Business Ethics As a corporate manager of a publicly held company, one is responsible for the interests of many different stakeholders.
In the past, it has been a very common assumption and practice that corporate managers of a company should strive to act solely for the benefit of shareholders, or owners of the company. Corporate managers were trained to take any actions necessary or use any means possible to improve the bottom line; or profits, without regard to other stakeholders. As a business student at San Diego State, I had adopted this same bottom line philosophy that had been preached to me since the day of my first business class. I had bought into these teachings so wholeheartedly, that before this class I really felt the terms stakeholder and shareholder could be used interchangeably.
However, I was very enlightened by your lecture on February 29th, in which, you taught us the true definition of a stakeholder.It simply boils down to two crucial yet basic points. A stakeholder is described as, anyone or anything that can affect the ability of the corporation to achieve its mission or which is affected by the corporations activities (Dunn, 2/29 Lecture).
This simple statement encompasses so many more entities than I had ever thought of in the past. In this paper I will place myself in the position of a corporate manager of a publicly held, for profit, company and discuss which shareholders interests a corporate manager is obligated to represent in the order of their importance. As a corporate manager, my primary obligation is to shareholders.As you will see later in this paper, these are not the only stakeholders whose interests should be represented but they are the most important.
Without financing from shareholders, no corporation can efficiently accomplish their mission and goals. In a for-profit organization, the shareholders are the people that made the inception of the corporation possible. They bare all of the risk and put their faith and funds into the corporation.
Before there were customers and employees, there were shareholders with a vision of a viable and profitable corporation. Because of the risk they bare, the vision they had, and their ability to create an efficiently functioning corporation, their interests are number one. However, not to the extent that laws be broken and other stakeholders rights be violated.A great of example of corporate managers doing just that lies within the Ford Pinto case we went over in class. Consumers rights to life were grossly violated by Ford, solely because they calculated the loss of life to be less expensive than a recall.
This was clearly a case in which managers crossed the line in upholding their duties to shareholders and would not be condoned within the corporation I am part of. As long as nothing of that nature takes place, as a manager I have a deontological duty to my shareholders. Deontology is a principle discussed in lecture and Rachels book I use to support this argument. As corporate manager, I have a deontological duty to make shareholders interests my primary concern.They have an intrinsic right to be my primary concern since, as I mentioned previously, without the formation and funding made possible by the shareholders, the corporation wouldnt even exist.
Next in the pecking order of stakeholder interests I would represent would be the environment. In these days of the soaring NASDAQ, space shuttle missions, and the internet, it is easy to forget that the environment is even a stakeholder at all. I have to admit, before this course I had been guilty of doing just that. After you taught us what constituted a stakeholder, I was quickly reminded how important the environment is.There are two primary reasons the environment receives such important representation.
First, and most obvious, at this time as human beings it is all we have to survive off. The delicate balance and interrelationships of ecosystems must be respected. Thinking short term, managers commonly forget about the environment because immediate destructive outcomes to the environment are not always easy to see. This way of doing business must change.Managers dont always realize how grand of a scale this is. We have already seen the harmful effects of o-zone depletion, acid rain, oil spills, etc. Simply because you, as a manager, and your shareholders wont be around to be subject to the effects doesnt make it right.
This is a way of thinking and doing business that must be changed. This argument is clearly supported by the Land Ethic discussed in Rachels book and class. Without a doubt, the environment fits the definition as a stakeholder.And as stated in lecture, our responsibility to the environment is inherent, the environment has an intrinsic value within it(Dunn, Lecture 2/22). The second reason I represent the environment is based upon shareholder interests. Any corporation that violates environmental laws because of short term cost savings is subject to heavy monetary penalties as well as costly clean-ups if caught. These costs can dramatically effect profits; in turn, shareholders returns. The next stakeholder group that I represent is the consumers.
If a corporation doesnt have consumers purchasing their goods or services, they wont be a corporation for long.Consumers provide the revenue stream necessary for a corporation to operate. The framework that comes to mind to support this stance is that of a Utilitarian perspective. When explaining Utilitarian doctrine, Rachels states, what course of conduct would promote the greatest amount of happiness of all those who will be affected (Rachels, 98). In this context is evident that to maximize profit and well being for the corporation makes me happy. To do this, I need to produce a high quality product or service reaching a point of marginal utility.In which, allowed me to satisfy shareholders, make the product affordable and desirable to customers, and compensate employees all while turning a profit.
By doing this I am creating the greatest amount of happiness for the greatest amount of people. Another important stakeholder group I would represent would be my employees. I have been able to work in a corporation in which employees were simply used as a means to another end and we knew it. The effects were devastating to that particular corporation. It is imperative that as a manager you give your employees a feeling of self-worth and that what they are doing is an integral part of corporations success. Without that, employee morale is non-existent.
As a manager I would strongly represent my employees interests. Their efficiency, enthusiasm, and morale play a crucial role in the corporations success. I would protect their interests by rewarding them for their performance and offer profit sharing programs so that they too can feel part of something greater than a nine to five job that pays the bills. I take a utilitarian stance to provide support to employees interests. When employees feel they are valued and realize they will benefit from the companys success they will work harder and more efficiently; in turn, raising profits, shareholder return, and customer satisfaction.This again will create the greatest amount of happiness for the greatest amount of people. The final group of stakeholders whose interests I would represent would be those of the community in which the corporation operates.
More times than not, the community existed long before the corporation showed up. This is a concept that the manager must take into consideration before making any decisions. The community has rights just as any other stakeholder group.
One good example, which goes on quite frequently today, is when corporations locate themselves in low income, poverty stricken areas to minimize production costs. Many times, the communities and its citizens are simply used as a means to another ends, which violates a deontological principle. In addition, often, some modern corporations take actions that make the least advantaged members within the community worse off. This practice violates a principle known as distributive justice, which is part of the Justice framework discussed in lecture and Rachels book. Because of this, before any decisions become final, I would take into account the effect on the community my corporation was operating in.I have discussed five stakeholder groups whose interests I would represent. In doing so, I have used many of the ethical frameworks discussed in class to support my arguments.
You may ask, which should be used or which holds the most water? If there was a clear-cut answer this course wouldnt be offered. The answer is all of them. Each framework has it strengths and weaknesses, it really depends on the circumstances specific to each situation. In one way or another, all of the ethical frameworks should be examined by the corporate manager in decision making placing the most emphasis on the one he or she deems the most righteous.Ethics and Morals.