Ethical Dilemma In Volkswagen Diesel Emission Case: A Utilitarianism And Kantianism Comparison

Background

Discuss about the Company that faced ethical dilemma.

Every organization is very particular about its reputation in the market. None wants to have a bad image. But there are times when the company faces dilemma and has to go through a rough time. Volkswagen diesel emission case is definitely a good example of Ethical dilemma because due to this dilemma, the company had to bear lots of money to the EPA and to the consumers worldwide (Kansas City, 2016). Ethical dilemma in business is the situation when there lies confusion between any two decisions and the organization cannot seem to make any, be it moral or immoral(KarimiJahromi, 2016). Utilitarianism and Kantianism are the two theories which explains Ethical Dilemma as a different perspective. Volkswagen’s case comparison with the theories are done in this report. Companies must implement rules and regulations to ensure that these types of dilemmas are not faced by them. Compliance policies in all the organizations are important.

Volkswagen (VW) is known to be the largest automobile making company. This German brand has made its mark in the world by selling the best cars with great designs and engines. In September 2015, the EPA (Environmental protection agency) found that VW had a software device attached with their carengines whichcontrolled the emission of Nitrogen Oxide and the car tests were being approved so that the cars can finally go out on the roads. While actually their cars were releasing 40 times more Nitrogen Oxide and it was creating pollution in the environment. VW believed that producing diesel cars would be good, which was just 5 percent of the US market till 2007 (Lynch & Santos, 2016). These were done in all types of cars, be it beetles, Audi A3, Jeta, Golf and Passat. EPA then issued notice for violating “Clean Car Act” and VW agreed that 11 million cars worldwide (Slide Share, 2018) and 5 lakhs in US undergo that software in between 2009 to 2015 (Kansas City, 2016). Earlier when this discrepancy came into picture, VW people said that it was due to a technical mistake but later they also agreed that they were at fault and that all this was done deliberately. Thus, VW had to pay $10 Billion to the US consumers as compensation, $2.7 Billion as a remediation fund and for cleaner vehicle projects they paid $ 2 billion to EPA. In another 44 countries, $600 Billion were paid to settle all the claims (Kansas City, 2016). The company was also charged for attaching that software to the cars of 3-literdiesel engineslike Audi and Porche. Although, VW did not agree to this but the truth was that this technology affected over 10,000 automobiles. (Hotten, 2018). Then again in November 2015, VW said that their cars were some “Irregularities” found in their cars when the tests were run again and that it could impact over 80,000 cars in Europe but later after more investigation that said that it only impacted 36,000 cars. This act broke Volkswagen’s customers trust and it was not simply acceptable by them. The company should not just maintain its image but also should think about its consumers. Good business minds never would hurt their customers as it’s said that customers always come first. They also offered a small amount of $1000 as penalty and assistance for free on the roadside (Kansas City, 2016).It later came into picture that some senior executives including the CEO were also involved in this fraud (Slide share, 2018).

Utilitarianism Perspective

This theory basically comes under those managerial ethics which acts when there is something good to be done for a huge number of people (Barrow, 2015). The main thing that a company can do morally is to keep their customers happy rather than keeping their self interest in mind (My assignment help, 2018). This is a definition of a good business company. According to the founders, Jeremy Bentham and John Stuart Mill, utilitarianism is the amount of goodness done in an action rather than producing any excruciation for others.  Volkswagen did put their own interest first and produced the cars that spread environment pollution and nothing good could come out of this treachery. VW even after knowing the negative impact of their doings bought the cars on the road after fooling the laboratory tests. They made good profit by selling huge number of cars but could not stand out in the eyes of their consumers. Overall, Volkswagen lost their goodwill in the market after denying the accusations and then not full heartedly being apologetic to their customers. Hence, the concept of this theory does not apply to this case as there was nothing good in this whole act of treachery. Rather, Volkswagen should not have attached the software and let the diesel emitting cars face the laboratory tests.    Environment pollution created by the VW cars was harming the citizens of the country and that is not at all an ethical way of doing things. Going by ethics would have meant a lot to the customers and they would have trusted the brand forever by this act. Utilitarianism helps the organization in understanding that a customer comes first. If they are satisfied with the outcome, then the brand is also safe to play in the market. However, this theory also suggests a punishment so that this should not repeat again in future but VW had to bear more than this punishment. They faced a big loss and the stocks came down like anything. The demand for their diesel cars also went down in a huge manner. The stakeholders were not at a very good position as well as the customers in this case as none of them were benefitted by this act. (Fowler S, 2017).

Kantian Ethics theory was founded by Emmanuel Kant (Arnold, 2012).The theory basically states that any action that is done by the company should only create growth for it and this growth should keep increasing as long as the company is good enough to face its competitors in the market (Neil, 2013).  In this case also, the company made lots of profit by pushing out their pollution producing cars on the roads and earned the title of the second largest automobile selling company but they forgot their moral ethics on the whole. Not just the customers but the habitat that we live in i.e. environment was at stake. On moral grounds exploiting the environment is unethical. Also, consumers should know the real standards of the cars the company was providing them with. Hence, the consumers were also cheated. This behavior is also immoral. When the act of fraud is done by any company, not just the higher authorities like the CEO or the founder but the managers and executives are also at fault (My assignment help, 2018). They also know about the wrong doings of the company and by its owners yet they stand still and do nothing about it. The technical managers those who developed the software for the company were also equally at fault. The image of the organization depends on the one’s who take out new ideas to promote it and also the hampering of it belongs to the same set of people. These leaders should definitely think of the benefits that their company is going to provide to its consumers. Trust is a big thing in any of the business. Kantianism says that the company should be on the growth side only by being ethical. It means the long term growth which a company can achieve by gaining the trust of its consumers.  When a customer is happy with the products of any company, they put that company on the top list and the image of that company touches the sky. Hence, even before putting the idea into practicality, these leaders should think of the consequences their company has to bear.  

Kantianism Perspective

This is a process in which leaders or managers takes decisions which are good for the company and it harms no other person as well. It is about choosing between what is ethically right. During the process, the options that are unethical and not the best for anyone should be totally neglected and never be taken. Volkswagen or any other organization should look up to t his process as it helps the company to be ethical and think ethically all the time. This way Volkswagen would never have gone through the loss they went through actually. The ethical decision making involves three simple steps:

• All decisions are to be taken only when it is suitable for everybody and not harming anyone in any sense. Volkswagen’s act did harm many people just to earn profit out of selling their cars (Blink, 2018).
• There are times when the unethical decisions are made by the company. There can be times when the perspective of the decision maker does not foresee the harmful impacts that are harmful. Yet, the leaders make that decision. Hence, one should be able to judge between wrong and right (Blink, 2018).
• Out of many right ethical decisions, there are some ethical decisions which are most likely to provide more goodness as compared to the other one. Hence, one should be able to sense which ethical decision is providing the best results for everyone than the other and then only implement that (Blink, 2018).

For creating the positive environment in the organization, there are three different types of ethical work climate which can be followed.

• Deontological climate: It is derived from the conceptual theory of deontology. To provide a positive atmosphere, managers need to make good decisions in terms of the rules, procedures, norms, behavior, codes etc. The company rules, norms and procedures should be such that not even one stakeholder feels disconnected with the organization (Cairn, 2018).
• Egoistic Climate: Enough space should be given to an employee so that they do not feel power abused or doubt their individuality. The self interest of an employee should always be there (Cairn, 2018).
• Caring Climate: When a person enters any organization, he expects that the company would provide him the best of the atmosphere as well as emotional balance. Equal respect and ethical treatment, openness and authority are the key factors to keep an employee happy (Cairn, 2018).

The positive climate in any company comes when it has a good corporate culture maintained all throughout. When ethics are not right one cannot expect the culture and the climate to turn out positive. Every company has the culture to teach its employees about the work ethics and to follow them by any means (IIA, 2015). Volkswagen did have the intention of the company growth but also it was not in the best interest of its consumers (IIA, 2015). In Volkswagen, there were about 30 people who knew about the software that helped VW passed the test from the laboratory and finally get the cars on the road (IIA, 2015). Now VW is a big company and it has a huge number of employees yet these leaders went for the decision which was unethical and totally neglected the interest of the stakeholders and the consumers too. The top managers in any of the company play a very important part in maintaining the healthy and positive environment. They provide the details of the ethical culture that should be followed in the company. Basically, they put down the foundation of a positive climate for the company. Volkswagen managers and leaders are the example that an organization can lead to the downfall if any illegal act is perused by the company which is not at all in the interest of its stakeholders or the employees. There are surveys where results have shown that the maximum percentage of the image of the company is based on the ethics the company follows. There might have been a chance when if this problem of producing more pollution, if discussed, with its employees, they might have given their valuable suggestions and the problem might have been solved. Giving importance to all the employees is a critical aspect of a good corporate culture. An employee more than feeling cared, wants to be valued in the company because that is why he is working in the company. Some of the employees had to lose their jobs as well. Hence, the company did not provide a good climate for the employees to work in (Delta Net, 2017).

Ethical Decision-making Process

A leader is a person who has the growth idea for him and his team and who would work positively for his team and company (Babalola, 2016). IT is important because the leaders are the people who can take their company to a higher level by taking some good decisions for the company. Leadership skills are of different styles. In case of Volkswagen, there are three leadership styles which if used, would have given the company a good and a long term growth.

• Transformational Leadership Style: This type of leadership is focused on the overall growth of the company. This means that the employee or all the stakeholders as well as the profit of the company on the whole are at the positive side. If we consider this style in the real sense, it promotes changing of the heart, mid and soul of the employees, so that their goal is to value the ethics and work culture of the company. The leader has a keen interest in the growth of the employees and has a good vision for every employee growth. Volkswagen leaders took a disastrous decision and the employees who were working on the very same assignment did not have any clue. Though the employees were not at fault, still, they faced issues (Nanjundeswraswamy, 2014).
• Autocratic Leadership Style: This style of leadership defines that the leader’s perspective is just to make the employees follow what he thinks is right for the company. Though he also thinks about the growth of the company but there is no importance of the employee’s point of view. No respect is given to the ideas shared by the employee and this kind of culture could lead to a greater issue because the employee satisfaction will decrease gradually (Wise Toast, 2018).
• Laissez – Faire Leadership: This type of leadership gives very much importance to the employees. Mostly the decisions are given by the employee in the interest of the company growth. The leader gives equal importance to the employee and his ideas and considers him as a part of the team as well as the company. Volkswagen’s employee had no idea about the software until the news was out (Small Business, 2018).

All these leadership styles were missing in the case of Volkswagen.

Managing a huge company is in itself is a task beyond taking company out for the growth. People today want to work for the company which provides positive and warm environment to each and every employee. There are many factors that contribute to the success of the company in which the most important is the ethical and positive work environment created by the company. Factors that would have helped in making the climate of Volkswagen positive are:

• Transparency and Openness: A company or the leaders should make sure that every employee has a right to say whatever they feel. The respect given to their ideas makes the employee feel that he is being valued. By doing this, the company would create an open and confident environment to work in (Poh M, 2018).
• Work Life Balance: An employee is majorly satisfied with the work culture of the company when he is able to complete all the responsibilities he is liable to such as Family, society and spirituality and self growth. Hence, the leaders while making the rules and norms, should keep this point in mind (Poh M, 2018).
• Training and Development: Work culture would also be positive when a proper development plan is maintained for every employee of the company. Training for the code of conduct and skills should be properly and mandatorily given so that there lies no confusion (Poh M, 2018).
• Recognition: When any employee’s work is not recognized, the morale of that employee can break. Every employee should be recognized by the company and the leaders. This will give push to the employee to always keep up with the pace (Poh M, 2018).
• Team Spirit: In case of any difficulty, one goes to seek help from his mentor or the leader. The sense of responsibility and helping nature would develop within the teams and hence, the productivity of the company will increase (Poh M, 2018).
• Caring: Sometimes, a few nice gestures take a huge place in the heart of any person. A company should create an environment where people genuinely care of each other. A few factors can also add in to the positive climate such as celebrating birthdays, yearly bonuses etc (Wahoos, 2002).
• Ethical Decision Making: Employee should be given compliance trainings on decision making and should be given the overview of the ethical conduct. By doing this, knowingly no one would try and take the unethical decision which can put a company in dilemma (Cairn, 2018).

All these factors would have contributed to Volkswagen’s positive work environment.

Conclusion

This essay has argued about how Volkswagen diesel emission case had put the company in ethical dilemma and the consequences the company had to face. Also, the theories like utilitarianism and Kantianism can help the company with not getting into any dilemma. The positive work environment that a company should have is also mentioned with the factors.  Leadership styles and the decision making factors which can contribute to the overall company’s long term growth.  Following all the leadership styles, a company can stop itself from facing any dilemma. By creating the positive work environment including the factors discussed above, the company can maintain a healthy and competitive climate and also can provide a good experience for any employee. Growth of a company should be long term rather than short term. A few leaders or managers take advantage of taking unethical decision, which are good for the company short term growth but they do not think about the dilemma that the company will face in the long term. This essay shows as to by just following some simple rules, a company can touch the sky and can keep the trust of the customers forever.

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