Does Trying to Make the “ethically, Correct” Choice Pay in the End

TAKE – HOME MIDTERM

1. Does trying to make the “ethically, correct” choice pay in the end?

To answer whether trying to make the ethically correct choice pay in the end, we must first ask ourselves what ethics really means. Ethics is moral standards and expectations for what is commonly considered to be described as a “right” behavior. This does not mean that every unethical thing is necessarily illegal, but it means that unethical behavior is not socially acceptable.

Imagine having a high position in a company, which makes you responsible for your employees and the people that work under you. You also, of course, have to answer to someone who is standing higher in the hierarchy than you. There is a lot of decision-making and a lot of communication required for the success of a business like this. We must agree that everyone will be happy when the business is profitable and everyone is earning a good amount of money from it. So how do we achieve all of this in the smoothest way possible? The answer is - by strictly following the ethical rules the company has and trying to think and act morally.

The explanation for this is rather simple, even though it might not be the most obvious one. Having a business operated by people who do not stick to moral and ethical standards is doomed to fail sooner or later. Not making ethical choices will create trust issues between the employees. “If employee A is acting unethically in this situation, he will probably do it again and it might affect me”. This dishonesty and selfishness of people will create more stress in the working environment which will ultimately reduce the productivity of the people working there. Yes, unethical behavior can be rationalized by many thoughts like “Everybody else does it”, “If we don’t do it someone else will”, “That’s the way it has always been done”, “It doesn’t really hurt anyone” and more, and they might actually sound rational at first, but will only lead a company to the rock bottom.

Your behavior, especially if you are in a position of power affects greatly everyone around you and mostly your employees. Sometimes making the ethically correct choice might be really hard and might alienate you from the rest. If you are surrounded by many unethical people who openly perform unethical acts it can be truly challenging to separate yourself from the rest by playing by the rules, but this should not frighten you. Making ethical choices in similar situations shows just how brave you really are and will pay back by creating a positive and reliable image for you in the future. By setting an example of how one should behave, by sticking to the ethical decisions, by applying them and requiring others to apply them as well, we change the face of the whole company. Trust will be regained, the snowball of unethical decisions will be avoided and the working environment will become a more productive and happier place.

Another example showing how ethical decisions can pay in the end is the social work a company does. Making the environmentally safest choice, donating money and other essentials to charity organizations, giving back to the society, in general, will create a good name for the company and more and more people and businesses will be willing to do business with it. This shows that when you do good things, you receive the same.

2. List five (5) separate groups who might be considered “stakeholders” in a corporation. Briefly explain how does stakeholder theory differ from traditional theories of corporate governance. Be specific.

“Stakeholders” in a corporation are the people who are involved in or affected by the company and the direction it takes in any way so the company is responsible for them. Stakeholders in a company are the shareholders, the employees, the suppliers, the managers, the community and many more.

Shareholders in a company are stakeholders because they directly invest money in it and claim ownership of shares that it has issued. A corporation has a responsibility to maximize the profits of the shareholders and to treat them with the due care and respect.

The employees in the company are also stakeholders because without them the company would not be able to function anymore and because they are depending on it for the salary they receive. This also makes their families a non-direct stakeholder in the company, since they also depend on the salaries earned by the family members who work there.

The suppliers for a company are stakeholders too because their business is directly affected by the company. Most often they have contracts which provides them with a regular obligations to the business and without it they would lose a source of income. Therefore the company is responsible for them as well.

The managers are people who represent the core of the company, giving directions to their employees on where the business is going and how they should help follow that path. Many people depend on managers, just like managers depend on the business growth.

The community in which the company is located or the communities which the company does business with are directly affected by it. From an environmental stand point to a purely economic stand point a corporation has an effect to its surroundings. This makes the corporation responsible for them too.

Marjorie Kelly and the Divine Right of Capital states that stockholders money are not the main funders of the company, but that is the act of the initial shareholders. Many companies don’t sell stock and when they do they only get funds from stockholders on the secondary market when they issue more stock so that is why shareholders shouldn’t be the most important people for the company and the extraordinary allegiance to them is unjustified. She believes that employees are the ones creating the real value for the company and this should be a reason to eliminate the shareholder primacy and make the company’s responsibility for its employees the main priority, which differs from the stakeholder theory by prioritizing some of the stakeholders.

John Mackley, on the other hand, believes that while businesses exist to maximize profits, those who found them don’t have that same goal in mind. Some do it for just for fun, just to follow their dreams and see where they can get by doing that, some do it because they don’t want to work for anyone else, and others do it because they want to help people, which is a fresh view on how businesses are created.

3. Explain the primary differences between Kantian and Utilitarian approaches to analyzing ethical situations in business. Use examples. Be Specific.