Ethics refers to the moral judgments made by an individual with regards to what is right and what is wrong. In an organization, the decisions related to ethics would have an impact on the overall culture and stakeholders of an organization. A system of ethical and moral behavior in an organization would help in guiding the behaviors, values and the decisions of any business organization, along with the individuals who are a part of it (Bednarz 2013). Maintaining a code of ethics, as a matter of fact, would be extremely beneficial to a company in terms of profits and even brand positioning (Trevino and Nelson 2016). The following essay conducts a critical analysis of a recent news article related to business ethical issues by Uber Australia.
On July 26, 2018 a news article published in ABS News wrote about an ethical issue that Uber Australia faced in recent times. The app cab company with branches all over the globe was recently accused by its drivers of wage theft. The Uber drivers claimed that the company had been deceiving them by compelling them to take pay cuts as a result of recent changes in policy. The recent policy dictated that the company would provide its customers with a fixed upfront price (like 50 Australian dollars) instead of providing them with a range. This was done so as to attract more customers and provide them with assurance. The drivers were told that the customers would be given a brief estimate of the price, which would be beneficial for the drivers themselves since they would be assigned more trips. However, the drivers alleged that they were forced to sign a contract and had to accept the estimate price policy set by Uber Australia (ABC News 2018). If they failed to comply with the policies provided by Uber, they would be deactivated or blocked from using the app without any prior explanation.
The main ethical issue identified in this case is that of corporate governance and ethics. The company had promised its employees that imposing this new policy would prove to be beneficial for them and cater to their interests as well. Yet, Uber Australia forced the drivers to sign a contract which would terminate their services if they failed to abide by the policies, that too without prior notice. As a result, a majority of the drivers observed a significant drop in their earnings. Since customers were being given an exact estimate which may or may not be accurate, drivers often incurred losses. The Uber Australia policy claimed that the estimate prices would be based on the distance to be covered by the driver and the time taken to cover the distance. Based on certain parameters like heavy traffic or multiple stops made by the customer, the fare would be adjusted automatically. This was the condition provided to the drivers. Yet, the drivers claimed that it was in these situations that the Uber policies proved most ineffective (ABC News 2018). The management of the company or the leaders involved in development of the policies based the upfront prices of the cab fares based on certain ambiguous calculations, which proved to be problematic for the taxi drivers. According to these drivers, these calculations are based on theoretical evidence an historical data which are not accurate. Accordingly, the drivers are facing tremendous losses and losing more than 30 dollars per week.
Following this controversy, there were several investigations into what made Uber Australia take this unethical decision. It was found that the business model of Uber was designed in a way that could not take into account the interests of the drivers and the customers simultaneously. In order to incorporate the interests of both the drivers and the customers, Uber would have to invest huge sums of money, which was impossible for them. As a result, the interests of the drivers had to be compromised. It has also been found that due to the policies implemented by Uber Australia, the drivers employed under the company are earning even less than the specified wage, which is not enough to sustain an existence. The drivers work for more than seventy hours per week, yet take home less than minimum wages. On top of that, fixing the fares without backing of sufficient traffic evidence proved to be all the more problematic for the drivers. This is because the drivers were putting in long work hours, yet, they were getting paid less than they should have.
Thus, it can safely be asserted that the decision taken by Uber Australia is an example of unethical behavior. It must be remembered that each organization is powered by its workforce (Michaelson et al. 2014). An organization like Uber is entirely reliant on its workforce of drivers. As such, it is the responsibility of the organization to ensure that the interests and the benefits of the drivers are taken into account. However, the recent policy implemented by Uber prioritizes the interests of the customers and entirely ignores that of the customers. Moreover, the policies implemented by the company are not backed by solid evidence. The upfront pricing strategy implemented by Uber is based on historical data and not current statistics. This can be compared to another company in the same industry, named Ingogo. The company, Ingogo too follows a fixed pricing strategy where an estimate is provided to the customer at the beginning of the trip and he or she would be required to pay exactly that mount (Ingogo Ltd. 2018). However, the fixed pricing strategy at Ingogo takes into consideration the interests of the drivers as well. The fixed fare estimate is calculated on the basis of the best routes available, the tolls and other miscellaneous charges involved and other factors. These uncertain and unpredictable factors are incorporated as part of the price provided to the customer so as to avoid confusion later on. Moreover, what was most unethical about the way Uber handled the situation. The company had compelled the drivers to sign a contract that forced them to accept the unfair fare system and if they failed to do so, their employment would be terminated without notice. Post the accusation of the drivers, an investigation was launched into the claims. The leaders of the company said that the confusion had been due to miscalculation on part of the company. As a result, they would be willing to compensate the drivers for the unfair treatment that had been meted out to them. However, the compensation offered by the company proved to be insufficient to make up for years of losses. Thus, it can be affirmed that Uber Australia has failed to make ethical decisions in this aspect.
In this aspect, it is important to scrutinize and understand the unethical practices by Uber Australia and align them to moral philosophies. Moral or ethical philosophy may be defined as the process of defending, systematizing and utilizing concepts of wrong and right conduct (Ferrel and Fraedrich 2015). Concepts such as good and bad, right and wrong, virtue or vice are analyzed as part of moral philosophy. There are essentially seven kinds of moral philosophies, namely teleology, egoism, utilitarianism, deontology, relativist, virtue ethics and justice (Teulon 2014). The philosophy of teleology suggests that an act can be deemed morally acceptable and right only if they produce some desired results, which could serve utility purposes or self interest (Berker 2013). Egoism suggests that an action can be called morally right if it maximizes an individual’s self interest. Utilitarianism, as the name suggests, defines an act as morally right if it maximizes total utility or is a step towards the greater good. Deontology emphasizes mostly on the preservation of the basic rights of people and the behavior demonstrated by individuals rather than the consequences (Bentham 2014). Relativism refers to the ethicalness of a decision, based on group and individual experiences. Virtue ethics is more conventional in nature and analyzes the ethical aspects of a situation based on accepted norms of ethics. Justice defines ethicalness of situations based on concepts of fairness. In order to analyze the ethicalness of Uber Australia’s decision, the moral philosophy of deontology would be used. Such a philosophy specifies that every individual must be treated with respect. In business, this is of prime importance. Employees are human beings and deserve a degree of respect. As such, the drivers employed by Uber Australia were deprived of even the basic wages needed for existence. Uber failed to treat their drivers with the same level of respect as their customers, prioritizing one over another. Contradictory to the utilitarianism principle, deontology suggests that businesses are obligated to take ethical decisions and take into consideration the interests of the employees even if it does not maximize utility. Uber justified their stance by stating that their decisions were in the interest of social utility, and their policies were implemented to improve customer experience. This would in turn improve profit generation for the company. Yet, as the principle of deontology suggests, it would be wrong to forego interests of individuals and indulge in behavior that is simply for utility purposes (Sacco et al. 2017). Going by the principles of deontology, some actions are inherently wrong while some are by nature good. This theory is thus also known as nonconsequentialism (Vadastreanu, Maier and Maier 2015). In other words, an act must be judged on the basis of its ethicalness, irrespective of whether it yields favorable results or not. Accordingly, it can be affirmed that the behavior on part of Uber Australia was indeed an unethical one. They prioritized profits over the interests and well beings of their drivers. The ethical philosophy followed by Uber can be said to be utilitarian in nature, since it suggests that compromising the driver’s welfare is justified since the steps taken by the company would beneficial for the customers and even increase the profitability of the company.
To conclude, it can be said that Uber Australia made an unethical decision, as far as the wages of their drivers are concerned. A news report released in July showed that the fixed fare policy for Uber Australia was severely protested against by their drivers. The drivers claimed that the fares were fixed based on unscientific evidence and historical data of traffic. As a result, the drivers were working twice as hard, but were not making profits. They were earning wages less than the minimum wage levels. To make matters worse, Uber Australia had made the drivers sign a contract which stated that if they failed to abide by terms and conditions, they would be terminated without notice. A moral philosophy of deontology has been used in this essay to assess the ethicalness of Uber’s actions and accordingly, it was deemed unethical.
References:
ABC News. 2018. Uber accused of ‘wage theft’ by drivers. [online] Available at: https://www.abc.net.au/news/2018-07-26/uber-drivers-allege-upfront-wage-theft/10025908
Bednarz, T.F., 2013. Ethics in business. Practical Ethics for Food Professionals: Ethics in Research, Education and the Workplace, 52.
Bentham, J., 2014. Deontology; or, The Science of Morality.: In two volumes. Adegi Graphics LLC.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Ingogo Ltd., 2018. ingogo | Taxis done better. For Passengers, Drivers and Businesses. [online] Ingogo.com.au. Available at: https://www.ingogo.com.au/
Michaelson, C., Pratt, M.G., Grant, A.M. and Dunn, C.P., 2014. Meaningful work: Connecting business ethics and organization studies. Journal of Business Ethics, 121(1), pp.77-90.
Sacco, D.F., Brown, M., Lustgraaf, C.J. and Hugenberg, K., 2017. The adaptive utility of deontology: Deontological moral decision-making fosters perceptions of trust and likeability. Evolutionary Psychological Science, 3(2), pp.125-132.
Teulon, F., 2014. Ethics, moral philosophy and Economics. Financial Economics, pp.28-8.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
Vadastreanu, A.M., Maier, D. and Maier, A., 2015. Is the success possible in compliance with ethics and deontology in business. Procedia Economics and Finance, 26(15), pp.1068-1073.
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