One Source Essay
The purpose of this paper is to argue for and against an organization adopting an ethical approach. This essay will look into the two sides of the argument in depth using relevant theories, examples and case studies. The first part of this essay will look into why an organization adopting an ethical approach to management could ultimately benefit the firm.
On the other hand, the essay will look at the case against a firm adopting an ethical approach to management. The essay will then conclude by suggesting that it would be important for organizations to act ethically to a certain extent.
One definition suggests that ‘ethics are the moral principles that should underpin decision-making. A decision made on ethics might reject the most profitable solution In favor of one of greater benefit to society as well as the firm’ (Marabous, 2003). The key words used in definition are ‘moral principles’, so this definition suggests that acting ethically means acting in a moral way. In essence, an ethical approach to management Is generally acting right to benefit the community and the environment not solely concentrating on maximizing profits.
It Is also important to define what exactly acting morally is, one good definition suggested that morality is the notion of what is good and bad (McIntyre, 1998). Argument For In arguing for an organization adopting an ethical approach, the benefits that an organization would gain from this behavior Is that it could be used as a USPS (unique selling point). This is evident in a variety of organizations today, for instance, the Body Shop. Body shop sells products that are kind to the environment, and also boast the fact that they are 100% against animal testing.
A key point is that, not only does the many strive to Improve the communities In less developed countries, but it publicizes these actions In order to get support from possible consumers. This strategy appeals to customers a great deal, which implies there are plenty of consumers who choose not to buy products that have been tested on animals so choose to buy products only from the Body Shop. Similarly there are consumers that may not have such strong opinions against animal testing but buy products from the body shop because it seem like the right thing to ad.
These ethical approaches to management has seen Body Shop’s profits rise over the years, and are now one of the arrest cosmetic retailers in the country as a result. As well as advertising the fact that they are against animal testing. The Body Shop also promotes community trade. Active self esteem, defending of human rights, and the protection of our planet. Organizations will also gain significant public relations advantages from ethical behavior. There are examples of organizations that have not acted ethically, and as a result have received very negative publicity.
One key example would be Nestle. A study in the British Medial Journal said that manufacturers of powdered milk, such as Nestle were breaking international codes by selling their products to West African countries. The Studies were carried out in two West African countries Togo and Burning Fast. Findings from the study showed that Nestle had been Issuing free powdered milk to mothers in these West African countries, officials from Nestle had convinced mothers that powdered milk was actually better for their children than 1 OFF needed to find money in order to purchase this milk.
Of course money was not always available so drastic measures were taken, such as over diluting the little dowered milk they had available, or diluting the powdered milk with water that was not very clean. As a result of this children’s health in the region was poor due to lack of nutrition and consumption of contaminated water. The result of this study severely affected the reputation of Nestle. Pressure groups and other activists urged consumers to boycott products from the firm because of the way they had acted in Africa. As a result of this poor publicity Nestle had operating profits fall significantly.
This case study is a prime example of how not acting ethically could seriously image the reputation of the firm, so another advantage of adopting an ethical approach to management is that this sort of situation could be avoided. Another major advantage of an ethical approach to management is that an organization could get more out of their workforce. Employees can expect to respond positively to working for an organization that they trust to be acting morally correct. Employees may feel proud to work for a firm that they know is abiding by ethical and moral guidelines.
This would also help motivate the workforce and boost their confidence. As a result this could in turn lead to higher productivity from the workforce and ultimately lead to higher operating profits. A positive ethical approach to management could add to the competition for employment at such a firm. An ethical approach to management would also result in a lower labor turnover, because less employees would be leaving the organization if they felt they were being treated right, subsequently all of these reasons would lead to lower costs for an organization I. . Training and paying redundancies. A survey conducted in 2003 even showed that about 75% of The Body Shop’s employees felt ‘proud’ to be working for the organization. According to Banyan (1996) the success of the final solution depends on the capacity of managerial techniques to denude individuals of their dignity and deprive them of their humanity. Argument Against One of the main disadvantages that come with an ethical approach to management are the costs involved when managing ethically. A key example would be the exploitation of cheap labor.
Sport manufacturing giant Nikkei has been accused of exploiting cheap labor in Asian markets. A report in Vietnam in 1997 showed that Nikkei had been mistreating women that worked in the factories producing shoes. The women were being paid about $1. 0 per day which was well below minimum wage in America. It was reported that the workforce was even punished for using verbal communication and were only allowed one toilet break during their period of work. From an ethical point of view this is the opposite of how a firm should act, and thus Nikkei received bad publicity for their actions.
Although from Nine’s point of view exploiting cheap labor in these Asian markets meant extremely high profits per unit produced, because shoes produced were being sold at around $150. Since the bad publicity and attempted boycotting from pressure groups, Nikkei vowed to act in a ore ethical manner, so paid worker significantly higher wages and also improved working conditions, although this did reduce the amount of bad publicity they were receiving it also meant that Nikkei so their costs soar.
Although the company still makes a healthy profit, a more ethical approach to management has meant they are the argument that not all organizations will see a loss in profit for acting more ethically. It will largely depend on what type of organization is in question, for example Marks and Spencer sell organic chocolate and promote the fact that there is air trade between farmers. Although Marks and Spencer do have to pay farmers fairly, they can also charge a premium on their products to maintain profit levels.
This way the firm can hit two birds with one stone, because they get positive publicity and a good consumer base, and are able to maintain profit levels. Another Disadvantage of a more ethical approach to management is that it could conflict with existing policies within the organization. A possible restructuring of the organization may need to be done; internal divisions may be created within the business. This of ours is a problem is the workforce is not used to change or does not want change in general. This could lead to lack of motivation of workers which in turn would lead to lower levels of productivity.
A company could possibly also experience problems in sending a message in an organization which is decentralized. Even though the workforce may be in favor of a more ethical approach to management it would be extremely difficult to implement it, and additional training of the workforce may be required for maximum efficiency. Conclusion Having argued on both sides of the organization approach, it suffices to state that, it s important for firms or organizations to adopt an ethical approach to management as the advantages clearly outweigh the disadvantages.