieved when the obligations are fulfilled. Compliance with the obligations strengthens a company’s reputation in the market and protects it from legal and financial harm. An organization can expand its business only through the strengthening of its reputation in the market (Nelson, Smith & Hunt, 2014).
Considering the Character and Integrity – In this step, decision is analyzed based on the mindset and values of those taking these decisions or actions. When an ethical dilemma is experienced, the first thing to be considered is the judgment of the people regarding the integrity and character of the business. The decision will be right only when the business is proud of publicly disclosing the actions undertakes and decision made while facing an ethical dilemma (Romiszowski, 2016). Considering this step is so important because customers nowadays assess the ethics of a company, product or decisions when considering buying products or using services.
Steps Taken by an Organization for Ethical Decision Making
Thinking Creatively Regarding the Potential Actions – The companies are required to put themselves in the creative thinking mode when faced with an ethical dilemma. Several options should be considered rather than making decision from only two choices. Broad thinking will assist the organization in evaluating various solutions for implementing change. Diversity should be adopted in the company. It guarantees different points of views and more scenarios to choose from (Thome & Ferrell, 2015).
Checking the Intuition – In other words: What does your gut tells you? Intuition is gaining reliability as a basis for good business decision making. In ethical choices, if the gut is bothering the company, it means something is not right. In fact, it may be only clue that the company has facing an ethical dilemma to deal with. It can be a source of sympathy for those affected by a decision. So, it is important to pay attention to the guts. But, don’t let the guts make the decision for the company. Sometimes the decisions based on intuitions can put the company into troubles as they may prove to be wrong (Shapiro & Stefkovich, 2016). Once the company discovers that it is facing ethical dilemma, it can use the coherent decision-making tools to guide the decision making.
The company is familiar with and has considered the steps suggested by Trevino and Nelson as it assists in making effective ethical decisions. The first two steps of the ethical decision-making process of Trevino and Nelson has been covered by the company. The company first defines the problem and makes use of a number of sources for the purpose of collecting the needed data and information. Then it assesses and analyses the information before concluding and making any decision (Betsch, 2014). Moreover, the company also thinks of the effect that will result from such decision which is also suggested by Trevino and Nelson. The parties who may suffer, or benefit, from the effect of such decisions can be the shareholders, customers, employees, government and neighboring communities. In other words, the pros and cons of the decision are carefully assessed by the company, same as that provided by the eight-step guide of Trevino and Nelson (Schwartz, 2016).
Differentiation between the short and long-term consequences is an important step in the ethical decision-making process suggested by Trevino and Nelson, however, it is not undertaken by the chosen organization. It also does not make in- depth analysis of the legal obligations associated with the ethical problem. The selected company also seems to have little concern about their public image. Where Trevino and Nelson advocate for creative thinking during the decision-making process, the concerned organization is more rigid and does not allow creative thinking (Lehnert, Park & Singh, 2015). In my opinion, companies that are not involved directly in consumer products can afford to ignore public opinion. It is probably more difficult for a company that sells their products directly to the consumers, e.g. Nike or Coca Cola.
Conclusion
Therefore, it is fair to say that there are a number of factors which are not undertaken in the ethical decision-making process of the concerned company.
The reviewed company should adopt an ethical decision-making process by considering all the major factors covered by Trevino and Nelson. It is recommended that the company identifies the need to make ethical decisions and searches for relevant information so that an informed decision can be made. The collection and analyses of the correct information will assist the company in formulating alternatives to choose from. The alternative to be selected should be the one which contributes the most towards the organizational goals. The one leading towards negative consequences should be left (Snyder & Diesing, 2015). The alternative that protects and strengthens the integrity of the company should be selected by the organization. After the selection of the best alternative, the decision should be socialized, executed and implemented. At the end, the company should review and evaluate the outcome and impact of its decision. The company should assess whether the action taken has effectively addressed the organizational needs. If the predetermined targets are not met, then the target, the strategy and the provisioned means should be revised. If needed, a better plan should be framed (O’ Connor & Aranda, 2016).
A special relationship exists with the employer of the concerned company which is based on the degree of loyalty. As a corporate representative, actions are considered as the actions undertaken by the company. Following are an employee’s responsibilities towards the employer:
As a corporate representative of the company, it is my responsibility to aim at increasing the reputation or goodwill of the company by way of working in a way such that the satisfaction of the customers can be enhanced. If not possible, it should be ensured that no such act is done which causes a detrimental effect on the reputation. Furthermore, it is the duty of every employee, that the reputation of the company is not used by the employees for their personal purposes (Flach, 2014). Furthermore, it is every employee’s responsibility to undertake internal reputation building by shaping the behaviors and activities such that it formulates corporate reputation. Reputation building is not a responsibility which is specifically mentioned in the job description of the employees but it a part of external role behavior. It is also the duty to create awareness among the newly joined employees regarding their responsibilities to build and maintain the reputation of the company. In this way, all the employees will be able to contribute towards the achievement of the corporate goals by the organization with the help of its reputation in the marketplace (Flammer & Luo, 2017).
The term financial resources can be defined as the money available with the business in the form of credit lines, liquid securities and cash for meeting its expenses. Sufficient financial resources are required to be maintained by every business for the purpose of operating in an efficient manner and promoting its success. Being a part of the company, it is every employee’s duty to not disclose the confidential financial information of the company to outsiders or the industry competitors. In other words, each and every employee should maintain loyalty towards the company (Harper, 2015). An employee helps the company in fulfilling corporate social responsibilities – an employee supports the efforts of his company to take up its corporate social responsibilities, e.g. by undertaking society healthcare responsibility, sponsoring matches, assisting poor children to get a good education, provide good ambiance and clean environment to the downtrodden community (Pedersen, 2015). In this way, the company can use its funds for the benefits of the society. Suggestions can be provided by the employees regarding the areas where the company can make investment for obtaining better amount of profit. It is also the responsibility to perform the finance relating operations in a strict manner and not making manipulations of the accounts or the related processes. No employee should make personal contracts in the name of the company and should earn only fair remuneration to which he/ she is entitled (Crane & Matten, 2016).
As an employee of the company, it is a responsibility to provide honest information/ data to the employer and stakeholders. This will assist the company in making informed decisions. Honesty is considered to be the best policy, it will not only offer better opportunities to the employees but will also result in immense success of the company. Therefore, the employees are required to follow the morally correct path. Furthermore, it is the employee’s responsibility to protect the confidentiality of information regarding the company. The employees are also not allowed to disclose any information to third parties or the competitors. An employee, however, is required to disclose the financial position of the company in a truthful manner and without any manipulation towards the management and shareholders. Since some employees are involved in the internal operations of the business, they can also predict the future threats for the company. It is their responsibility to make the company aware of such threats so that needed action can be taken on timely basis. The stakeholders should also be provided honest and accurate information regarding the profit and loss accounts of the company so that they can make an informed decision. In other words, the shareholders and the stakeholders should be provided correct and honest information so that they take decisions regarding whether to invest in the company or not (Shekshnia, Ledeneva, & Denisova- Schmidt, 2017).
An ethical problem can be defined as a situation or problem that requires a person or organization to make selection among right (ethical) or wrong (unethical) alternatives. The smooth functioning of the organization is hindered by the ethical problems to a great extent. If the responsibilities are not fulfilled by the employees, ethical problems or issues may arise. Such ethical problems may result from the actions which are not clarified by the company by listing it into the policies of the company (Weiss, 2014).
Those are the issues, which requires a person to categorize the performance as right or wrong. These problems cause the disturbance in the good functioning of the organization. If responsibilities are not fulfilled according to the requirements, it may lead to an ethical issue. Any action that is not included or described in the company policies and responsibility may lead to be an ethical problem (Ruck, 2017).A company faces an ethical problem when an illegal activity is performed by an employee that hampers the growth of the company as a consequence. If an employee does not fulfill its responsibilities towards the organization, then the company faces the ethical problem of whether to retain the employee for his qualifications or to terminate his employment (Eshleman, 2014). Sometimes, unethical use of the company’s reputation is also made by the employees which also puts the company into trouble and affects its growth. In such circumstances, the company is required to consider the utilitarian theory which provides that value can be created by the organization only by making the use of the best action. Any act or work being done against the interest of the company will not provide utility to the company. Therefore, it will result in ethical problem or issue for the company (Su, 2014).
The employer or the company gets severly affceted as a result of misuse or abuse of the company resources by the employees. The misuse by the employees can be in any form such as misusing the compter system of the company or violating the employee permissive use policy. Moreover, sometimes the postage and office supplies are under theft by the employees. In some cases, the employees start to run other competitive business out of the company after gaining the needed knowledge for running the business by working in the company (Pettigrew, 2014). The company has to bear the cost of such expenses incurred by the employees. Such instances often result in weakening the financial reserves of the company . Furthermore, the company’s expenses are increased by its misuse by the employees. Some employees also indulge in the illegal activities which results in prompting other employees as well. Such activities ultimately impacts the organztaion by decreasing its productivity. This in turn, also lowers the market value of the shares of the company (Erskine, 2016). Technology used by the company is often abused by its employees which reduces its productivity and profitability. When false use of financial resources are made by an organization, even suppliers refuse to deliver raw materials to the company. Inappropriateness of the balance sheet will also result in the bad impact on the stakeholders and other interested persons in the company. The threat of unpaid debts may lead the suppliers to stop delivering raw materials to the business. Agency costs may arise as a result of the use of company resources by the employees for their personal purposes. It is the duty of the employees to understand that misappropriation of the assets of the company is considered to be the breach of their duty towards the company. It can further be regarded as the act of fraud against the company. Using the company resources without permission can also be considered as the theft and can also result in the termination of employment (Pearson, 2017).
Misusing company resources will result in weakening the financial reserves of the company. In case of criminal behaviour, the case will be taken to court against the company that requires a lot of money. Draining financial resources can hinder the development of new technologies which can impact the company’s reputation (Brummer, 2015). “A good reputation comes on foot but goes on horseback”. Repairing a damaged reputation back is not an easy task in today’s scenario. It will increase the company’s expenditure in restoring its market value. At this point, revenue earned in past years all might have gone in smoke (Flach, 2014).
Giving wrong information to the shareholders is not only illegal, it will most certainly lead to a decrease of the share value of the company. As soon as their share value goes down, the company and its shareholders lose money. If employees of an organization start using company resources for their personal use, it will increase the company’s expenses. When one employee starts to indulge in illegal activities, other employees might start doing the same. That leads to a decreased productivity. Decreasing productivity will most likely be reflected in lower market value of the shares. The misuse of technology by employees results in decrease the productivity of the company. A supplier may halt delivering raw material due to false use of financial resources. If the balance sheet of the company is not appropriate, it will conceal the bad impact of the company on its environment. Supplier may choose to escape the threat of unpaid debts and stop delivering the necessary goods.
Misuse of company’s resources by an employee increases the costs of the company. Agency costs incur when an employee makes use of company resources for own use (Corporate finance institute, 2018).
Conclusion
Through the above discussion, it can be concluded that it is the responsibility of an employee to represent a company in a positive manner. The employee is responsible for promoting the goodwill of the company. The employee is also responsible for maintaining proper accounts of the company along with ensuring that there is no manipulation in such accounts. The employee is responsible for providing honest information to shareholders as well as customers. Analysis of financial statements is necessary for the performance of work by an employee because it helps the company to progress financially. If an employee does not fulfil these responsibilities with due care, this leads to an ethical problem. Employees of an organization sometimes indulge in illegal activities that disturbs the working of the organization. Due to a disturbance in work, productivity decreases. Revenues may decrease because of a damaged reputation. Due to misconduct, companies may end up paying a high price. Repairing a damaged image and making up for lost earnings may take a long time, a lot of effort and eventually also a lot of money.
From the second part of the report, it can be concluded that decision-making processes should help the company in achieving predetermined goals. Trevino and Nelson described a useful decision-making process in 2014 for taking ethical decisions. Their process includes the consideration of the feasibility of any decision to contribute adequately to the company’s goal. The concerned company is a leading infrastructure company of Malaysia who believes in providing best facilities to its people by doing development of the property. The 3C’s approach of the organization is increasing capabilities and skills of employees through learning various technical terms used by the organization. By investing in technologies, the selected organization is developing the various new innovative approach.
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