Ethics in Business

QUESTION ONE

The Seven Step Model

• The first step in the model is identification of the problem. It involves thinking about the goals, and objectives that the decision maker hopes to achieve (Johnson 2004; David, Harvey & Wright 2009). Hugo has noticed that Anja’s marketing plan is discriminatory. He has read that this form of discrimination is increasingly becoming a social issue, with recent lawsuits and boycotts due to such discrimination. Hugo does not support marketing practices that publicize the phenomenon of physical attractiveness. He even has proof of the nature of discrimination that the plan exhibits. He is faced with a problem of challenging this plan based on his own principles, and probable effect on the organization. It would be right to inform his superiors about the probable effect of the plan if implemented, but the esteemed consequences of doing so, are not indicative of correctness of such act. His personal beliefs do not support the discriminatory phenomenon, but the consequences of reporting this issue do not seem to be good. If he challenges Anja’s plan, Anja may not get the promotion, Anja’s superior may rethink his position about the plan, employees may think ill of Hugo as trying to jeopardize Anja’s success, Hugo risks losing the chance to be promoted to the brand manager position as well, and employee relations may be destroyed. Additionally, Anja has spent six months developing the plan, challenging it would be discouraging considering the amount of effort, and time he placed on coming up with the plan. If Hugo does not report the possible harm that Anja’s plan could cause, the business would be at high risk of losing its customers, facing lawsuits and boycotts, resulting to both of them along with other employees losing their jobs. Hugo still needs to make a decision.

• The second step of the model implies receiving the facts (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). Hugo has enough evidence after a review of 1000 scientific studies, that the use of ‘physical attractiveness’ phenomenon, is discriminative. It is, however, important to find out other people’s knowledge and awareness about the practice as discriminatory, and their perception of using such practice. In the case study, there is clear evidence that the practice is commonly accepted by the marketers. There is also proof that such practice has financial benefits to the organization. If Hugo has reviewed 1000 scientific articles, there may be more than 1000 advertisements that are based on the ‘physical attractiveness’ phenomenon.

• Step three of the model is to identify the stakeholders (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). Stakeholders involved are the brand manager, the assistant brand manager, the brand manager’s supervisor, the owners of the business, other employees, and the consumers. The brand manager, assistant brand manager and their respective supervisors are involved in this dilemma due to their managerial functions and organizational relations. Other employees and consumers are involved because of their role in the organization and protection from discrimination. The owners of the business will be affected if the business returns decrease or if the business goes down.
• Step four is to identify the alternatives (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). There are three main options. Hugo can decide to inform the supervisor and Anja in a polite way or he can report his findings to the supervisor. He can decide to just take no action or can ask for reassignment to another department of the company.
• Step five implies evaluation and testing of alternatives (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). There are various evaluation strategies to this problem based on different theoretical approaches to ethical decision making. This case study utilizes three theories: Justice, Kantian and utilitarian approaches.

Justice Approach to Ethical Decision Making

This approach argues that moral decisions must be based on standards of impartiality, equity and fairness. According to the theory, in decision making process, managers have to consider three types of justice: distributive justice, compensatory justice and procedural justice. Distributive justice requires that people be treated equally and different treatments should not be based on arbitrary characteristics. If men and women perform the same jobs, they should be rewarded equally. This applies to the case presented. Two people of different sexes perform the same functions acting as spokespersons in the marketing strategy. However, one characteristic used to differentiate them is their physical appearance. This is injustice. Compensatory justice argues that people should not be held accountable for matters which they have no control over; that any party responsible for causing damages to an individual should compensate the person for the cost of damages. This only applies to the case study considering the argument that people should not be held accountable for matters that are out of their control. In the discriminatory plan, physically unattractive persons have no control over their creation. They should therefore, be given equal, impartial, fair consideration in the process of assigning adverts irrespective of their sex or appearance. Procedural justice requires that decisions be made based on fair administration of rules (Daft 2008; Daft & Marcic 2011; Weiss 2008).

The Utilitarian Approach

This approach holds that decision making should be focused on moral behavior that “produces the greatest good for the greatest number” (Daft 2008, p. 142; Daft & Marcic 2011, p. 139). It means that a decision should consider the consequences to various parties involved. In the case study, the organization is at risk; Hugo and Anja, the employees, and the supervisor are all affected in one way or the other. If Hugo decides to inform the supervisor and Anja, the consequences might result in Anja not receiving a promotion, Hugo may also not receive his promotion, six months would have been wasted on developing the project, and a new one will have to be created, the Company may be saved from bad reputation, and likely lawsuits due to discrimination. Destruction of the company reputation bears more negative outcomes in the prospect. Business operations will be negatively affected due to lack of competitiveness for the right skills resulting from discriminatory practices on employees, this, in turn, might shy away the company consumers and investors. In this case, Anja, the supervisor, Hugo, other employees, the investors, and even the customers will all be at a loss.

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If Hugo decides to keep quiet, they may both with Anja get a promotion, but there is a high probability of the company suffering the consequences of the plan as described above. If the discriminatory nature of the plan is not detected, then the company and its stakeholders will be safe, but the ethical issue of the practice will still remain. In the case of reassignment, Hugo will be safe, but there is an equal probability of Anja, the supervisor, and other company stakeholders suffering a downfall due to the plan..

Kantian Approach

This approach is based on Kant’s moral philosophy which argues that “any business practice that puts money on a par with people is immoral” (Frederick 2008, p. 3). Kant’s Theory advocates for morality through the rule of respect and the rule of universality. The rule of respect requires that no one be treated as a means of personal gains for the other, while the universal rule requires that one behaves in a manner that is appropriate for all and at all times (Josephson Institute 2010; Arnold & Harris 2012). This seems to be the best approach that Hugo can use ague his position. He can term the act immoral. It is clear that the relationship of the business practice to the respective people is all about the financial benefit. Anja’s marketing plan is based on the following two findings: “it is fiscally advantageous to use unattractive persons while mundane products marketing” (Case Study), and “it is fiscally beneficial to use attractive persons while glamorous products marketing” (Case Study). According to Kant’s Theory, this is immoral.

As mentioned above, step five on the model implies testing the alternatives (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). Davis (1999), David, Harvey and Wright (2009), describe tests to which various alternatives should be subjected. These tests are:

1. Harm test: This test determines if the alternative is less harmful than others.
2. Publicity test: This test determines what the decision maker would want the public to think about him or her. A question that illustrates this interest is : would the decision maker want his/her father to know about such decision?
3. Defensibility test: This test asks if the decision maker would defend such decision before a congressional meeting, or a committee of peers, without appearing to serve self interests.
4. Reversibility test: This test lets the decision maker consider the effect of the decision if applied on him or her.
5. Colleague test: This test makes the decision maker think of what his professionals say about the selected option.
6. Organization test: It takes into consideration what a legal officer would say, or what an organization ethic’s officer would say about the decision.
7. Virtue test: Takes into consideration, what a virtuous person would do (Davis 1999; David, Harvey & Wright 2009).

This test is based on a Yes/No answer. Yes earns 5 points while no earns 1 point.

The details are shown in the table below:

Step six: Making a choice (Johnson 2004; Davis 1999; David, Harvey & Wright 2009)

Based on the above analysis, it would be unjust, unfair and impartial to treat physically unattractive persons according to the plan. Not reporting the discrimination would be unethical. It would also be immoral not to inform the supervisor, and challenge the marketing plan based on its overall effects on the organization and its stakeholders. Lastly, according to Kantian approach, the practice in the marketing plan is immoral, and it would be unethical not to stop it. It would also be appropriate to report the matter and argue against implementing the plan based on the above alternatives.

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Step seven: Review and prevention of reoccurrence of such dilemma (Johnson 2004; Davis 1999; David, Harvey & Wright 2009). To avoid such dilemma in the future, it would be appropriate to:

• Ensure policies against discrimination including those against physical unattractiveness.
• Develop an awareness program within the organization.

QUESTION TWO

In the application of ethical theory in decision making the most challenging is the area of application in the seven step model. In might be confusing whether to use the theories in identification of alternatives or to evaluate the alternatives. Looking at the seven step model, identification of alternatives can be achieved by examining the theories and finding out what every theory says about a decision maker’s thought. The Utilitarian Approach could reveal a different finding from the Kantian and justice approaches. With this outcome, it is expected to find three alternatives to what Hugo should do. The three theories incline to one sided decision making. Applying the above theories in the evaluation step may assist in decision making as they provide more notions about ethical behavior. All the three theories revealed that, not reporting the manner would be immoral, unjust and could harm far more than just two people.

QUESTION THREE

One’s ethical decision making may change to include seeking affirmation and guidance from ethical decision making theories. These theories widen one’s thoughts towards other options and provide satisfactory and supporting information for the decision maker. Ethical decision making is different based on people’s individual perspectives. The perspectives inform their actions and they may be ready to defend such actions irrespective of other’s thoughts, that their actions are immoral. The theories also help explain individual behaviors. For example, in the case analyzed, Anja’s belief in the use of unattractive people for beneficial purposes for the organization may be defended as just and ethical, if he has a different convincing perspective of the issue.