Managers have a duty to aim for profit. At the same time, modern ethical standards impose a duty to guard, preserve and enhance the value of an enterprise for the good of all touched by it, including the general public.
Explain FOUR (4) ethical problems managers face in dealing with stakeholders. [10marks]
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In the area of products and production, managers have responsibility to ensure that the public (consumers) and their own employees are protected from danger. Attempts to increase profitability by cutting costs may lead to dangerous working conditions or to inadequate safety standards in products. In the United States, product liability litigation is so common that this legal treat may be a more effective deterrent than general ethical standards.
Another ethical problem concerns payment by companies to government officials who have power to help or hinder the payers’ operations. Some of the issues which exist in this area are:
i. Extortion. Foreign officials have been known to threaten companies with the complete closure of their local operations unless suitable payments are made.
ii. Bribery. This refers to payments for services to which a company is not legally entitled. There are some fine distinctions to be drawn; for example, some managers regard political contributions as bribery.
iii. Grease money. Multinational companies are sometimes unable to obtain services to which they are legally entitled because of deliberate stalling by local officials. Cash payments to the right people may then be enough to oil the machinery of bureaucracy.
iv. Gifts. In some cultures (such as Japan) gifts are regarded as an essential part of civilized negotiation, even in circumstances where to Western eyes they might appear ethically dubious. Managers operating in such a culture may feel at liberty to adopt the local customs.
v. Discrimination against an employee or any group of employees based on gender, religion, beliefs, etc.
vi. Environmental pollution and degradation
vii. Failure to provide the right working environment and conditions of service for employees (e.g. unfair labour practices on the part of management-which can result in legal actions and avoidable cost for the company).