Consequences of ethical decision-making
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The Price of Doing Good: Consequences of Ethical Decision Making.
Consider the following two scenarios:
Scenario 1:
James works in the accounting department of a large firm. While going over the books for the past several months, James notices that someone has altered the figures to increase earnings by several thousands of dollars. He suspects that the errors, which are in the company’s favor, are too consistent to have been honest mistakes. He knows that he should report his findings through the company’s ethics hotline. However, he worries that doing so will jeopardize his security and reputation with the company.
Scenario 2:
Mary owns a small toy manufacturing company. One of her employees has noticed that one of the pieces on the most popular toy can detach from the toy. This could pose a potential choking hazard to young children who play with the toy. No customers have yet reported problems with the toy. Mary wonders if she should report the potential hazard before anyone gets hurt. However, the recall would cost her company money and result in loss of sales during the busy Christmas season.
As the scenarios illustrate, making ethical decisions often requires a trade-off for an organization or individual. After a scandal results from ethical wrongdoing, the proper course of action seems clear. Even so, organizations continue to struggle with making ethical decisions on a day-to-day basis as they weigh the cost of making such decisions.
To prepare:
• Choose a positive example from the past ten years of a business organization whose leaders acted ethically when they encountered an ethical dilemma. Select, analyze, and describe the ethical decision making and actions in the organization.
Write a 4-page (not including cover page or references) analysis of the ethical situation. Your analysis must include the following:
• An explanation of the ethical framework applied by the organization to make its decision, including support for your analysis from scholarly research
• An examination of both the positive and negative consequences of the decision, including the tradeoffs that the leadership of the organization made in making their decision
• A minimum of five references
Learning Resources.
- Northouse, P. G. (2013). Leadership: Theory and practice (6th ed.). Thousand Oaks, CA: Sage.
- Chapter 16, “Leadership Ethics” (pp. 423–451)
Abrhiem, T. H. (2012). Ethical leadership: Keeping values in business culture. Business & Management Review, 2(7), 11–19. - Cuilla, J. B. (2011). Is business ethics getting better? A historical perspective. Business Ethics Quarterly, 21(2), 335–343.
- Hartog, D., & Belschak, F. (2012). Work engagement and Machiavellianism in the ethical leadership process. Journal of Business Ethics, 107(1), 35–47.
- Selart, M., & Johansen, S. (2011). Ethical decision making in organizations: The role of leadership stress. Journal of Business Ethics, 99(2), 129–143.
SAMPLE ANSWER
Consequences of ethical decision-making
A major responsibility of leaders in business organizations is to act in an ethical way, promote ethics in the company, and make decisions that are ethical. Ethical decisions are essentially understood as decisions, which are in agreement with one’s individual or organizational value system (Salvador & Folger, 2009). In this essay, the purpose is to provide a description of an ethical decision making in a firm whose leaders acted in an ethical manner when they faced an ethical dilemma. The analysis includes an explanation of the ethical framework that the organization applied to make its decision, as well as an investigation of both the positive and negative consequences of the decision and the tradeoffs that the company’s leadership made. A leader should be mindful of the messages that he/she is sending when making decisions. Ethical business practices basically include observing the highest moral and legal standards in one’s relationships with the entities in the organization’s business community, most importantly the customer of the business. It is notable that short-term profit for the organization at the cost of losing clients is certainly long-term death for the company (Brenkert, 2010).
The selected company is Lundbeck Inc., which is a pharmaceutical firm based in Denmark and is the only manufacturer of pentobarbital drugs for sale in the United States. In the year 2011, the company faced an ethical dilemma regarding the usage of its medications in capital punishments. Pentobarbital medicines are progressively more being utilized in the United States in place of sodium thiopental for fatal injections (Brockway, 2012). The drug was most recently utilized in capital punishments in Mississippi, South Carolina and Texas. According to Lundbeck’s spokesman, Andrew Schroll, the corporation has prided itself in manufacturing drugs that improve the lives of people. The company is officially opposed to capital punishment and disagrees with the way the drug is being utilized.
Andrew Schroll stated that how the medication is being used constitutes wrong usage of Lundbeck’s product. He added that Lundbeck is in an ethical dilemma whereby it is opposed to the usage of its products for the death penalty whilst at the same time the organization’s leaders want to ensure that patients who benefit from Lundbeck’s medicines get access to it (Death Penalty Information Center, 2014). The company’s top management sent letters to the penitentiaries in 11 states insisting that they should discontinue utilizing pentobarbital in their lethal injection protocols. Nonetheless, none of these penitentiaries responded. In fact, even more states have shown intentions of using the medication, and this includes Virginia. Pentobarbital is also utilized in treating seizures in human beings as well as in euthanasia and anesthesia of animals. Lundbeck is the only manufacturer of this drug for purchase in the United States. Accordingly, a lot of physicians have written to Lundbeck asking the company’s leaders not to suspend distribution of the medication (Death Penalty Information Center, 2014).
The company’s top management found itself in this precarious situation primarily as a result of a deficiency of sodium thiopental, the anesthetic that for long had been used as an ingredient in lethal injections in 35 of the 36 states that still apply capital punishment. Denmark and all other members of the European Union have abolished the death penalty. In essence, Lundbeck does not want to be involved in the execution business; however, it also does not want to lose its lucrative American pentobarbital market, which is crucial to the company’s revenue and profitability (Buhmann, 2012). Lundbeck’s top management acted ethically in this ethical dilemma by attempting to take some action since it called on the prisons to stop using its product in executions given that such behavior would be against the company’s mission of providing the world with life saving technologies. Ethics in business consists of actions of people within a company, and the company’s positions and actions on ethical matters (Death Penalty Information Center, 2014).
Lundbeck’s leaders are clear that the firm’s products should be utilized for healing and not for killing. There are several positive and negative consequences of Lundbeck’s decision to prevent the use of its pentobarbital drugs in capital punishments. The positive consequence is as follows: first, the company will prevent its major investors including Denmark’s largest pension investor, ATP, from unloading shares worth millions of Euros. If the company were committed to preventing the use of its products for executions in the United States, its reputation especially as viewed by investors would improve considerably. In turn, this would result in good, positive relations with the Lundbeck’s investors. It is noteworthy that an organization’s reputation is basically one of its most important assets. Business ethics creates goodwill within the market given that an organization that is famous for its ethical practices will create goodwill for itself within the marketplace (Salvador & Folger, 2009).
The negative consequence of the decision to prevent the use of the product to carryout executions in the United States is that the move would result in reduced sales and revenue, and more importantly reduced profitability. This is as a result of the fact that the prisons in the United States are a major customer-base which is crucial to the company’s bottom line. Business or organizational ethics is vital given that it influences and contributes to an organization’s performance, revenue and profit; image and reputation; and the ability to build relationships with the company’s investors. In addition, it influences and contributes to customer satisfaction; legal problems and penalties; investor and customer loyalty and confidence; as well as employee commitment (Brenkert, 2010).
Given that Lundbeck’s leaders acted ethically, the company’s long-term profitability is assured. It is of note that businesses that follow certain organizational ethics have better probabilities of survival relative to the companies whose sole goal is profit making, though they have to compromise on many things for that (Buhmann, 2012). Business ethics is important to organizations since ethical companies have the tendency of making much more profits relative to other companies. This is owing to the fact that customers of ethical organizations are loyal and contented with the product/service offerings of such organizations (Brockway, 2012). Moreover, organizational ethics helps to ensure efficient utilization of business resources since employees will emulate the company’s ethical leaders and follow ethical business practices. As such, employees will also desist from misusing company resources or property.
Conclusion
In conclusion, the selected firm whose leaders acted in an ethical manner is Lundbeck Inc., a pharmaceutical firm based in Denmark and is the only manufacturer of pentobarbital drugs for purchase in the United States. The company faced an ethical dilemma regarding the usage of its medications in capital punishments. Lundbeck does not want to be involved in the execution business, but at the same time, it does not want to lose its profitable American pentobarbital market which is crucial to the company’s revenue and profitability. Lundbeck’s leaders acted ethically in this ethical dilemma by trying to stop the usage of its products for the death penalty; the company’s leaders maintain that Lundbeck makes drugs to heal and not to kill.
References
Brenkert, G. G. (2010). The Limits and Prospects of Business Ethics. Business Ethics Quarterly, 20(4), 703-709.
Brockway, J. (2012). Danish Drug-Maker’s Death Penalty Dilemma. Crescent City, CA: CRC Press.
Buhmann, K. (2012). Damned If You Do, Damned If You Don’t? The Lundbeck Case. National Center for Biotechnology Information.
Death Penalty Information Center. (2014). Sole Provider of New Drug for U.S. Executions Faces Ethical Dilemma. Available at http://www.deathpenaltyinfo.org/sole-provider-new-drug-us-executions-faces-ethical-dilemma (Accessed June 10, 2014).
Salvador, R., & Folger, R. G. (2009). Business Ethics and the Brain. Business Ethics Quarterly, 19(1), 1-31.
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