Impact Of Ethical Values On Organizations And The Consequences Of Non-Compliance

Discussion

Explain the impact of ethical values on any organisation and then discuss the consequences if any organisation cannot follow it then the complications the company has to face is the main concern of this study.
 

Managerial Ethics refers to the process, which enables the organisational heads to understand what is right for the organisation and what is wrong to incorporate within it. Every company has a particular ethical principle that is followed by the organisation to drive their organisation in a smooth way. However, as stated by Dent and Whitehead, (2013), sometimes the organisations does not follow their ethical principles or intentionally disobey those values to get a higher growth and profit in the organisation that leads the company to face  great failure or dilemma within it.

In this study, the researcher has found out two ethical dilemmas, which were faced by the well-known technology company Apple Inc. In 2011, the company has experienced a severe employee abuse to gain a higher profit and organisational growth. Apart from this, the company has also faced a huge problem with the workers in China that led the company into a great controversy regarding the organisational ethical values. According to Frederickson and Ghere, (2013), Apple has faced this type of ethical dilemma many more time from their emergence in the market. The researcher has explained those ethical dilemmas in this study to evaluate the theories of managerial ethics in organisations and then discussed the role of the leaders in the organisation to improve their position in business. 

Apple Inc is one of the most popular technological companies in the world that produce various mobile phones as well as technological products that attract the customer with the innovative features and attractive designs. It mainly produces the electronic elements, computer software, hardware etc. The company was founded in the year of 1976 with the innovative view of Steve Jobs who has founded and developed the company to its peak level. It is mainly a US based company and spread its business all over the world very fast. In present time, the company has almost 478 stores in different areas of 17 countries with more than 115,000 employees (Hill, Jones & Schilling, 2014). The company has gained the success with the tremendous level of good leadership by Steve Jobs and the highly skilled employees as their corporate culture that led them to achieve the success. According to Giacalone and Rosenfeld, (2013), the practice of evangelism in the corporate culture of Apple has promoted the company before the customers and the unique work culture of the organisation. The dedicated and enthusiastic employees who were very efficient in working in the company have proved their ability with the expansion. The company has also practiced a particular ethics for employees that all have to follow. The main ethical concern of the company is to provide the same thing that they had promised before (Schaubroeck et al. 2012). This concern has led them to gain the customers’ trust on the products of the company. Apart from this, the company possess the creativity and innovativeness in the products that enables the company to attract the customers easily. The main motive of the company is to produce the products with advanced creativity. They practices main four principles within the organisation, such as, honesty, respect, confidentiality and compliance (Myers, 2013). According to Goetsch and Davis, (2014), if the company does not follow the principles therefore they have to face problems in their growth. Honesty and respect is very essential for the company, as they believe that without honesty no work can be done properly. If the employees remain honest in their working time, then the production will be increase and the productivity of the company will too increase automatically. They manufactured their products with very low labour cost that the cost of the manufactured products becomes very cheap that is affordable for customers. Nevertheless, this system has forced them to face the misconduct due to labour standards.

Being practiced the ethical principles of honesty, respect, confidentiality and compliances the company has experienced some ethical issues within recent few years. Apple Inc has faced a severe accusation regarding dealing with the employees in 2011 that has created a great side effect on their business (Chan, Ma & Wong, 2013). The main issue was regarding the employee abuse that they created in the greed of achieving a high growth and profit in business. As per the report, the company was accused that they were treating their employees in many areas very inhumanly, almost like machines. In that year, the company has implemented the strategy to hire employees to earn more profit and to increase their cost too. This was happening in the two factories of China that were faced severe employee abuse by the company. The plants in Chengdu and Shenzhen, this was reported more complaints about this. The truth was more pathetic when it is investigated properly (Hao, 2014). The company has unethically hired the employees in those plants and after that; they did not able to give the proper working environment according to the employees. The company has kept the employees in a very inhumane condition that was against the ethics of the company.  After investigation, the real picture was exposed that the employees were kept in the place where the working environment was not suitable to work neither in the working premises nor outside the work area. According to the ethics of the company it was allowed to force an employee to work around 40 hours in a week but Apple Inc was enforcing the employees in these plants to work more than 40 hours (Bai & Morris, 2014). It was not ethically correct and for this the employees had to work forcefully to produce the Apple products that are very popular and was in demand that time due to the innovative and creativity if the products. Therefore, many employees had committed suicide for the excessive workload and the company has to face all the troubles during this. According to Lynn and Salzman, (2015), the Chinese law support one employee to work up to 36 hours per day as overtime but the company was compelling to work the employees almost 98 hours. It was almost three times more than the law and completely against the ethics of the company. Therefore, the decision of the company was proven wrong for this time and they had to face various problems regarding this decision of hiring so many employees at a time. 

The company has met another ethical issue in the next year of the employee abuse issue. In this time, the problem was again in the China and the issue was regarding the ethics about employees. The complaint was that the company was nit following the ethical values regarding the welfare of the employees (Haley, Haley & Tan, 2012). This time the business chains in China had identified that, the company was using child labour in manufacturing iPhones, iPads etc. This was really a fact of concern that the company has created an ethical curse. As per the report, the company has used the employees in the supply chains of China to work overtime the rule. They reported that the company was forcing the employees to work almost 60 hours per week whether as per the rule they have not the rule to work more than 40 hours in a week. Apart from this, the main ethical disorder that the company had made was to appoint child labours in their factories (Hao, 2014). This has created a great concern among the people or the customers that they were engaging the children in their factories for work. Apple has used the employees to work more and more except their working hours and their working ability deteriorated. According to Parks, (2013), as Nike has faced huge criticism in the year of 1990 due to their wrong decision in developing sweatshops in Asia, likewise Apple has faced the same situation in this case. The main issue was regarding the competitive advantage that the company has gaining for their innovative products, which were manufactured from the Chinese supply chains but the company was giving very less share of the profit to the supply chain level companies. Therefore, they protested against the company’s ethical decisions of involving the children as labour and for forcing the workers to work excessively overtime.

There are many theories that are developed by various experts to show the way of managing an organisation. If any organisation does not possess a good management body then the company cannot reach the success that they want to (Robbins et al. 2013). Therefore, every company needs to follow a particular managerial skill to know the policies of leading the organisation to meet their organisational goals and objectives. According to Chan, Ma and Wong, (2013), as every organisation follows a particular ethical principle therefore they have to follow some theoretical views on this aspect. In this context, the theory of managerial ethics of Archie Carroll can be followed by the organisations. According to the theory of Carroll, it is a theory based on the social responsibility. As stated by Xu and Li, (2013), the theory refers to the management of the organisation that helps the management authority to manage the internal economical, legal, ethical, and philanthropic aspect of a company. In this theory, the management have to take the responsibilities of the economic aspect upon which the whole organisation depends. If the management does not possess the responsibilities of producing goods and services that will be supportive to the society and the customers then the creditors and the stakeholders can repay it, which the management of Apple has not used in their organisation. Therefore, it led to the ethical dilemma in the decision-making. The main step of any management is to create the profit level upon which the future of any organisation depends. As opined by Cullen and Parboteeah, (2013), the economical responsibility of any management is very essential that it maximises the profit level of any organisation as well as the earning. In the present time, the competition is so high that every organisation needs to maintain their competitive efficiency to retain in the market. The definition of success is now depend on the profitability of any firm therefore, the management have to look after on this aspect more consciously that the organisation can gain as much as profit. According to the theory of Carroll, it is equally important to follow the rules in any organisations. The management have to follow the rules and regulations of the government and laws that Apple has not followed. Therefore, the management of any organisation should consult the various national regulations along with the supra-national or international regulations to comply. Apart from this, the most important thing is to follow the ethical values in an organisation that will teach the employees to do the right things in right way without doing any harm to anyone. Finally, the most important part of any corporate is to become a good corporate citizen. The Management have to concern about improvement of the organisational sales and profit to gain the trust of the customers. If Apple has implemented this theory in their organisation then the organisation will not focus only on the profit of the company but also the focus will diverted towards the ethical values as well as the social responsibilities, corporate citizenship and sustainability of the organisation. It will affect the environment and the life of normal people very positively that will be helpful for the company too. 

There is another managerial theory, Stakeholder Approach Theory that can also be applicable in these cases to manage the organisation effortlessly. The Freeman’s theory of ethical managerial helps the organisation to develop the idea about managing the organisation in way that will reflects on the organisational profit level and the relation between the external and internal entities of an organisation (Weiss, 2014). According to the theory of Freeman, every management should follow the responsibility of their own. Freeman has argued against the concept of social responsibility rather he suggested that the responsibility should reflected in the organisational behaviour according to the need of the business. As per the theory, the true business manager should be that person who can take the responsibility in a way that he can cut the costs of the products if required in an inflation situation and in between the relation with the stakeholders should be kept in priority order. Normally the management of any organisation always try to implement the laws and regulations that will lead the company to meet the objectives as well as the organisational goals but in this time, they forget to think about their stakeholders. This theory makes understand the business owners to concentrate on the relationship making with the stakeholders, as they are the essential part of the organisation. However, sometimes the management need to focus on the market situation that requires some risky steps to handle the organisational profitability. Therefore, the theory refers to only one responsibility of the society on business growth, which the management have to incorporate, is the resources that Apple has failed to apply in their company. The management have to use those resources in their business to gain the profits. Apart from this, the management has to follow the rules and regulations of the company without involving in any kind of deception or fraud cases (Ciulla, 2014). In Apple, if the management has used the theory then the management have to take the responsibility to support the organisation in every situation. The company has applied some tricks to increase the profitability of their business but the tricks were proven wrong in their cases. On the other hand, they could not develop the proper relation with the stakeholders to get the support in their problem situation. The applications were completely not according to the theory as the theory has involved the rules and regulations to implement them in their organization, which Apple has not followed. Therefore, they have to face the issues regarding the legal rights in the supply chains of China.

The role of leaders is mainly in leading the workforce in a particular way that the company too can gain the profit. One of the important roles that the leaders play in an organisation is to communicate with the workforce to understanding the consequences of different decisions (Kuntz et al. 2013). This will enable the leaders to understand the requirements and the fruitfulness of the strategy if implemented. If the leaders discuss with the workers in the organisation then the organisation will be benefitted with the strategy. Apart from this, the leaders can implement effective negotiation strategies to reduce conflict among workforce. If the leaders of any company use this as their strategy then the decisions will never unethical. The company will also be benefitted with this type of leadership. In Apple, they also can use this type of leadership to gain the actual profit, which will be more ethical and free of conflicts.  

Conclusion

In this study, the researcher has observed that the ethical values are very essential for any organisation to follow. The researcher has explained the impact of ethical values on any organisation; and then discussed the consequences if any organisation cannot follow it then the complications the company has to face is the main concern of this study. The researcher has described the ethical issues related to Apple Inc that had created a lot of controversy regarding their unethical decisions. The main issues that Apple Inc have faced in 2011 and 2012 mainly in China regarding the unethical workload upon employees, which has led some employees to serious damage physically and mentally. This discussion has helped the researcher to find out two theories related to managerial ethics that can be implemented in the organisations to maintain the ethical issues. The researcher has also explored some leadership strategies for these organisations to avoid unethical decisions by involving the workforce in the decision-making. 

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