Summary
The business environment is faced with multiple ethical issues that need to be resolved. This paper reviews the ethical issues that arise from a spa in Singapore, Wellness Village spa, closing down without notice. The spar disappears while owing customers’ money in the form of pre purchased packages and credit card bills. This paper applies various ethical theories so as to solve the ethical issues.
By use of the consequentialist, social contract and stakeholder theories, it is proposed that the bank has an obligation to cover some of the costs covered by the customers. Application of the deontological ethics reveals that the bank is under no obligation since it has performed all the duties expected of it. While the directors of the spa are pinpointed as the major culprits, this paper shows that they should not be punished alone since they were working for the interests of shareholders.
Collective punishment is seen as the best manner to obtain justice. From the ethical theories applied in this scenario, it has been seen that the interest of the society at large should ideally take precedence over individual or business interests. The paper concludes by restating that knowledge of ethical theories is essential in solving ethical issues that arise in the business environment.
Introduction
Ethical behavior has throughout human civilization been supposed to be a major building block for a productive and well functional society. For this reason, ethical behavior has been applauded and taught to be superior to unethical dealings. However, ethics have not been given much relevance in businesses and so long as businesses stay within the law, businesses been given much consideration and businesses have been subjected to little criticism for their ethical behavior so long as they did not break the law.
Ethics can loosely be defined as a system of moral principles by which social conduct is judged as either “right” or “wrong”. As relates to business, ethics are moral principles which prescribe what is legitimate behavior in varied business dealings (Chryssides and Kaler 3). This paper shall analyze the ethical issues that surround the closing of the Wellness Village spa. The paper shall make use of various ethical theories so as to demonstrate the most effective way to deal with the ethical issues.
The Spa Issue
The ethical issues surrounding the Wellness Village Spa closure is who should pay for the credit card bills charged to cardholders by the bank for services that the cardholders did not receive. In the scenario, the spa closed down without informing the clients some of whom had purchased expensive packages from the spa.
Notably, the Wellness Village spa used misinformation to deceive the customers. This was by claiming that they were overbooked while in reality the company was preparing to close operations abruptly. Another underlying concept in the case are secrecy whereby the company directors failed to divulge vital information about the company being closed in the near future since the information would had affect the company’s profitability.
Ethical theories are the criteria that we use to make judgment as to the fairness or unfairness of actions undertaken regarding problems (Crisp, Potter & Perry, 2005). The theories provide support to decision making and shed some light the thought process behind a conclusion.
The first theory that can be applied on this case is the consequentialist ethics theory holds that actions can be judged as right and/or good only on the basis of the consequences they produce with no consideration for their intentions or motives. Based on this theory, the actions of Wellness Village Spa were hugely unethical.
The management of the Wellness Village Spa is no doubt the major culprit since they are the one’s who closed down the spa without giving their clients any notice. In addition to this, they proceeded to take money from clients for services that they had no intention of offering.
The Social Contract theory holds that actions carried out by someone are morally permissible if they increase the benefits of an individual or indeed, the society at large. The actions of Wellness Village were evidently did not benefit the majority of the people. As a matter of fact, there are 7000 customers who are affected by the credit card liability issue as a result of the spa closing down. The spa should therefore be sued and held accountable so as to benefit the majority of the individuals.
One of the theories that guide manager’s behavior in an organization is the stakeholder theory which states that “managers should make decisions so as to take account of the interests of all the stakeholders in the firm” (Jensen 299).
According to the stakeholder theory, the stockholders are not the only legitimate claimholders and as such, the needs of other stakeholder entities such as customers, employees, supplies and community should be taken into consideration. By following this theory, the banks should cover some of the bills of the customers since they are stakeholders to the banking institutes.
Deontological ethics place emphasis on the assumed duty. This implies that duty is the basis of all moral actions regardless of the consequences. By applying this theory, it can be seen that the banks in question do not require to foot the bill for the cardholders. This is because the banks have fulfilled their duties to all parties as the theory stipulates.
The banks have paid for the customer’s purchases and therefore, the card holders should fulfill their obligation to settle the charges incurred by the bank. As such, the offer by the bank to support the investigative efforts of the customers to dispute the charges is more than enough.
Another theory that can be used is Utilitarianism which is considered to be the most influential ethical theory. This principle dictates that the collective welfare of the people overrides the individual’s right and as such, the theory advocates the maximization of happiness for the greatest number of people (Johnston 76).
In this approach, the net benefit is calculated and the net consequences evaluated. By use of the Utilitarianism the bank should take some liability and incur some cost on behalf of the cardholders. This is because the principle dictates that that the collective welfare of the people overrides the individual’s right and as such, the maximization of happiness for the greatest number of people is advocated for (Crisp, Potter and Perry, 20).
Being unethical inevitably leads to loss and damage for some of the people involved in the issue. This is the case in the spa scenario where the customers to the spa have lost money as well as been denied services they had a right to.
For this damage to be undone, the guilty parties must be held accountable. In an attempt to redress the clients of the misdeeds of the spa, it has been proposed that the directors be held personal accountable. This is because the directors of the company are no doubt the major culprits since they made the actual decisions to close the company but keep it “live” therefore causing lose to the customers.
However, it should be taken into consideration that the management was only acting in the interest of the shareholders who were the major benefactors of the profits obtained from the business dealings. It would therefore be unjust to personally hold the management responsible since they were only protecting the interests of the company (Fredrick 405). A better means of seeking justice would be to collectively punish all the stakeholders.
Conclusion
Being unethical inevitably leads to loss and damage for some of the people involved in the issue. This is the case in the spa scenario where the customers to the spa have lost money as well as been denied services they had a right to. For this damage to be undone, the guilty parties must be held accountable. From the above discussions, it can be seen that most of the ethical theories support the notion that the bank should at least foot part of the bill incurred by the customers.
In addition to this, the theories support the taking of legal action against the directors of the Wellness Village Spa for their wrongdoings. However, a more collective punishment is proposed since the directors only acted with the interests the company at heart. From this paper, it can be authoritatively stated that knowledge of ethical theories can greatly assist in solving ethical issues that arise in the business environment.
Works Cited
Chryssides, D.G and Kaler, H. J. An Introduction to Business Ethics, Cengage Learning EMEA. 1993. Print.
Crisp, J. Potter, P. A. and Perry, G. A. Potter & Perry’s Fundamentals of Nursing. (2nd ed). Australia: Elsevier Australia. 2005. Print.
Frederick, R. A Companion to Business Ethics, Wiley-Blackwell. 2002. Print.
Jensen, M. “Value Maximization, Stakeholder Theory, and the Corporate Objective Function”. European Financial Management, Vol. 7, No. 3, 2001, 297-371.
Johnston, George. An Introduction to Ethics, for Training Colleges. BiblioBazaar, LLC, 2009. Print.