The situation presented before us is of dire importance and requires urgent attention. It has been recently brought to my notice that a shipment that is to be dispatched to South America soon has a batch of defective whistles and fails to adhere to the standardized content of lead in the product. This may escalate serious health issues among the young users who are target customers for the toys.
Therefore, this memo presents three options that may prevent any form of health hazard to the children who will ultimately be using the product:
- recall the products which are reported as defective,
- do not dispatch the shipment and re-make the order considering dire financial consequences,
- dispatch the shipment and hush up the whole issue.
The process of decision making is dependent on heuristic since it provides assumptions, integration of options, and ethical control. Decision environment often experience dynamics and swings which create short and long term effect on chances of survival for two alternatives to solve a problem.
When faced with a decision dilemma that requires critical assessments, analysis resorts to analytical tools that ensure competitive positioning advantage. Each option is assigned to a quadrant with predetermined response strategies and ‘follow-ups’ upon implementation. Before we go ahead to choose one of the options as our final choice we must undertake a cost-benefit analysis of the three recommendations as presented above.
The first recommendation as presented above is to recall the products when they are reported defective. This has many financial advantages. If we do not out rightly reject the ones that are defective and do not adhere to the safety level of lead in whistles, then the company need not incur the financial loss of re-producing the whole lot of whistles.
On the other side of the problem is the question, if unethical conduct on part of the company to avoid the issue, is a serious breach of quality standard, especially when it was aware of the pending issue. Passing the products as quality checked would imply that the company had passed the products in its quality checks and it implicitly adhered to the standards set by the governments.
Therefore, the consumers could take the quality standard to be perfects as per the government norms. However, if any of the products failed the quality test this would create a stigma to the company and the image of the company would be irrevocably tarnished. In addition, the company could face litigations for not maintaining quality standards from both the consumers as well as the government authorities.
The second option was to stop the delivery of the product and re-produce the whole batch of whistles. This option though is apparently expensive for one had to forgo the cost of re-production from scratch and the rejection and dumping of the rejected whistles, however, this option was ethically correct.
The reason for it being ethically correct is that the company would then follow the quality standards set by the government as well as adhere to it when they may have gotten away with the minor disruption in quality standards. This would increase the credibility of the company and may make the consumers more loyal to the products. The problematic concern for the company is the extra cost that it has to incur.
The company has to face an additional cost of producing the whole batch. The financial cost of producing the whole lot again will be very high and the company may have a face a high loss.
The third option would be a highly unethical standpoint i.e. to send the whole shipment for distribution and hush up the whole issue of quality breach. This would sell products and the company need not face any extra cost of production. Further, the products would be delivered on time.
In addition, until the products are specifically tested for lead content in the whistles, chances are that the authorities too would not come to know about the quality violation. This option though financially extremely viable, is unethical and goes against the social responsibility of the company.
If the excess percentage of lead in the whistles do children harm, the onus of the poisoning would be on the company, which may lead to loss of reputation as well as business.
While evaluating the whole scenario it must be noted that the quality testing done by the quality assurance team had identified an anomaly in the lead content in the metal whistles manufactured for the elementary school toy collection. The main market where the toys are expected to be sold belongs to underage children from primary and elementary schools.
The case shows that the company tested for quality of the lead whistles attached to the toys. The testing showed that the content of lead was higher than the maximum level of lead permissible in metal toys targeted to children. This is believed to be harmful for the children below seven years and do not qualify the quality standards in the US.
The company had an allotment of a large shipment due to be delivered in South America by the end of the forthcoming week and missing on deadline would be disastrous for the company.
The loss the company has to incur due to failure of supplying or re-production of the whistles adhering to the quality standards would be approximately around $100,000. Now as a socially responsible company, we must adhere to the ethical decision making process.
However, the economical consideration in making a socially responsible ethical decision is a dichotomous path. Milton Freidman has pointed out that the social responsibility of a business is to create profit . However today reducing ethical behavior to solely economical consideration is not enough. If companies are solely driven by profit motif they will end up taking an unethical decision that may do society more harm than good.
Today businesses are responsible in taking prominent roles in societal building and therefore ethical conduct devoid of profit motif becomes more important. Unlike Freidman, the present ethical concern reverses Friedman’s theory and reduces economic profit motif to ethical behavior.
Therefore, the new mantra for businesses is to be socially responsible for “ethics pays” . The moral philosophy that the company must follow begins with the philosophies of Socrates and/or Plato who believed that the
… good and bad, right and wrong, reflect subjective opinion and desire – how we as human beings and as individuals feel about things – Plato and Socrates believed that good and bad, right and wrong, are part of the objective nature of things – how the world around us really is.
Some ethical beliefs portend that necessary economic rationality leads to ethical behavior. In other words, such idea of ethical conduct beliefs that unethical behavior is not profitable for the business. However, in case of the production of faulty metal whistles it must be understood that following the ethically correct path does not necessarily mean that it would be financially viable.
In order to make the whole thing in an ethically right point one must understand that it would incur a lot of cost that will not be beneficial to the company or to any other stakeholders. Based on this understanding, the second option seems that most potent alternative that the company must pursue.
Therefore, the company must pledge to call back all the whistles that do not adhere to the quality standards and reproduce them before supplying them to the market. This is the only decision that is ethically correct and helps the company to act in a socially responsible manner.
For the contaminated whistles may do harm to little children who will be the end users of the toys and may cause great harm to their health. This will not be a profitable outcome for both the company and the society. Therefore, recalling the faulty products and producing them again would be the right decision for the company to take. This decision to recall all the products will help in improving customer relations.
This is so because customers will gain greater faith on the ethical conduct of the company and will be assured with the company’s socially responsible stand.
Further, this ethical decision can be used as a leverage to promote the quality standard of the product to assure the customers of the company’s integrity and stand towards making quality toys safe for children to use. This would definitely improve the perception of the company to the customers.
There is a very fine line between the rationally correct, economically viable, and ethically correct decision. Decision making for the company must be based on addressing all three aspects and not only one of them. An ethically correct decision may incur short-term loss to the company but in the longer run, this would be a more profitable decision.
Report
Ethical decision-making is an important aspect of doing business. Many philosophers today believe that without doing business ethically one cannot assume profit.
In this respect, the company must undertake ethical decision making in order to remain viable as well as respected. An unethical company may end up losing its customer base for even customers today are highly conscious of the ethical decision making done by companies.
Specifically, the business cannot survive without the customer who must be made to feel part of the business endeavors to win the aspects of brand loyalty, acceptability and support. An ethical decision can be defined as a decision with moral and legal appeal to the wider community. The aspect of commitment is crucial element in examining ethicality of a decision.
In precision, for these decisions to hold and be positively assimilated into the work environment, a series of tests are carried out by gathering facts and incorporating them in defined issues surrounding ethics to test the consciousness in application. Thirdly, the aspect of competency is critical in separating premises from assumptions in making ethical decisions.
The first area that one must understand is that the company should encourage a culture that condemns unethical behavior and rewards ethical work activities. As a company, we must understand that being ethical is profitable. There are two types of dilemmas that companies face today – first, is to forego economic interest in order to remain ethical and the other is to forego ethical behavior to maximize profit.
As a company, we have to decide which one of these problems leads to rational decision making. Therefore, as one would point out that it would be irrational for a company to consciously choose not to pollute the environment to save it from polluting and similarly, it would also be irrational for a company to consciously pollute the environment in order to maximize one’s profit.
The second rational may sound pragmatic to many, which foster the behavior of doing what one wants to do, and the other is considered pragmatic rationalization and gains support from consequential and utilitarian philosophies.
From an idealist perspective, one can reject a pragmatic approach. The idealist perspective condemns all actions that are pursued at the cost of ethical behavior in order to gain interest. Therefore, according to this perspective, ethical conduct is of utmost importance and no employee should behave unethically .
From this philosophy’s point of view, all those behaviors, which are unethical but have economical rationality, are irrational.
Therefore, both the pragmatic and idealist philosophies are two ends of ethical thinking and therefore in order to obtain a more rational, stable, and less obtuse philosophy. For instance, it would be pragmatic to believe that “it can be rational to choose a profitable but unethical behavior as well as to choose a costly but ethical behavior.”
Therefore, the main potent of the third approach is to combining the two i.e. the material and the ethical concerns that may lead to the belief that any behavior may “a process and a consequence” . In this way, a company has to adopt a mode that involves both ethical and profit seeking behavior, which may be called the optimal behavior.
In order to increase the probability of ethical decision making enshrined within the company culture, the company must undertake a few steps that would ensure ethical decision-making. The company must inculcate a culture of honesty. The reason for embracing honesty in the company culture, as businesses is nothing but a subset of human relationships.
The commonplace rules of morality do not uphold in everyday business dealings where at times one has to crush to competition to become the leader. Therefore, in business, like in many other games like football or boxing the common ethical rules logically do not apply.
Further, as national culture based ethical decision making research has shown countries high on individualism like the US have to incorporate ethical behavior for individuals as collective ethical norms will not be affective in such an organization .
Business ethics are obligations that the management of a business should follow in doing business activities. Reflectively, when a business fails to follow these obligations, ethical dilemmas are likely to occur and negatively affect such business. Based on the code of ethics, the management of a business should exercise integrity when preparing statements and report accurate information to all stakeholders.
Moreover, good business ethics define objectivity and motivation in maintaining trust in transactions. In the contemporary world, any business has social responsibilities which determine how it operates, how it carries out its duties and how it survives in the markets full of competition.
The social responsibility of a business is to make profits in the market through value addition, responsible production, accountability, and quality in their products. Therefore understanding the cultural norm of the company before implementing an ethical decision making structure is important.
Strategy and the Process of identifying them
Figure 1: Ethical decision-making process
In order to spot the strategies, an internal survey was conducted which helped to determine the ethical requirements of the company and these strategies were identified as the most important factors affecting ethical culture. The steps followed in identifying the steps were:
- First the areas were identified which frequently required general ethical decision-making. This process helped to identify the issues that were ethics related.
- The guidelines already at disposal were consulted to see the strategies that are important to set up an ethical decision making process.
- Then all the sources were evaluated that might influence decision making process such as individual and group prejudices, attitudes, and needs.
- The strategies that evolve from the above three processes are brainstormed and then the two strategies had been identified.
- Then the consequences of adopting these strategies to the business were weighed. This step was essentially a cost-benefit evaluation. This essentially viewed the outcome of adopting the strategies.
- The strategies were implemented.
The two strategies that the company must adopt to ensure ethical decision-making are – 1) promote a culture that fosters integrity and honesty, and 2) create a workplace that respects the interest of others as well as the environment. The first point is based on the belief that honesty and integrity are two pillars that must be imbibed within individuals as well as teams in the organization in order to inculcate a culture of honesty.
This strategy was derived through detailed discussion with the top management and through a survey on their perspective of the importance of ethics and moral in the organization. Figure 1 shows that in order to establish ethical decision making within the organization, the organization must foster a culture of ethical conduct within the organization.
An ethically right culture within an organization is important to help the organization make ethically correct decisions. Further, a culture that helps promote ethical behavior is important for enforced ethical conduct cannot be sustained for repeated decision-making process.
It is not a point at which a decision is to be made but organizations have to undertake chain of decision making which must be enforced through an ethical culture that all believe in. an understanding of the corporate culture among the individuals and teams is important for this will only increase the propensity of the individuals to make ethical decision a part of their regular logical thinking.
The second aspect that individuals must concentrate on is that the workplace culture must respect the stakeholders. A business has many stakeholders right from its customers to the government or the people who derive drinking water from the river where the company dumps its waste.
Therefore, the company has responsibility not only to the people directly involved with the organization but also to people who are indirectly affected by the actions of the business. Given this, one must understand that ethical decision-making will help the company not only gain good popularity among its customers but also to the community.
Therefore, the company has to adopt a strategy to enhance awareness of the environmental damage that a business may cause and trying to avoid such problems is important for the company and must therefore be incorporated in its regular decision making process. Ethical decision-making must also include the interest of the stakeholders and the environment.
Code of Ethics
A code of ethics will help the company to attain a better position and a socially responsible position among its stakeholders. This can be used as a leverage to market the brand of the company.
Ethical business decision making also helps in marketing the organization and developing a socially responsible brand. A code of ethics would benefit the company to gain greater loyalty from its customers and stakeholders, which would enhance its brand image.
The code of ethics of 3M specifically points out that individual integrity and honesty are the most important part of ethical conduct within an organization . This is so because individuals are the microcosms that build an organization . Further, the company makes sure that its workplace of remains safe and all individuals respect the dignity of all individuals directly or indirectly involved with the organization.
Further, the company pledges to promote a culture of fairness, transparency, respect, and integrity within the organization. Further, the company also pledges to protect the environment and avoid conflict between professional and personal life.
The aspects of 3M’s code of ethics that could benefit the company are its culture of fairness, transparency, and integrity that would help in avoiding conflicts among the personal and professional ethics of employees.
Ethical decision making process involves stating the problem after which the underlying facts are verified. This is followed by identification of the relevant factors and developing the possible options to eliminate dilemma. The identified options are then tested for their harm, publicity, reversibility, defensibility, and professional, organization, and colleague aspects.
The testing step is followed by making a choice and then reviewing the entire process for authenticity within the 3M’s code of ethics.
The main problems with stakeholder collaboration include conflict of interest, imbalance of authority, legitimacy challenges and urgency response to business demands when aligning the 3M’s ethical code. These problems may make stakeholder collaboration difficult especially when the business environment is experiencing series of economic swings and require steadfast approach to reversing the challenges.
Through the dual pillar approach, the 3M’s ethical leadership will comprise of a combination of moral being and moral management skills. The combination of the two aspects is critical in building ethical leadership reputation since executive responsibility functions on moral codes that promote proactive leadership in making decisions that directly affect business sustainability.
This model defines expected behavior, procedural patterns, and response to every deviation. Ethical dilemmas are easy to distinguish and unravel. Thus, a comprehensive review of the situation or factors that led to such a dilemma should be analyzed with an intention of reversing the challenges currently facing this company with its Whistles product.
Conclusion
Therefore, the report presents the importance of building an ethically right organizational in order to inculcate an environment of ethical decision-making. Incorporating integrity and honesty within the culture of the organization is important for this would allow an unobtrusive practice of ethical decision-making.
Individuals should be made aware of the ethically correct positions and they should be encouraged to be more honest and fair in their daily dealings. Reflectively, ethical conduct within the organization must be practiced to have a better organization.
References
3M. (2013, May 15). Ethical Business Conduct Guidlines. Retrieved from 3M: https://www.3m.com/
Graham, G. (2004). Eight Theories of Ethics. New York: Routledge.
Le Menestrel, M. (2002). Economic rationality and ethical behaviour: ethical business between venality and sacrifice. Business Ethics: A European Review, 11(2), 157-166.
Vitell, S. J., Nwachukwu, S. L., & Barnes, J. H. (1993). The effects of culture on ethical decision-making: An application of Hofstede’s typology. Journal of Business Ethics 12(10), 753-760.