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Course BUSI1314: Business Ethics Course School/Level BU/UG

Coursework Business ethics - Portfolio 2 Assessment Weight 40.00%
Tutor L Catchpowle Submission Deadline 12/01/2010

Portfolio

Coursework is receipted on the understanding that it is the student's own work and that it has not,
in whole or part, been presented elsewhere for assessment. Where material has been used from
other sources it has been properly acknowledged in accordance with the University's Regulations
regarding Cheating and Plagiarism.

000532454 Matilda Akinyemi

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MATILDA C. AKINYEMI – STUDENT NO. OOO532454

BUSINESS ETHICS – PORTFOLIO – ASSIGNMENT 2:

INTRODUTION:

The task expects me to answer the questions from any three case studies

attempted in the tutorials. I have chosen these three case studies: Turner &

Newall: 1. (Week 4) The Case of the Asbestos Industry. 2. (Week 6) The HR

Manager’s Dilemma. 3. (7) The Caveat Emptor: Are Super Normal Profits

Acceptable? To deal with these tasks several corporate issues will be taken into

consideration. The methodology for answering these questions will include the

application of some “Ethical Theories,” bearing in mind the range of ethical

issues involved as well as their implications. According to Guest, (1987), quite

often most Corporate Bodies use profitability as their means of measure for high

performance, thereby limiting themselves only to the Shareholders interest, at

the expense of other Stakeholders. It will consider the influence of individual

actors since they have moral obligations to the Stakeholders too.

CASE STUDY 1:

TURNER & NEWALL: THE CASE STUDY OF THE ASBESTOS INDUSTRY:

A)

The use of the bankruptcy law by Asbestos Companies was not an adequate way

to deal with the liabilities that arise in toxic pollution incidents. In the first

instance, this Company played ignorance for a very long period irrespective of

the number of deaths involved, even though it had good knowledge of the cause

of such deaths. According to Waite 1993, by 1920, Turner & Newall Company
was very much aware that the loss of about one third of its workforce was due to

the inhalation of certain dust classified as asbestos, yet it failed to disclose this

to its workforce. This demonstrated that the Company placed profits above

humanity. “Asbestos is derived from the Greek word incombustible.” Though

the product was in high demand because it was very useful for the productions

of - “Motor Vehicles, Ships, Electrical and Power Generating Equipment, and

largely in the Building Industry;” but it was very dangerous and hazardous to

human body. Irrespective of these dangers it maintained the policy of “Secrecy”

and ignored all other important issues relating to humanity, such as “Duties of

Care, Distributive Justice, Informed Consent and Corporate Responsibility.” The

report recorded that by 1980, its profit was more than £300 million, and the

profit making continued until 1980. According to Jeremy 1995, up to 16% profit

was returned to its shareholders in some years, yet they continued to deny their

employees their right to “Health and Safety” environment.

Though there has been no definite line drawn for ethical values in the history of

the HRM. The essence of ethics therefore depends on the theory that an

individual or an organisation wish to adopt. There are presently several theories

on ethics and moral behaviou , I will assume that the theory applied by this

Company was Utilitarianism. In all the theories, this has too large a loop-hole

that can easily tolerate several discrepancies without so many challenges on

ethical issues. This is because Organisations are not confined to the application

of a particular theory. In Utilitarianism, “the morality of actions is to be judged

by their consequences.” In other words, an action is moral if when compared

with an alternative action, it brings more happiness and joy to the individuals. It

also signifies the placement of the Shareholders interest over all other

Stakeholders. Irrespective of the disclosure of several asbestos related deaths,

published in the British Medical Journal 1924 and 1927, Jeremy 1995, (page 256),
Turner & Newall refused to accept liability in order to avoid the payment of

compensations to the victims.

The Asbestos Companies making use of the bankruptcy law is not an adequate

way to deal with the liability claims because of their lack of open policy to

disclose the consequences of working in such Company. If the Company had

kept open policy for disclosure, then there will be choice for the employees to

work or not to work there. It was very necessary to have warned their

employees of the consequences in their work environment and give them the

opportunity for choice. Their actions for the maintenance of “Secrecy” as well as

the “Denial” of negligence to their employees failed short of credibility. Though

the idea of bankruptcy law was a good effort to reach solution, but it was

ethically wrong. This is because of all the circumstances that surrounded the

case. Nothing could really compensate for the lost of lives, nor for the pains that

were inflicted on the victims and their relatives through highly concealed

Corporate irresponsibility.

B)

The responsibility for the liability and damage done to workers and consumers in

this situation should not simply be divided among all the Stakeholders because

most of them have no knowledge of the dealings by the Executives of the

Company. Therefore, the responsibility for liability should be given to those

actors who were directly involved in the decision making of the Company; such

as the Board of Directors and the Executives. These actors were very influential

even in the act of Secrecy. They also have direct influence at the Managerial

levels. The second category will be the Managers, especially for the

implementation of the decisions reached by the Board. They were very

committed in the maintenance of their Employment Code of Secrecy, but they

considered not the health and sufferings of the employees and the public,

thereby overlooking the Standard Code of Conduct to all Stakeholders . The third

category is the Medical Professionals due to their lack of publication of the

terrible threat of asbestos to humanity. Their profession demands moral

obligation at all times especially in a situation such as this that involved mass

deaths. The Media should also be blamed for not playing an effective role on its

own. They could have created adequate public awareness on their own without

being instructed by the Medical Professionals. The Media has the power to act

on its own even as an art of propaganda against the Company. The Government

was not tough enough on this Company, even though it introduced “Health and

Safety” standards. The Company delayed in the implementation of its Health

and Safety Policy, instead it went into negotiation with the Government, yet they

were not adequately punished for their actions. The Executives clearly

demonstrated their loyalty to the Company as a Corporate Body, and this loyalty

to the Company and its Shareholders eventually superseded their Duty of Care to

other Stakeholders. According to Bok 1983, (page 106), “the act of secrecy

carries some risks of corruption and irrationality; if they dispose of greater than

ordinary power over others, and if this power is exercised in secret, with no

accountability to those whom it affects, the invitation to abuse is great.”

Workers and Trade Unions, I will categorise as the victims. Though they brought

this issue to the open, but in most cases, those at the realm of power subdue

these categories of actors to nothingness, and their voices will almost be

silenced. Turner & Newall Company treated other Stakeholders poorly compared

with the “Mining and Textiles Industries,” that were in similar position, but they

were open to their employees. Their employees had full knowledge of the

dangers and demanded for higher wages that befitted the risks they were

prepared to take. That is how to be civil.

C).

The ‘Goyder sanction’ can be practical in an ideal world. But this is not the case

in the world we are living in. The principle of most Companies is based in the

theory of “Capitalism,” which promotes Egotism and Utilitarianism. The concept

of Egotism is based on self-interest and personal profits. This concept failed to

take into consideration the consequences of making profits at all costs, because

its foundation is ‘Subjective’ and not ‘Objective.’ Though, all things being equal,

the bankruptcy law can be practical, especially if the Company has the interest

of the Society and mankind at heart. This will place Duty of Care and Ethical

Issues over loyalty to the Company and Shareholders interest. In order to

redress this I recommend that: a) Ethical and Moral Principles should become

part of Internal Policy and requirements for all Companies. b) Quality Standard

System should be raised to enable high standard of supervision on management.

c) Transparency and disclosure to all Stakeholders. d) Creation of Ethical

Policies as a watch dog for Companies. e) Incorporation of the management of

Corporate Social Responsibilities to the HRM of the Companies. f) Company

leadership should serve as a role model in the observation of its Ethical and

Moral issues.

D).

The management of a Company should be held personally responsible when they

act in the interests of their Company, because they also partake in the sharing of

the profits accumulated by the Company. The “Theological and Deontological”

concept identified the need of moral responsibility by individuals. Apart from the

moral and ethical standard set by Companies, their Managers should also

observe personal moral responsibilities to the Stakeholders. Otherwise such

persons are not suitable to serve the interest of the public. The Company should
be punished by forcing them to pay very high compensation to the victims.

Perhaps, immediate closure of the Company to public use, since their main

agenda is for exploitation, and they lack moral and ethical responsibilities.

Alternatively, there should be Government Intervention, as in the case of several

failed Corporate Bodies last year. Government should set up a Government

Agency that will monitor and regulate the activities of such Company especially

for the protection of public interest.

E).

The exporting Governments and Companies have a great deal of responsibilities

to other countries in the areas of - Informed Consent, Moral and Ethical issues

and Support in the implementation of a high standard of Business Ethics in se

countries, especially in the Developing Countries. According to Waite, (1993),

this was not the case with the dealings of Turner & Newall in Zimbabwe. In the

area of Informed Consent, the exporting Government and Companies must make

it clear of the implications of the failure to disclose the hazardous nature of the

products to all Stakeholders. Also, a system of sanctions must be set up in order

to deter the non implementation of a Safety Measure in those countries.

QUESTION 2:

THE HR MANAGER’S DILEMMA:

The principles that should apply in this case are – The intentions and Moral Ethics

of the individuals. The conviction of this staff will have negative impact on the

Company, because things went out of hand through the involvement of the
Media and public knowledge of the incident. This might affect the Company’s

reputation and image.

The appraisal will consider the merits of the matter before taking action. It will

take into consideration the deception and the false information he maintained

over five years. This was not of good reputation. Notwithstanding, his tax

evasion was a personal matter and had nothing to do with the work. Supposing

the person was only subletting a room in his house to enable him pay his

mortgage. But, if it was a calculated effort to cheat, I will consider his action to

be misleading. The appraisal will follow the Company’s procedures strictly. My

action will depend on the nature of the crime. Generally speaking, I will assume

that this ought to be the Government’s problem but not that of the HRM. Though

ethically and morally speaking, he was fraudulent. There was also a breakdown

of trust, honesty and virtue. Aristotle in his “Virtue Ethics” defined virtue and

honesty as too precious to undermine. Though, recently, our Members of

Parliament seem to have changed the moral climate through their fraudulent

claims over the past years, at the expense of the tax payers. Due to his

competence and the nature of the crime, I will assign him to a different section

which have no direct contact with the customers in order to preserve the

Company’s reputation.

As for the ex-offender candidate, having seen his potentials, I will take several

factors into consideration such as: His age at the time of crime and peer

pressure. His present aspirations, his achievements and his ability to disclose his

crime voluntarily. On the strength of all these, I will give him another chance.

This will not only empower him but it will be of benefit of the Society. My

decision will be based on these factors: A) The fact that honesty is a moral

dimension and a virtue. B) The notion of the crime and consequences, and he
has served for it. C) Rehabilitation of Offenders Act, which pardons violence

offences after ten years. D) Giving him a chance serves as a moral decision. E)

Provision of psychological and mental support for him as part of the workforce.

QUESTION 3.

CAVEAT EMPTOR: ARE SUPER NORMAL PROFITS ACCEPTABLE?

A).

Dealing with this issue will depend on the interest of the Company and its

standard of ethical and moral values. There is no correct answer to this

question. I will observe whether the individual has acted outside the Company’s

Ethos. It should be borne in mind that the salesman was bragging on what he

referred to as “hoodwinked the MoD.” He was simply referring to his power of

negotiation that led to the super profit. First of all, negotiation took place before

an agreement was reached. Personally, I will not take any action because the

salesman performed his duty appropriately. The main goal of any Firm is to

make profits which enhances their growth and expansion. But ethically and

morally speaking, the profit was not ideal. Most industries are unethical and

most businesses find it difficult to deal with them ethical and their principles

might be bent a little for this course.

B).

In this situation it is not only the salesman that acted unethically, the buyers also

acted unethically, because they failed to protect the public interest. The ethics

do not stop with the salesman but the Organisations too. A Company can make

as much profit as it can as long as it keeps the law.

C).

The consequences for refusing to sign the account after the Managing Director

had signed will be detrimental. As an employee it is my duty to adhere and

respect the Company’s decisions. Being the Account Manager does not give me

the right over the corporate decision of the Company. It is also necessary to

assess the devastating position my action will place the Company and its entire

workforce. Personally, I will sign the account, on the note that the salesman’s

action should not repeat itself. I will also make my ethical and moral standards

clear before the Board of Directors.

D).

Under this circumstance, I will assume that their decision was based on my

refusal to sign the account, therefore it was an unfair discharge from my duties.

My next line of action will be consulting my lawyer and the Employment Tribunal.

Alternatively, in order to uphold my integrity, I might blow the whistle. This will

be the last resort, because the consequences might be overwhelming. This was

the case in “The Insider.” According to Van (2003), Wigand’s determination to

reveal what he perceived as unethical behaviour on the part of his employer was

classified as his ‘stubborn integrity.’ This character trait was not uncommon for

whistleblowers, and I will seriously consider it before taking such action.

References:

1. Business Ethics Case Study Material and Case Study Hand Book,

(2009/10), University of Greenwich.

2. Business Ethics Case Study Material and Case Study Hand Book,

(2009/10), University of Greenwich.

3. Business Ethics Case Study Material and Case Study Hand Book,

(2009/10), University of Greenwich.

4. Crane, T and Wolff, J. (1977), Routledge Philosophy Guidebook To Mill on

Utilitarianism, Routledge, Oxon.

5. Crane, T and Wolff, J. (1977), Routledge Philosophy Guidebook To Mill on

Utilitarianism, Routledge, Oxon.

6. Duckworth (1991), A Mclntyre, After Virtue: A Study on Moral Theory.

7. Guest, D.A (1987), Human Resource Management and Industrial Relations,

Journal of Management Studies, 24:503-21.

8. http://Ezine Articles/Com/Ethics, 8th December 2009.

9. Jubb, P. B (1999), “Whistleblowing”: Journal of Business Ethics, 21:1, 77-

94.

10.Macklin, R (1982), Man, Mind and Morality, Prentice Hall, Inc.

11.Macklin, R (1982), Man, Mind and Morality, Prentice Hall, Inc.