Topic 7 Contextualizing Business Ethics

Employees and Business Ethics

We have looked at internal and external environments and why it is important to an organization. Within the Internal Environment we see Employees as a component include its owners, board of directors, employees and organized labor and organizational culture.

·         Owners

·         Board of Directors

·         Employees

·         Culture

Management of human resources implies more than just the application of economic criteria. Human beings within the firm are a means to an end according to Crane and Matten. From an ethical perspective they should not be treated as a means only. It is this restriction that makes a difference in term of business ethics.

Let us look at employees in relations to business ethics.

Employee Rights	Issues Involved
·         Right to Freedom from discrimination.        ·         Right to Privacy.             ·         Right to due process.       ·         Right to participation and associations.       ·         Right to healthy and Safe working conditions     ·         Right to fair Wages       ·         Right to freedom of Conscience and Speech   ·         Right to work	Equal Opportunities. Affirmative Action. Reverse discrimination. Sexual and Racial harassment.   Health and Drug testing. Work-life balance. Presenteeism. Electronic Privacy and data protection.   Promotion. Firing. Disciplinary proceedings.     Organization of workers (Unions etc.). Participation in company’s union.     Working Conditions. Occupational health & Safety.     Pay. Industrial Actions. New forms of work.   Whistleblowing.   Fair treatment in interview. Non-discriminatory rules for recruitment.
Employee Duties	Issues Involved
·         Duty to comply with labour contract.       ·         Duty to comply with the law.   ·         Duty to respect the employer’s property.	Acceptable level of performance. Work Quality. Loyalty to the firm.   Bribery.   Working time. Unauthorized use of company resources for private purposes. Fraud, theft, embezzlement.
Rights and Duties of employees as stakeholders of the firm. Adopted: Figure 7.2 Crane and Matten (2007)

We touched on managing diversity in organization however let us look some issues that may arise when it comes to employee-employers relationship.

Discrimination.

What is discrimination? Discrimination in the business context occurs when employees receive preferential (or less preferential) treatment) on grounds that are not directly related to their qualifications and performance in the job.

The most common bases for discrimination in the workplace are;

·         Race

·         Gender

·         Age

·         Religion

·         Disability

·         Nationality.

There are other factors not related to job performance but might be used to discriminate against employees, some of which are as follows;

·         Marital status

·         Physical Appearance

·         Sexual Orientation

·         Gender reassignment

·         Cultural groups.

Countries around the world are addressing the issue of discrimination be enacting legislations to protect the rights of employees. 

Sexual and Racial Harassment

As well as discrimination occurring in the area of promotion, pay and job opportunities, diversity considerations also have to take account of physical, verbal, and emotional harassment. In the case of sexual harassments, problems may arise when certain sexual favours are requested when it comes to promotion etc.

How to Deal with Discrimination and Sexual Harassments?

Organizations are required to come up with Equal Opportunities and Affirmative Actions, in the form of;

·         Legislations

·         Recruitment Policies

·         Fair Job Criteria

·         Training Programmes for discriminate minorities

·         Promotions to senior positions encouraging equality

·         Psychological Privacy

·         Health and Drug Testing

·         Due process and layoff – Consultations and determinations

·         Working Conditions

·         Flexible working patterns

·         Fair Wages

·         Freedom of Conscience and Speech

·         The Right to Work 

Consumers and Business Ethics

Consumers are the most valuable and important stakeholders for any organization, since with the support of consumers and their support, organization may not survive for very long. Let us look at consumers as stakeholders. There have been numerous examples of firms being accused of treating their customers in questionable manners. Let us look at some example;

·         Multinational Drug Companies have been accused of exploiting the sick and the poor in developing countries by maintaining high prices for HIV treatments and preventing the sale of cheaper generic drugs. 

·         Fast food and soft drinks companies have been condemned for targeting children with unhealthy, high sugar, low nutritional products. 

·         Banks and Credit card companies have been accused of putting their customers at risk of financial ruin by offering easy credit to people who are already in serious debt. 

·         Mobile phone companies have been condemned for overcharging their customers with expensive cross network call rates. 

·         Technology companies have provoked criticism for accommodating censorship in product such as search engines, internet routers and email services to comply with regressive regimes despite violating consumer’s rights. 

·         Schools have been criticized for offering people with cheap processed food rather than healthy nutritional food and we can continue with many others. 

‘Consumer’s rights rest upon the assumption that consumer dignity should be respected and that producers have a duty to treat consumers as ends in themselves, and not only as means to the end of the producer. Thus, consumer rights are inalienable entitlements to fair treatment when entering into exchanges with other parties.’ (Crane and Matten, 2007) 

Ethical Issues, Marketing and the Consumers

When discussing and dealing with ethical issues and consumers, you will come across a whole range of issues and problems. Let us looking at the area of marketing activities; 

Ethical Issues in Marketing Management

Most ethical issues concerning business-consumer relations refer to the main tools of marketing management, commonly known as the marketing mix which normally looks at the Product policies, marketing communications, pricing approaches and distribution approaches. 

  

Area of Marketing	Common Ethical Problems	Rights Involved
Marketing Management ·         Product Policies     ·         Communication                 ·         Pricing           ·         Distribution         Marketing Strategy       Market Research	·         Product Safety ·         Fitness for purpose.   ·         Deception ·         Misleading Claims ·         Intrusiveness ·         Promote materialism ·         Create artificial wants ·         Perpetuating dissatisfaction ·         Reinforcing stereotypes   ·         Excessive pricing ·         Price fixing ·         Predatory Pricing ·         Deceptive pricing     ·         Buyer-Seller relationship ·         Gifts & Bribes ·         Slotting Fees     Targeting vulnerable consumers. Consumer exclusion.     Privacy issues.	Right to safe & fit for consumption purposes.     Right to honest and fair communications. Right to privacy.           Right to fair pricing           Right to engage in markets. Right to make free choice.         Right to be free from discrimination Right to basic freedoms and amenities Right to privacy
Figure 8.2 Ethical Issues, Marketing, and the Consumer (Crane & Matten. 2007)

 

Ethical Challenges In the Global Marketplace

Similarities in consumer needs across different countries have been widely identified as one of the key drivers of globalization in business. These developments have clearly extended many issues identified in the previous section to an international context.

Problem of targeting vulnerable consumers becomes an increase problem (population poor, illiterate and uneducated population, poor consumer taste and preferences, inexperience in technical issues etc.).

Four main considerations;

Reproduction of consumerism – Products have matured in developed countries are being marketed into new international markets.

Dislocation of Production and Consumption - Increasing living standards and material wealth has increase the production of goods and consumption. Example; producers from developed countries carrying out product in a developing country thousands of miles away and creating demand through consumers in developing as well as developed countries. (Low wages for production and sold in develop countries at high prices).

Cultural Homogenization – When discussing cultural homogenization, you are looking at critical issue that focuses on the exporting of global products and brands on local cultures, and the effective homogenization of certain cultures. Global media, entertainment industries are good examples of exporting and promoting cultural homogenization.

New Forms of Resistance – New form of resistance by consumers against corporations’ exploitation and unethical practices are taking place worldwide through the use of internet, social media and other means of communication. 

Students are encouraged to read more into this topic.

 

Sources:

Andrew Crane and Dirk Matten, 2007 Business Ethics Second Edition

Nickel, McHugh, McHugh, (2005) Understanding Business 7^th Edition, McGraw-Hill Johnson, Abramov, Business Ethics 2004, “A Publication of the Good Governance Program” International Trade Administration Washington D.C. 2004