Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization
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Decisions are bound to be made on a daily basis whether on an individual or corporate level. The actions taken after the decision may lead to positive or negative outcomes. Ethics, therefore, is an important aspect that guides decision making both at a personal level and as a company. Ethics is described as the accepted moral values within a society or a given organization(Hoffman, Frederick, & Shwartz, 2013). It gives organizations and individual the outline of accepted practices and guides the decision making process to yield the preferable results without causing harm to others. Decisions define the success of any given organization because they are made on daily a basis, ranging from the top level management decisions to the support staff routine decision making. Ethical standards are important as they ensure all the stakeholders act sensibly. It is because of this reason that ethical standards play a crucial role in the success of an organization.
One of the common ethical issues at an organizational level are the issues concerning the management of human resources. I have witnessed a human resource practitioner faced with an ethical dilemma concerning matters of recruitment, selection, fair working conditions, and remuneration(Seglin, 2011). The manager in charge of hiring and managing the human resources of any given organization face tough decision while performing their duties. Under the situation, I experienced, thehuman resource manager was put under pressure by the finance department to reduce the cost of labor for the company to realize sustainable profits. To achieve the set profit target of the company, the human resource manager had the alternative of hiring individual with low qualifications, or fire some of the employees to reduce the wage bill, or significantly reduce the salaries and benefits the employees are getting from the firm.
From the above situation, the personnel manager is under an ethical dilemma situation. This is because both decisions and actions that he would take will have both positive and negative outcomes. First of all, it is ethical for the human resource manager to respect the directives from the senior management and serve the interest of the company to increase profits(Crane & Matten, 2012). However, by complying with these instructions will cause some employees to lose their jobs without sufficient or convincing reasons. This infringes the rights of the employees by terminating them without good reasons. If he employees with fewer skilled workers, the company will have a low wage bill, but the quality of work will be compromised and hence put the company at stake. Secondly, it is ethical for the human resource manager to protect the employees from termination without valid explanations(Seglin, 2011). Therefore, the manager is faced with two choices that both seem morally correct, but the outcomes have ethical considerations too. However, the manager was left with no choice and decided to terminate some employees, reduce salaries and employee benefits for the remaining workers.
The stakeholders affected by the decision of the human resource manager include the management, the employees, both the fired and those still working, and the clients of the organization. The management is affected because the company is understaffed and the available resources underutilized. This means most of the resources go to waste and hence increasing losses made by the firm in the long run. By hiring low skilled personnel translates to low wages as directed by the management(Hoffman, Frederick, & Shwartz, 2013). However, the employees will give poor work quality due to lack of required expertise and hence the management may lose business to their close market rivals.
The employees who are fired are adversely affected due to the loss of their source of lively hood. It is also against their right, to terminate their employment with no valid reason. Such individuals’ lives are changed and it affects their families too, if they were the main providers(Crane & Matten, 2012). The workers who remain on the job are also affected adversely due to the reduction in their number. They have to perform extra work and take extra time to finish what the terminated personnel used to do. With time such employees lose job morale due to low pay and long hours of work.
Clients of the firm will also be affected by this decision because of the poor quality of work. Termination of some employees will make the organization to be understaffed and hence unable to meet the growing demand for their products. This affects the final consumers due to the forces of demand and supply. Hiring low skilled employees has a direct impact on the quality of work output(Seglin, 2011). The consumers will, therefore, receive substandard products. This reduces the utility clients derive from consuming the services and products of the firm.
What would be considered the right outcome of the human resource manager’s decision, is the reduction of labor cost. Some of the things that constitute to high labor cost are high cost of wages and salaries, high number of employees, good working conditions, and employee benefits. By terminating the employment of some employees, the wage bill of the company reduces(Hoffman, Frederick, & Shwartz, 2013). The management will also offer lower salaries to less skilled employs and the reduction in the remuneration of the existing employees also reduce the labor cost. Therefore, the management would consider this outcome to be ‘right’ according to their expectations.
However, it would also be considered wrong for the human resource boss to terminate employment agreements, reduce salaries and benefits, and hire less skilled. It is unethical for any employer to terminate the employment agreements of his/her workers without valid reasons. The process of selecting who is to be fired is also faced with ethical considerations and bias may prevail the process(Hoffman, Frederick, & Shwartz, 2013). Employees are supposed to be remunerated in accordance with their contribution to the company. Underpaying the employee for the benefit of the company is considered unethical and wrong. By reducing the number of employees in an organization makes the remaining workers work overtime. This is unethical as it denies them the crucial time to balance work and family. It is going against the rights of the workers by adding them more tasks without changing their terms of payment.
The human resource manager made his decision based on the ethical principles of the firm. His decision to implement the directive of the management concerning cutting on labor cost, was influenced by the ethical principal that requires all the employees to respect the management and serve the interest of the company and not their own interest(Crane & Matten, 2012). If he would not implement the plan, then the human resource manager will be considered to have behaved in contempt of his seniors.The management of the firm spearhead the interest of the company and communicate it down to the least of ranks among the employees. In this case the firm’s interest is to reduce the cost incurred on manpower and hence increase the profit margins. As much as this decision when put to action affects livelihood of employees and the success of the firm, the human resource manager has to follow the code of ethics that requires him to respect decisions from persons at a higher rank than him.
Biases also played a major role in influencing the decision and action taken by the personnel manager. He took the decision in favor of the management since he has a lower rank to them. By favoring them, he reduces the risk of him being questioned or even fired. If he does not be biased in his decision then he would not have served any of the parties due to the natter at hand being an ethical dilemma(Hoffman, Frederick, & Shwartz, 2013). This means that both the alternatives he had seemed morally right. It is ethical for him to protect employees from termination and remuneration reduction, because the company may incur high losses in the long run if that action is taken. However, it is also his moral responsibility to execute the plans and instructions of his colleagues in senior positions than him. Therefore, his action is justifiable as ethical. It is because of this dilemma that the manager had to apply bias for him to find a way out. This bias is mainly as a result of seniority of management over the personnel manager.
To address the ethical dilemma at hand, it would be wise for the human resource manager and the management to discuss the issue at hand. Then they organize a forum with both the management and the employees over the cost of labor. During the talks, the personnel manager will have a chance to explain to the management why the human resources are the most important resources for the success of the firm(Seglin, 2011). He would advise the top managers on other methods of costs reduction other than termination and pay cut. Measures such as doing massive advertising and publicity would increase the sales margin of the company. This is directly proportional to profits and it can be adopted instead of firing employees. The company may also invest more in the employees to increase their efficiency and skills. By doing productivity will go high and they will produce quality products and services that would more potential customers and increase sales turnouts.
Human beings and organizations are faced with situations that require decision making on a daily basis. Ethics is those values that are used to distinguish between right and wrong in an organization or a society. The decision made always have consequences and the consequences are judged based on the set moral values. Human resource practitioners are faced with ethical dilemmas in their daily responsibilities, that is; recruitment, selection, training, and termination. During this decisions and actions several stakeholders are affected. The management, the employees, and the clients are all affected by the decisions of the human resource manager. At times it is difficult to consider what is right and what is wrong due to both outcomes seeming morally correct. This situation is called an ethical dilemma. To overcome such situations all stakeholders of a given organization should frequently have meetings and talks to update the code of ethics and discuss solutions to difficult ethical situations.
Crane, A., & Matten, D. (2012). Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. New York C: Oxford University Press.
Hoffman, M., Frederick, R., & Shwartz, M. (2013). Business Ethics: Readings and Cases in Corporate Morality. New York: Wiley-Blackwell.
Seglin, J. (2011). The Good, the Bad, and Your Business: Choosing Right When Ethical Dilemmas Pull You Apart . Boston: Wiley Publishers.