Ethical failures in business

Ethical failures in business are not uncommon. Companies sacrifice even the simplest ethical principles for the sake of competitiveness and higher profits. Customer service professionals and salespeople often find themselves troubled by unethical values, with which they are bound to comply.

Customer satisfaction is rightly considered as one of the weakest elements of corporate ethics: competition and market saturation place new demands on businesses. Pragmatism bordering on ethical absurdity often turns into the main instrument of retaining customers.

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Yet, unethical profits are never long-term. More often than not, customers do not accept unethical service and refuse to continue their relationships with unethical businesses. Therefore, organizations must build and sustain a healthy, ethical climate which will serve the basic measure of customer satisfaction in the long run.

Martha Wang has recently been appointed to Consumer Affairs Department of Herb’s Garden Products (Bauer & Erdogan, 2011). She enjoys her job and is fascinated by the company’s commitment to environmental protection (Bauer & Erdogan, 2011).

Martha believes that the company uses only natural, safe ingredients to produce and market fertilizers; however, one day a customer complains that Herb’s Special Fertilizer Mix has killed her dog (Bauer & Erdogan, 2011). Martha knows that Herb’s products are made of chicken manure and fish byproducts, but she heard of some secret ingredient, which is revealed to long-term employees (Bauer & Erdogan, 2011).

Martha herself used the product and found several dead birds in that part of the garden where most fertilizer had been spread (Bauer & Erdogan, 2011). Her boss does not take this information seriously, whereas the owner tries to persuade her that the product is the company’s bestseller (Bauer & Erdogan, 2011). Martha is being torn between her ethical concerns and the need to comply with the organizational values and culture.

Martha must take the most relevant ethical decision, but she faces a number of decision-making challenges. It should be noted, that the customer service professionals, as well as salespeople and marketing personnel, are often perceived as failing to handle many ethical dilemmas (Valentine & Barnett, 2003). In this situation, institutionalization of ethics through codes of ethics and ethical procedures could solidify employees’ ethical intentions (Valentine & Barnett, 2003).

However, Martha operates in the culture of ethical complacency which makes it difficult to take the most relevant decision. On the one hand, failure to handle the customer’s complaint may readily turn into an object of criminal investigation and a matter of ethical scandal. These scandals do not simply incur additional financial costs on businesses but expose prevalence of severe ethical misbehaviors in business (Formbrun & Foss, 2004).

On the other hand, Martha is bound comply with the cultural principles and workplace behavior expectations workplace at Herb’s: simply stated, she will have to persuade the customer that her concerns are invalid, since the product is made of natural ingredients and cannot cause any harm to people, pets, or other living beings. Otherwise, she may lose her job. Eventually, Martha cannot take the most relevant decision, unless she has the fullest information about the product and its ingredients.

Apparently, Herb’s exemplifies an outcome-based organizational system, which evaluates only outcomes but does not regard how salespeople and the company itself achieve their business goals (Verbeke, Ouwerkerk & Peelen, 1996).

It goes without saying that the state of ethics in outcome-based organizational systems is extremely poor (Verbeke et al, 1996). Such organizations sacrifice ethical and moral principles on the altar of financial profits (Bazela, 2010). For Martha, quitting her employment with the company will be the easiest and least troublesome solution.

Yet, if that is the case, customers will be unaware of the dangers and risks of using Herb’s fertilizers. The situation is further complicated by the fact that Herb’s is actually a family business, and neither the owner nor Martha’s boss is willing to deal with the customer’s complaint. The best Martha can do is to file an official memo to the boss and the owner, trying to explain the risks and possible outcomes of ethical misbehaviors in organizations.

First, the customer may file a lawsuit and demand compensation. Such a lawsuit will necessarily turn into a huge ethical scandal, which will disrupt the company’s reputation and may even lead the organization to bankruptcy. Second, the customer may file a complaint to government authorities which will reveal severe ethical and technical violations within the company. Again, the company’s future is under threat.

Third, unethical profits are never long-term: the company must realize that competitiveness and profitability are impossible without a profound restructuring of the organizational culture at Herb’s. The company must inform its customers that the Fertilizer is dangerous to living beings and must be used with caution. Herb’s must rebuild its ethical culture; this is possible if a general code of ethics is created and implemented.

The process of cultural restructuring at Herb’s will not be smooth: employees and managers may resist and sabotage new rules and ethical requirements. However, it is essential that these ethical and cultural initiatives come from within, before other stakeholders, including customers and the community, realize the hidden danger of Herb’s fertilizers and take a legal action against the company.

Conclusion

Ethical failures in business are not uncommon. The case of Martha Wang is a common example of how companies sacrifice ethical values on the altar of profitability. Martha faces several decision-making challenges. On the one hand, Martha must deal with the customer’s complaint.

On the other hand, she is bound to comply with the rules and principles of organizational behavior at Herb’s. She even risks losing her job for noncompliance. In this situation, the best Martha can do is to file a memo explaining all possible consequences of ethical misbehaviors in organizations. Herb’s must rebuild its culture and implement a complex code of ethical conduct. The company must inform its customers that the fertilizer may be dangerous for other living beings and should be used with caution.

References

Bauer, T. & Erdogan, B. (2011). Organizational behavior. Creative Commons. Retrieved from http://www.flatworldknowledge.com/pub/1.0/organizational-behavior/28975#web-28975

Bazela, M. (2010). Customer satisfaction: The weakest link of business ethics. Informacion Filosofica, VII(14), 110-118.

Formbrun, C. & Foss, C. (2004). Business ethics: Corporate responses to scandal. Corporate Reputation Review, 7(3), 284-288.

Valentine, S. & Barnett, T. (2003). Ethics code awareness, perceived ethical values, and organizational commitment. Journal of Personal Selling & Sales Management, XXIII(4), 359-367.

Verbeke, W., Ouwerkerk, C. & Peelen, E. (1996). Exploring the contextual and individual factors on ethical decision making of salespeople. Journal of Business Ethics, 15(11), 1175-1187.

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