Question

Mary owns a small toy manufacturing company. One of her employees has noticed that one of the pieces on the most popular toy the company manufactures can detach from the toy. This detachment 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.

(Please read the following text and with the information provided in the text. Yry to analyze the above case .)

ethical issues have become important to leadership and management practice as a result of many well-known cases of failure by organizations and individuals to observe and maintain ethical standards. Unethical activities of these organizations have resulted to defrauding of stockholders, consumers and employees, creditors and government to various degrees depending on the nature of the scandal or fraud. In this paper it was noted that organizations and individual have a role to play in ensuring ethical business and individual conduct. Organizations should create ethical environments by providing ethical role modelling and consisted ethical decisions and save workers from ethical dilemmas. Employees on their side should be ethical in thinking and actions to save themselves and their organizations from the costs related to unethical conduct. Whereas ethical conduct is costly and difficult to measure and account, there is evidence of long term benefits as acting ethically builds trust and respect which is necessary for successful long-term business and personal success. The solution to ethical and unethical challenges lies within organizations and individuals but leaders have a special role to act as role models and create ethical environments and organizations. Psychological factors, organizational and societal pressures, and a number situational factors make it difficult for people to realize their own ethical aspirations, but we must all try to be ethical in all our undertakings as individuals or corporates because there is evidence of long term personal and corporate gains.

Ethical Dilemmas

an ethical dilemma is a moral situation in which a choice has to be made between two equally undesirable alternatives and they arise due to a number of reasons, attitude, behavior, failure of personal character, conflict of personal values and organizational goals versus social goals. A business dilemma exists when an organization decision maker faces a choice between two or more options that will have various consequences on profitability, competitiveness ad stakeholders in general. There are occasions in life and in business practice that we encounter dilemmas. They include fights in court where manufacturers and sellers try to distort facts, buyers colluding with sellers to avoid paying taxes to state.

Ethical dilemmas involve making decisions where rules a vague or in conflict while the outcome of an ethical decision cannot be predicted with any degree of accuracy or precision so the leader or decision maker is often not sure whether a decision made is right or wrong and quite often mistakes are made .In making an ethical decision, an individual’s intentions and the factors prompting him or her are the last considerations. The decision maker usually feels guilty when the intentions and final decisions are at variance with one another.

Most ethical decisions are made in organizational environment with different value systems, competitive pressures, political ideologies, moral philosophies and culture all of which provide opportunities for misconduct. As a result, of this moral and ethical issues are common in business .In a year 2000 survey by KPMG on 24,000 workers from different companies, 74% revealed that they had observed violations of law or company policy and standards the previous year with 50% indicating that they observed what they considered as serious misconduct which could lead to financial losses. Employees who work for companies with comprehensive ethics and compliance systems reported more favorable results than those employees who work in companies without such programs. This confirms the high level of ethical issues in most organizations which can be reduced by enforcement of ethical monitoring and control policies by organizations.

Organizations must put in place various measures to reduce ethical dilemma which is undesirable but will always be encountered in daily business activities. Fernando proposes a number of measures which include;

i. Implementation of ethical activities and behavior by developing in-house codes of ethics that is expected to be adhered to by the organization and its stakeholders.

ii. Performance reviews or appraisals should include ethics as an element of review sending a clear message to the workers on their ethical requirements.

iii. Continuously review ethical behavior by employees and the organization with the objective of improving on continuous basis.

iv. Carry out regular ethics audit for the organization and implement any recommendations based on findings of the ethical audits audit.

Answer 1

The above case, is related to the problem of maintaining business ethics and the ethical dilemma faced by the owner of the company. If the problem is scrutinized in details, it is found that one of the parts, of the toys manufactured by Mary's company comes loose and may pose a choking hazard to the younger children while playing.Mary is in a dilemma of whether to recall the product, due to which she has to incur heavy loss or should knowingly do nothing as no case of has been reported till date. In this case, Mary should immediately recall the products as it is a very issue of choking, due to which a child may die. It may cause loss to Mary during the Christmas season, but in the long run, people will remember about what the company had done for the welfare of the society, how they have acted ethically to save the lives of children, without even bothering about their monetary loss. Mary as the owner and leader should establish a role model in front of her employees as well as in front of customers as she did not bother to face loss but for her maintaining business ethics is of supreme importance. Her employees will also follow her footsteps and will try to maintain an ethical climate in the organization. Her customers will become loyal to her products in the long run, if she withdraws all her products from the market without even getting any complaint from any customer and for the sake of safety of the children.

Mary is in a situation of ethical dilemma, where she has to opt between two equally undesirable alternatives as-

Firstly, to tell the truth and withdraw the products from the market and suffer monetary loss.

Secondly, to not to act and disclose the facts to anyone as long as no one complains. But waiting for this complain means a child has to get choked due to that loose part and it may turn out to be fatal also for the child.

As an entrepreneur, it is the duty for Mary, to create an ethical environment in the organization. The act of implementing ethics in any type of work may be costly monetarily or may be a benefit of the competitors. But in the end, Mary will feel contented if she acts ethically and withdraws a whole lot of products from the market. If she hides the truth, she will only have to suffer, there is only one case of choking accident, her whole customer base may be lost. The customers will degrade her products in this case.

Hence, It is always advisable to Mary to withdraw the products from the market for rectification, without thiking about loss and set an example before her employees of how to behave in an ethical way and create a good value system for the organization.