In light of the recent uproar over the concept of business ethics, corporations often find themselves faced with the tricky task of balancing business interests and the expectation to meet ethical standards. In this paper, we will look at business ethics and decision-making. I will particularly consider two approaches to business ethics analyse the case study about both approaches and then motivate for my preferred approach. The two approaches to business ethics that I will look at are Utilitarianism and the Human Rights approach.
As a starting point, I first answer the question of what is business ethics and make a case for ethics in business. Ethics is defined as a “system or set of moral principles that influence an individual to make choices based on his or her various motives and the resultant ends of those choices” (Masten, 2012, pg. 4). Business ethics is then “the application of ethical values to business behavior” (Business Ethics and Human Rights, 26 July 2012). The concept of business ethics affects most if not all facets of business and contributes greatly to the decision-making process of business (Leśna-Wierszołowicz, 2012). It also holds that there are many approaches to ethics (in our case, business ethics) and this has a great impact on decisions made having given due regard to ethics. As noted earlier, I will look at what impact utilitarianism and human rights will each have on the outcome of the corporation in answering the question of whether or not the corporation retains the now disabled employee despite budget constraints and strategic objectives of the business.
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Utilitarianism is a theory that holds that the morality of an action is dependent on the outcome or goodness of that outcome (Gamland, 2012). The theory can be traced back to the works of Plato and Aristotle. (Eggleston, 2012). It only developed as a theory that can be said to be both freestanding as well as defined in the eighteenth century and some of the early writers involved in development include Hume and Mill (Eggleston, 2012). The theory is commonly known as “the ends justify the means” theory with the classic case of a runway trolley running towards a group of tied-up persons and the only way to save them is by sacrificing one person. In this case, retaining in choosing whether or not to fire her, lay her off with compensation, or find a way to retain her would be resolved by giving preference to the option that will benefit mankind the most (Gamland, 2012). According to this theory, actions will never have an existing and permanent moral value (Gamland, 2012), the value is determined by the facts about “the maximization of overall well-being, which is closely related to happiness” (Eggleston, 2012, pg. 452).
The fundamental principle of utilitarianism is the principle of utility which has it that for an act to pass the test of ethics, it must yield the best overall result about usefulness or the welfare of all persons affected by the act in question. (Gamland, 2012).
Characteristics of utilitarianism are thus often along the lines of consequentialism which translates to that the outcome of an act affects if that act falls within the ambit of rightness or not; welfarism which qualifies one act as being higher than its alternative if that one act will amount to the happiness of a greater number of people; individualism which holds that the value will only hold if a being capable of feelings is affected; aggregation which is concerned with summing up all values of the persons affected; and maximization which qualifies an act as good only if it makes a greater number of people happier. (Eggleston, 2012). Therefore, applied to the facts at hand, the secretary will only be retained if the way found for retaining her would lead to a maximized state of happiness, not only for her but for all other stakeholders of the entity. Put in the alternative, she would need to be fired if it means that her losing her job will maximize the state of happiness or welfare of the business (the stakeholders as they are sentient beings).
I now move on to consider the second approach in question: The human rights approach. Human rights are rights held by individuals which are matters of significant importance and are undeniable (Brenkert, 2016). There are generally three approaches to human rights: Relativist which holds that rights are culturally based (Brenkert, 2016, 279), which takes a stand that rights are to be understood in a strict sense as basic moral rights (Brenkert, 2016, 280), and the expansive view which has it that rights are “things we might strive to realize for people for which we may necessarily be condemned or punished if we fail to achieve them (Brenkert, 2016, 281).
How human rights play a role in ethics, particularly business ethics can be explained as follows: there has been a move away from the traditional view that human rights are the responsibility of the state only. This can be attributed to the “developments in size, power, speed, and extent of business activities” (Brenkert, 2016, 271). Furthermore, businesses have come to realize their power and ability to impact stakeholders in their various forms. (Brenkert, 2016). Another factor is the questions relating to human rights that have arisen as a result of globalization (Brenkert, 2016), putting pressure on businesses to think and deliberate on the role and place of human rights in decision-making.
As such the modern view is that “businesses are morally responsible for human rights” as they “have a moral agency that is sufficiently appropriate to sustain moral responsibilities” (Brenkert, 2016, 288). This means the fact that they also have a significant impact on all their stakeholders including workers puts up a strong case for the moral obligation placed on them, to not only promote human rights but to also play an active role in their promotion. (Brenkert, 2016). Businesses, more often than not find themselves faced with risks stemming from commercial practices. One of the risks is the “moral risk associated” with these. Finally, it has been accepted that it is “part of a corporation’s general duty to exercise social responsibility” (Brenkert, 2016, 289).
As not above, human rights are undeniable. Therefore the fact that a business or the community in general has little to no regard for human rights does not mean that a right has been or can be waived by the holder (Brenkert, 2016). Businesses should therefore consider it only ethical to respect and uphold the rights of its stakeholders. “Doing business ethically necessarily involves respecting human rights in the course of business operations” (Business Ethics and Human Rights, 26 July 2012). Some of the rights that must be taken into account in our case are whether letting the employee go would not amount to a violation of her constitutional rights to dignity and not to be subjected to unfair discrimination on grounds of disability. Business also needs to consider if it would be ethical and be a display of respect for the international right to employment if they do not make means to retain her.
I now move on to the final aspect of this paper: to state my preferred approach and furnish reasons for that. My preferred approach is the utilitarian approach. I justifying this I start by offering criticism for the human rights alternative. The approach is too partial and considers the interests of only one person. All stakeholders have financial interests to be considered and protected and yet when we look at this approach we only look at the person and matter at hand. There is no regard for business strategic objectives. In this case, if retaining the employee is what will amount to ethical business conduct then that is the course to be followed. The fact that the business will suffer financially, which in the long run may affect more employees, customers, and shareholders, is ignored.
But with the utilitarian approach the business itself as well as other people involved. Retaining the employee at extra cost to the business would make the employee happy but happiness would be maximized by a guarantee that the budget will be kept to, the financial security of the company will not be compromised and whatever plans were already made for the already tight budget will be met.
It would therefore be very ethical to let the employee go with compensation. When it comes to business decisions her happiness cannot take priority over that of the whole organisation. It is important to note that the maximized happiness or welfare we are looking at here is not that of the organization as a juristic entity but of all its natural stakeholders that would be affected if the entity fails to meet its financial objectives or has to change its plans due to unforeseen changes in the budget. The result of happier stakeholders justifies disregard of loyalty and personal circumstances of one person. (1500 words)
References
- BrenkerT, G. (2016). Business Ethics and Human Rights: An Overview. Retrieved from https://www.cambridge.org/core/journals/business-and-human-rights-journal/article/business-ethics-and-human-rights-an-overview/4E12322863D6BA2B17871B03EDA9BBB9
- Business Ethics and Human Rights (2016). Retrieved from http://www.ibe.org.uk/userassets/briefings/ibe_briefing_26_business_ethics_and_human_rights.pdf
- Eggleston, B. (2012). Retrieved from http://www.benegg.net/publications/Eggleston_Utilitarianism.pdf
- Garland, E. (2012). Ethics Spring 102. Presentation, University of Bergen.
- Leśna-Wierszołowicz, E. (2012). Retrieved from http://agro.icm.edu.pl/agro/element/bwmeta1.element.agro-77c1382c-2474-4016-9765-9437a33f69a8/c/Lesna_Wierszolowicz.pdf
- Masten, K. (2012). Organizational Ethics in Accounting: A Comparison of Utilitarianism and Christian Deontological Principles. Retrieved from https://digitalcommons.liberty.edu/honors/276/
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