Running head: Historic Ethical 1

Historical Ethical Dilemmas

Stephanie Elliott
MGMT314 Mangement Ethics
Proffessor Samone Norsworthy
27 May 2018
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Abstract

Individuals are expected to follow a set of rules established collectively by a society in

order to ensure its survivability and progression. Based upon moral values, these rules offer

individuals guidelines on how to conduct themselves during specific situations and towards

others. To break a one of these rules would not only go against the beliefs of the society but

would result in negative lasting effects for everyone involved. The business world is no

different. Throughout this essay we will discuss some of the common forms of unethical

behaviors within the workforce and how organizational leaders can minimize these behaviors.

Additionally, we will discuss how ethics has evolved within the business world and whether or

not it played a role in the financial market crisis of 2008. Furthermore, we will take a look at

whether diversity and discrimination should be within a leader’s primary focus on ethics. Finally,

we will discuss if a business’s social responsibility is beneficial to them and the community.
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Common Forms of Unethical Behaviors in the Workforce

The human mind is just as complex as it is unpredictable. Our desires coupled with our

environment help shape how we feel, think and act. It is because that these desires can lead us to

perform unethically, we heavily rely upon our moral and ethical values to ensure that we do not.

We commit to following these social guidelines because it is the right thing to do, and doing so

would benefit society as a whole. This however, is not the case for everyone and unfortunately

many opt to engage in unethical behaviors for their own benefit without any regards to the

consequences. In today’s workforce, unethical behaviors have become very common, two of

them being theft and fraud.

Theft involves the misuse or attainment of company assets such as money, time,

information or supplies without proper authorization. A company such as Hewlett Packard could

have a wide range of unethical employees who commit theft in different ways. For example,

there could be a site manager who continuously attends medical appointments during work

hours, not report it, and get paid for those hours. There could also be a shift worker that is

secretly taking home printer parts in order to sell them for a lower price through the internet.

Fraud on the other hand, involves the purposeful deception of company employers or

clients in order to gain something of value. Employee who engage in this type of unethical

behavior usually are in search of attaining significant amounts of money. For example, an

employee can incur a severe leg injury outside of work and later claim it happened during work

hours. This type of fraud is categorized as worker’s compensation fraud, where the employee

attempts to acquire additional payment through employer deception.

Organizational leaders are responsible to ensure that all employees, regardless of the

level they are in, are engaging in sound, practical ethical behaviors. According to Stephen Reed,
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in order to prevent or minimize the effects that theft or fraud could have within an organization it

is critical for leader’s institute different types of procedures such as internal controls, reporting

systems, and expert consultations (2014). To ensure that an organization runs as smoothly as

possible, proper inspections of both product, services, and finances must be conducted at least on

a quarterly basis. These could help managers better monitor input and output of company assets

and identify any significant changes.

Evolution of Ethics within Businesses

Current ethical laws have not always been in place within our justice system. Before all

of this, business owners and managers hardly monitored -if not at all- the behaviors of their

employees. Unethical behaviors were widely accepted -especially from those in the upper

echelons- mainly due to the increase of wealth or status those involve benefitted from. However,

in the late 1970s the academic field of business ethics was born, providing a terminology and

central outline that spread to the media and to general culture (De George, n.d.). Soon, scandals

involving bribery, fraud and false advertising where highlighted leaving the government with no

other choice that to implement laws that protect the consumer, the company and its investors

from possible ruin.

Regardless of the reason of why ethical laws were implemented, it should go without

question that these have contributed to the financial and growth of businesses. Its influence is

visible. They have helped shaped the mission and vision of today’s businesses, shifting their

focus to something other than profit. Transparency, collaboration, and employee wellbeing are

but a few areas that companies in today’s day and age are choosing to focus on. In doing so they

stand to minimize risks that could potentially reduce company productivity and assets as well as
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boost their likeability with costumers. Unfortunately, these law have not been able to fully deter

unethical behaviors and their consequences.

The financial crisis of 2008 is a great example of this. Labeled as the worst economic

disaster since the Great Depression in 1929, the crisis began in 2006 when prices within the

housing market began to considerably fall. From there, banks began engaging in several

damaging investment moves, which ultimately resulted in the demise of several banks, the loss

of $7.4 trillion in stock wealth, $3.4 trillion in real estate wealth, $5.5 million American jobs, and

an estimated loss of $648 billion in income to the United States (Swagel, 2010).

For years analysts dissected the crisis in order to find its root cause. One of these was

deregulation. In 1999, the Glass-Steagall Act was repealed by Texas Senator Phil Gramm

Chairman of the Senate Committee on Banking, Housing and Urban Affairs. The repealed

allows banks to in invest in derivatives but only in low-risk securities to protect their customers.

In addition, he helped pass the Commodity Futures Modernization Act which exempted

derivatives from regulations (Amadeo, 2018). The problem lies in the development of both these

bills. The entity lobbying for the passing of the bill was the Enron Company who was also a

major contributor to the Senators campaigns.

Enron wished to engage in derivative trading using future exchanges. The bills would

allow them the opportunity to expertly perform these trades leading to their exponential growth.

There was a clear conflict of interest when these bills were being built and advocated for.

Senator Gramm and the Enron Company clearly showed signs of normative egoism in where the

individual pursues his or her own interest in order to maximize social welfare (Moseley, n.d.).

Their unethical selfish actions launched a chain reaction that devastated the entire world.
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Diversity and Discrimination: A Leader’s Focus

As ethics continues to play a key role in the development and success of today’s

businesses, it has become even more important for managers to acquire a deep understanding

about the subject. Two specific issues: diversity and discrimination have become essential

knowledge for managers to know in order to properly manage their workforce. This is due to the

fact that both subjects have been in the forefront of business ethics, mainly due to a high amount

of individuals who have experiences some sort of unfair treatment due to their race, gender,

religious background, or age. For this reason great emphasis has been place in diversity training,

and the deterrence of discriminating behavior.

Diversity has its benefits. First, it increases creativity within a company. A diverse

workforce paves the way for new experiences and skills to be obtained which in turn would lead

to new and innovative processes, products and services. Second, it provides a better consumer

understanding, meaning it gives a different viewpoint of a specific demographic group that

others could not provide. This in turn could help shift product focus increasing company profits.

Third, it enables richer brainstorming sessions in which different opinions and ideas based on

employee experiences are brought up for consideration (Altman, 2017).

Discrimination on the other hand, brings disadvantages to a company. For example,

companies that foster an environment in where discrimination is tolerated open themselves to

legal action in which if found guilty, the company can be force to pay remunerations to the

victim. Additionally, discrimination decreases employee productivity. Since feelings of

helplessness and anxiety can affect the employee being discriminated against, he or she could

begin developing a lack of interest in their jobs. This would in turn create a deficiency that now

the company must quickly make up for.

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A Business’s Social Responsibility

As times has passed we have seen more and more companies get involved with the

community; this is what we have called social responsibility. It is a code that compels

companies to behave ethically toward social, cultural, economic and environmental issues

(Enevoldson, n.d.). Those who engage in social responsibility do so by encouraging employees

to engage in community service, supporting community youth programs or contributing money

to charities. A good example is the Target Company who have donated five percent of their

profits to the local communities that their stores are located in. Since 2010, they have donated

more than $875 million in money and goods (Moreno, 2015).

There are various reasons as to why companies decide to engage in social responsibility.

For one it helps boost their reputation and establish rapport with the local community. People

who witness how engaging and caring a company is towards them and their community will

more than likely purchase their products or services. Additionally, companies stand to boost

employee approval since volunteerism can help with self-actualization and increase confidence.

Finally, through social responsibility, companies can help attract investors, boost revenue and

forge new corporate partnerships.

Summary

Throughout this essay we discussed two common forms of unethical behaviors: theft and

fraud and how managers through the use of internal controls, reporting systems and expert

consultation can minimize its effects and deter future incidents. We also took a look at how

ethics has evolved within the business world and how one small unethical behavior due to

egoism led to the biggest financial crisis since the Great Depression. Finally, we examined the

importance of a manager’s knowledge and advocacy of both diversity and discrimination as well
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as how a company’s social responsibility helps increase profits, achieve employee self-

actualization and sustain positive community growth.

Ethics affects us all both personally and professionally. Its importance cannot to be

ignored by companies who want to continue to exist in today’s market or its employees. To

behave ethically we must first take a look at our own personal values and as ourselves whether

are actions have potential negative consequences. Understanding, the importance of ethical

behavior will allow for our own personal growth, the growth of our company and those who

work within, and finally the growth of our own community.

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References

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Amadeo, K. (2018 March 26). What Cuase the 2008 Global Financial Crisis?. Retrieved May

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3306176

De George, R.T. (n.d.). A History of Business Ethics. Retrieved May 25, 2018, from

https://www.bbvaopenmind.com/en/article/a-history-of-business-ethics/?fullscreen=true

Enevoldson, N. (n.d.). What is social responsibility? Retrieved May 25, 2018 from

http://www.imasocialentrepreneur.com/social-responsibility/

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Moseley, A. (n.d.). Egoism. Retrieved May 25, 2018 from https://www.iep.utm.edu/egoism/

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25, 2018, from http://www.cgteam.com/blog/six-strategies-for-fraud-prevention-in-your-

business

Swagel, P.L. (2010 April 28). The Impact of the September 2008 Economic Collapse. Retrieved

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