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Business Ethics

272 Downloads1 I Published: 07 Nov ,2019

Introduction

Ethics refers to the branch of philosophy that consists of defending, recommended and systematizing concept of right as well as wrong conduct. In business ethics plays an essential role by guiding them to perform right conduct which are ethically right and provide benefit to its stakeholders. This report is based on Deliveroo, a London based company which take order from its customers online and deliver them with food from the restaurant which they prefer. Main purpose of this report is to identify the ethical issue which company is facing due to denied legal rights of its rider by specifying them as self-employed contractors (Aloisi, 2015).

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This report is divided into two part where section one contain an elaboration about ethical issues along with their dimensions and role of business within society. It also describe about different stakeholder of company and impact of issue over them along with examples of impact of good or bad ethical practice over an organisation and recommendations for ethical issues. In addition to this it also elaborates about the ethical theories and their implication over ethical issues of organisation. In section two it contains a description about SAS institution which is a software based company that perform its operations ethically. This part also includes characteristics of ethical leader which support them in managing business with high standard. It further describe about the practices that make an organisation unethical along with practices that make SAS to create organisational value at marketplace.

PART 1

(A) Description of issues and recommendations to overcome them

Deliveroo Couriers is a one of the most successful online food delivery organisation which take up food from restaurant and deliver it to customer's place. In this, people place order related to food items over the website of this company which is then taken up from the restaurant and transfer it to asked place (Fumagalli and et. al., 2018). But recently employees of Deliveroo has claimed that their rights are denied by the company and they are not treated ethically in term of their working condition (Deliveroo couriers win six-figure payout in employment rights case, 2019). This case has been filed with the help of Independent Worker Union of Great Britain against company for gaining their rights as a worker.

Ethical issues, their dimensions and related ethical questions:-

The case filed by riders of Dileveroo because company is involve in some unethical practices which is harming up the rights of employees. Following are the ethical issues that are involve in Dileveroo case:

  • Legal minimum wages issue:- From the report it has been found that the riders of deliveroo company are receiving money as per their contract and not according to the legal minimum wage system (Serafini and et. al., 2018). This is an unethical practice as some of the employees are gaining only £2 per hour and as per the National Minimum Wage Act 1998 an employee must get around £7.83 over the age of 25 and £5.90 below it. Hence this is an ethical question for the company as it denying the rights of its worker by exploiting them in term of their pay.
  • Paid holiday issue:- Another ethical issue found in this case of Deliveroo is that company pay only up to the work performed by them and doesn't get any money when they are not logged in to their id. This is an unethical practice because employees are not getting pay over their sick or other sort of leaves. But as per the UK government all the workers are entitled to get around 5.6 weeks' paid holiday within a year. It includes all sort of employees whether they agency worker, irregular hour or zero hour contract worker (Holiday entitlement, 2019). Therefore, it is an ethical question because employees are not getting their proper wage even over the holidays that are fixed by government. 

Number of factors and ethical questions involved in issue:-

There are number of factors which leads to unethical practice performed by the Deliveroo company which leads to denying of worker's right during their work. Following are the factors behind these ethical issues:

  • Management perception:- The main reason behind unethical practices is that management of Deliveroo is not giving due importance to its worker rather it focuses over paying on the bases of work performed by them (Pearson, 2017). The policies of company work over a rule that employees will be paid only for the time when they are logged in and offering services. Hence it is an ethical question that even if they are paid as per the working hour still they are not getting minimum wage which is fixed by government. 
  • Self employed:- This is the another factor which leads to arose of ethical issues, as according to the Deliveroo its workers are self employed which work over hour they feel convenient and are able to place their substitute when they are absent. So, because of these factor company get move toward adopting this unethical practice of denying employees legal right. 

Role of business in society:-

Main role of a business within society is to offer product or services that help in fulfilling the need and demand of customer (Goss, 2015). But apart from this a company is also responsible for performing such actions that contribute toward improving the living standard of people and promote welfare of society. For this an organisation must involve in CSR activities that work toward providing benefit to both internal as well as external stakeholder of company. A company is consider as ethically responsible only when they work toward solving the issues faced by society either by providing fund to needy people or by perform certain actions toward the improvement of condition. On the other side, an organisation is also consider ethically right when they treat its employees fairly by formulating several policies as well as managerial practices in their favour.

Key stakeholders and how they get affected:-

Stakeholder refers to the group of person who own up a share of interest within the company and being affected by objectives, policies and decisions taken by organisation (Bendell, 2017). Stakeholders are of two type i.e. primary ad secondary.

Primary stakeholders:- These are the one who get directly benefited or being affected by the activities performed by other company and their dissatisfaction may lead to heavier loss. Following are the primary stakeholder of Deliveroo and ways in which they get affected by the current issue of company:

  • Employees:- Unethical practice of Deliveroo company like unpaid holiday and less pay then minimum wages that its rider are working as self-employed worker and not liable for minimum wage as well as holiday pay affected employees up to a great extend. The reason behind this is that they are not getting required pay over their efforts toward company's growth and they are also getting exploited (Dentchev, Haezendonck and van Balen, 2017).
  • Customer:- This issue also has an impact over the customers of Deliveroo as they are losing their trust toward company which in turn also affect its image at marketplace. Apart from that customers are getting affected by this because due to dissatisfaction of employees leads to delay in delivery of food and quality of their services are also getting down. 

Secondary stakeholders:- It refers to the group of stakeholder who do not get engaged in direct economic exchange within business but get affected by the actions taken by a company (Davies, 2016). Following are the secondary stakeholder of Dilveroo and manner in which they get affected by the case of company:

Community:- It includes number of groups which work toward the welfare of society by forming up certain standards or norms. Deliveroo is performing these unethical practices toward the payment of employees which can also encourage other business to perform such practices in order to maintain their profit ratio. This may affect the community groups as their norms will be breached by other business which leads to increase in exploitation of employees and these group will not be able to maintain their goal of providing justice to workers within society.

Media:- These unethical practices of Deliveroo may also affect media as there are number of channel which company uses in order to promote its brand as well as services at market place. So after getting informed by this issue public may loose there trust among the media company which promote Deliveroo. Hence it affect their business, market image as well as profitability of media business.

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Examples of impact of right/wrong ethical choice over business

Ethical practices plays an essential role over the growth or success of a company but in order to achieve that it is very essential for a business to make right choice of ethical practices. As the wrong selection of ethics may lead to failure of business or sometimes result in heavier loss to company (Revelli, 2017). Following are the example of positive or negative choice of ethical practice as well as its impact over business:

  • Positive:- Salesforce.com donated millions of dollar toward technology and education grants as well as also discounted its services to Non-profit organisations. In addition to this employees are encourage toward work by providing them a six days of per year to do charitable work which they want. This right ethical choice make this company ranks highly in the list of best company which offer best hourly rate and best salaries to its employees (Ethical Corporate Policies, 2019).
  • Negative:- McDonald's despite of global success, it remain target of vitriolic public backlash it pay 20% less than federal minimum wage to its teenage employees. This bad business ethics leads to negative publicity in market which also somewhat lead to increase in employees turnover that affects its quality of performance. 

Recommendation

After performing a research over issues faced by Deliveroo company it has been determined that company must try to involve in ethical practices in order to improve its image in marketplace. These recommendations are explained below:

  • Deliveroo company must fix the pay of its employees as per the minimum wages per hour fixed by government. Company is also recommended to offer its employees some holiday benefit such as offer them sick, maternal and paternal leave options.
  • It must also focus toward including Corporate Social responsibility practices in their organisation by improving their policies toward employees. Management must contribute toward improving the working condition of employees by forming several policies toward the welfare of its riders such as health care and other compensatory benefit. 

B) Application of ethical theory and reflection

There are two ethical theories i.e. utilitarian and deontology which guide up people about ways in which a person can choose best action when there is an ethical dilemma related to right or wrong. Both the theories are different in term of their selection of ethical actions which can be better understood using following description:

Utilitarian ethical theory:- As per the view point of Brunon-Ernst, A. (2015) ethical theory which differentiate among right or wrong practice by focusing over the outcome of particular action. According to this theory a action must be perform which benefit larger number of people. In current case of Deliveroo the denying of employee right in term of hour pay and unpaid holiday, employees are getting affected by these practices. But on the other side company is able to recruit more employees by saving cost and this larger workforce providing quick services which benefit customers as well as channel partners like restaurant, food outlets etc. In addition to this investors are also getting benefited in term of gaining high return over investment as company is earning more benefit. So, as according to this ethical theory majority of stakeholders like customer, investors and channel partners will be benefited by these practices and only employees will get affected. Hence, according to this theory majority of people get benefited with this action.

Deontology:- According to Dougherty, T. (2013), theory focuses over a rule that distinguish between right or wrong which work over universal moral law which state that don't lie, don't teach and don't steal. This theory suggest that people must follow this rule and perform their duty which doesn't consider its outcome. In present case of Deliveroo company was required to focus over formulating effective managerial practices for providing its employees favourable working environment which encourage them to work harder toward the accomplishment of organisational goal. Because it is the duty of company that it must provide its employees a better environment to work their riders are performing their duty and working toward the accomplishment of organisational goal. So, as according to this theory Deliveroo fails in implementing these practices as it doesn't consider the universal rule of Don't lie and Don't cheat .

Hence company is ethically wrong in its practices and it must work over improving its policies toward the welfare or benefit of employees.

Reflection:

From the study or implication of these two theories over the case of Deliveroo, I have assumed that both the theories are totally different in term of their principles. As utilitarian theory focuses over weighing the cost as well as benefit from the outcome of particular situation in order to determine the action to be perform which is ethically right. In this theory only that action is consider right which benefited the large number of people and as per this theory the Deliveroo company is right in term of its behaviour toward the employees. But as according to me this Deliveroo company is ethically wrong because it is not paying off properly over the work of its employees even though it benefit other stakeholder.

Apart from this Deontology theory is just opposite of utilitarian theory as according to this people must follow three universal rule i.e. don't lie, don't steal, don't cheat and perform their duty. This theory emphases over the fact that a person must not compromise over its professional code of ethics. According to this theory Deliveroo is wrong in term of its behaviour as well as practices it have toward its employees, because they must get payment for what they work within the organisation.

From the above two theories I believe that deontology ethical theory is best as it suggest Deliveroo to perform ethical actions for its employees that are contributing toward the accomplishment of their goals. In addition to I also suggest that as per this theory company must focuses toward considering all the legal standards in term of employee salary, benefit and payment compensation as it is their duty which is fixed by government. By considering all these employee benefit standards or law Deliveroo will be able to maintain its business with high standard which also leads to organisational goodwill and success at marketplace.

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PART 2

What make an ethical leader that manage business to high ethical standard

Ethical leadership refers to the set of actions performed by a person by considering ethical beliefs or values and also respect from the dignity of its follower. These practices of ethical leader benefit both organisation as well as employees (Fehr, Yam and Dang, 2015)). Following are the characteristics of an ethical leader:

  • Justice:- An ethical leader is one who always remain just and fair toward its follower by avoiding favouritism. A ethical leader always focuses on avoiding and becoming bias and try to provide equal opportunities to employees so that they can enhance their working capability which benefit both customer as well as organisation.
  • Honesty:- An ethical leader is one who is loyal and honest because this help them in gaining trust as well as confidence of employees. A leader is ethical when it remain loyal to its follower and maintain a transparency while communicating higher management message.
  • Respect others:- Most essential characteristic of an ethical leader is respect it offer to its employees by listening to them and valuing their contribution by regularly appreciating them over their efforts toward organisational practices (Lin, Ma and Johnson, 2016). 

I currently working as a manager in SAS institute which is a software company and also operates its operations ethically. Being a manger I follow several ethical standards in order to manage business with high ethical standards. I remain fair to all my employees and provide justice to them whenever they are having any sort of issue while they are working. In addition to this I also ensure that employees will get equally opportunities must not be discriminated on the basis of their rationality, gender or age by their colleagues. Apart from this I always present respect toward my employees as it is my personal ethics which doesn't allow me to misbehave or disrespect others at workplace.

Conditions that make an organisation unethical

There are some practices which sometimes either intentionally or unintentionally performed by a company that make it unethical (Davies, 2016). These practices must be avoided as it may affect its brand image at marketplace that may also leads to business loss. Following are the practice that make a company unethical:

  • One of the highly performed unethical practices is discrimination on the bases of gender in term of providing opportunity or paying off salary to employees.
  • Favouritism performed among two employees is another major unethical practices that usually performed within the organisation while providing opportunities.
  • Payment of salary to the employee which is below then the minimum wage amount fixed by government.

These all are the managerial practices which make an organisation unethical and also bring dissatisfaction among employees that have an huge impact over the goodwill of company at marketplace (Freeman, 2016). To achieve high standard practices and success at marketplace, it is very essential for an organisation to work ethically that help in creating value in front of its stakeholder (Ethical Corporate Policies, 2019). SAS institute follows ethical practices and values it create ethically is explained below:

  • Employees at SAS get benefited with Montessori child care, access to free health centre and unlimited sick time.
  • Company support education philanthropy which promote science, engineering, technology, mathematics program for children. 

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Conclusion

From the above given report it can be summarised that ethical practices plays an essential role within the growth and success of nay business as these practices affect the image of company in front of stakeholders. In order to perform its operations ethically a business must determine impact of ethical issues over stakeholders so that proper action can be taken in order to improve its practices. A company can also follow ethical theories in order to determine what is ethically right or wrong. But in order to perform operations effective a manager must be posses ethical characteristics such as justice, honesty and respect for others. These practices help them in achieving high standard practices and creating organisational value.

References

  • Aloisi, A., 2015. Commoditized workers: Case study research on labor law issues arising from a set of on-demand/gig economy platforms. Comp. Lab. L. & Pol'y J.
  • Bendell, J., 2017. Terms for endearment: Business, NGOs and sustainable development. Routledge.
  • Brunon-Ernst, A., 2015. Utilitarian biopolitics: Bentham, foucault and modern power. Routledge.
  • Davies, P. W., 2016. Current issues in business ethics. Routledge.
  • Dentchev, N. A., Haezendonck, E. and van Balen, M., 2017. The role of governments in the business and society debate. Business & Society.
  • Dougherty, T., 2013. Agent-neutral deontology. Philosophical Studies.
  • Fehr, R., Yam, K. C. and Dang, C., 2015. Moralized leadership: The construction and consequences of ethical leader perceptions. Academy of Management Review.
  • Freeman, R. E., 2016. Ethical leadership and creating value for stakeholders. In Business ethics: New challenges for business schools and corporate leaders
  • Fumagalli, A. and et. al., 2018. Digital Labour in the Platform Economy: The Case of Facebook. Sustainability.
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