Ethical Dilemma Essay Requirements
We all know that there is one ‘ethical’ answer to most of life’s problems. So making an ethical decision should be easy. Life, however, is complicated and we may have to make a decision against competing interests. This essay is designed to assist you in thinking about options, not a test of your ethical stance. Remember ethical decisions are made by people, not companies or organisations. You will need to undertake some research to understand the context of the problem
Critically evaluate the situation below. Describe what actions you could take. There are a number of competing stakeholders who would be affected by your decisions, including yourself. Outline the possible outcomes of those actions and how they will affect the different stakeholders.
In your answer, you must explore the competing ethical considerations in the case given. Use a theoretical framework (one only) to support your decision. In your conclusion you should outline which decision you would go with, why you have made that choice and review the possible impacts of that decision on the different stakeholders. Remember there is no right or wrong answer; otherwise there would be no ethical choice!
Scenario
You are the senior food and beverage manager in a large, previously highly successful sporting club. You have just attended a board meeting in which there was a big debate about the finances of the club. Although it is not yet in serious difficulty, the team is on an extended losing streak and the membership is dropping. The board discussed the need to rebuild the team and ensure that they start to win as the drop in membership is having a detrimental effect on revenue. The meeting became really heated about the possible cost of new high-profile players and whether they could be afforded by the club.
You are feeling a lot of pressure at the moment. The club depends at on the cash flow from your food and beverage section, which includes the poker machine income and the bar. You understand the need for an improved team to keep the club viable.
Later that day, you stroll into the head coach’s office to discuss the board meeting. You get on well with him; you are friends. He steps out of the room to get you both a cup of coffee. You are not in the habit of looking on people’s desks, however there is a file open with a prominent players name on the front. You become excited, hoping this player will come to join your team – he may save the club! It appears he has signed up! Glancing through the paperwork you notice the cost of the player. The sum is not unexpected. However, although not a member of the board, you attend their meetings and realise that, if this player is employed, the club will breach the salary cap rules. You understand the implications if the club gets caught.
What do you do?
SOLUTION
Table of Contents
Ethical Dilemma Analysis for Business Decision in a Sporting Club
Summary of the Ethical Dilemma
Managers, leaders and even employees often have to contend with ethical dilemmas. Ethical dilemmas arise when there are two important values that are in opposition (Trevino and Nelson 2011). The current ethical dilemma stems from a financial crisis in the sporting club. The club is on a consistent and long losing streak, which has had a negative impact on revenue due to a drop in membership. One of the most plausible solutions to address this dilemma is to rebuild the team by acquiring new, high-profile players. The problem with this alternative, however, is that players of the required calibre are very costly. The club has chosen to engage one such prominent player, but the cost of acquiring this player breaches the salary cap rules. This ethical dilemma is explored through a utilitarian framework.
Ethical Framework
There are different ethical frameworks that may be applied to resolve the current dilemma. Ethical frameworks require to be applied within the appropriate context, which in this case is a business context. From a business perspective, there are four levels of ethical analysis. The first is macro ethics which pertains to the norms and values of the entire political system. The second is intermediate ethics. This aspect focuses on business firms collectively, for example industries. A third context of ethical analysis within a business perspective is organizational analysis, which deals with the ethical performance of a firm (Agalgatti and Krishna 2007). Finally, at the lowest level, there is individual ethics which pertains to the conduct of individuals.
Analysis of the Ethical Dilemma
There are a number of issues and conflict which yield the ethical dilemma under investigation. From a business perspective, the dilemmas arise from conflicting interests. Moreover, the dilemma affects a number of different stakeholders. Regard for different stakeholders is part of the normative considerations in business ethics (Ferrell, Fraedrich and Ferrell 2016). An organization’s responsibility to its stakeholders is enshrined in the stakeholder theory. The stakeholder theory is one of three normative theories of business ethics highlighted by Hasnas (1998). According to the stakeholder theory, organizational decisions should be guided by the pursuance of actions that will provide an optimal balance among the interests of different stakeholders (Weiss 2009). The various stakeholders involved in the current case are discussed.
The current ethical dilemma affects the members of the sports club. Members of the sports club are important as they are the main source of revenue for the club (Lodewyckx, et al. 2007). In the current scenario, the club has been losing many games lately, leading to a decline in membership. This indicates that members are dissatisfied with the team’s performance. In order to stop losing members, the club needs to ensure that they are satisfied, by winning more games.
A second set of stakeholders is the board members. Board members are tasked with decision making. Their role is to ensure that the organization remains on track to the attainment of its objectives. The board also has the responsibility to ensure that procedures governing the organization’s operations are adhered to. The board has expressed interest in employing new high-profile players, with the aim of improving the club’s performance and to see it winning more games.
Yet another set of stakeholders is the club’s employees. The club has many sets of employees at different levels, including the club’s players. Other employees include managerial staff as well as other staff from sections such as the food and beverage section. These employees rely on the high activity of the club arising from positive membership numbers. If there are few members or if the club is no longer able to sustain its revenue base, then employees are likely to lose their jobs. Employees will also be affected if for whatever reason, the club shuts down, because they will lose their jobs.
Application of Ethical Theories
The ethical framework chosen to analyse the options in resolving the current ethical stalemate is utilitarianism. In particular, rule-utilitarianism is applied. Utilitarianism essentially assesses a particular course of action based on the consequences of that action, to determine whether the consequences are the best possible (Frederick 2008). Under this ethical approach, a particular decision is considered ethical if it results is a greater overall balance of good over evil. Rule utilitarianism focuses on defining an ethical rule rather than evaluating a particular singular course of action (Shaw 2016). The rule maxim affects the principle of utility in that it requires not just a determination of the course of action to be pursued in resolving the dilemma, but further, a determination of what the rule should be in the first place. In the current case, the rule is defined to be ‘What would happen if every team were allowed to break the salary cap rules in order to procure an advantage?’ This rule will be applied to the scenario after an analysis of the possible courses of action that the company can opt to pursue.
Possible Ethical Alternatives
There are several decisions that can be made to resolve the current ethical issue. In resolving the current ethical stalemate, it is essential that the organization consider the effects of whatever decisions it makes on the various stakeholders. Moreover, these actions will be subjected to the rule utilitarianism, the chosen ethical approach for the current case, in order to determine which action is the most ethical.
The first option is to raise a red flag and complain about the club’s impeding decision to employ a player whose engagement would lead to a breach of salary cap rules. The rationale behind this decision is that it is important for the club to abide by the rules set out. Breaching these rules would constitute ethical misconduct. Additionally, breaking these rules is likely to result in stiffer penalties if the club is found out. Choosing this option will affect value to stockholders. This effect however assumes that the club will not be able to improve its form, or to acquire suitable players within the appropriate salary range. If the situation remains the same, revenues may continue to decline possibly leading to layoffs or other cost-cutting measures.
Alternatively, I could also opt to maintain silence and feign a lack of knowledge of the impending decision. Firstly, this is guided by the fact that it was not anticipated that I would find out about this decision. The arrival of the new player will likely lead to an increase in wins. The increase in wins will stimulate a revival in the club’s membership, and revive the club’s revenue flow. All stakeholders will benefit in the short-term, provided that no one discovers the breach in salary cap rules. Nonetheless, the high profile nature of the player is likely to attract a lot of curiosity and possibly lead into investigations. In the event that investigations are carried out and the club is implicated, it will suffer consequences such as heavy penalties and fines. The club may receive point deductions as is the case with Salford Red Devils (PA Sports 2016). The clubs signing of a particular player, Tony Puletua, led to inquiry about its use of salary caps. It is therefore not far-fetched to assume that something similar would occur in the current scenario, thereby exposing the club. If the club is exposed and loses points, then it might lose membership, leading to increased revenue loss. Other fines or penalties may further impact the club negatively, possibly leading to job-cuts and other cost-cutting measure. The board would suffer the greatest repercussions, for sanctioning the move. Employees and players would likely suffer due to constrained revenue. Stockholders would suffer a loss in value
Conclusion
Business
organizations often have to make tough decisions pertaining to ethical
dilemmas. Ethical dilemmas arise as a consequence of two conflicting decisions.
In the current case, the ethical dilemma stems from poor club performance,
which can be alleviated by employing new high-profile players. The new
high-profile players are, however, rather expensive and their employment would
cause a breach of salary caps. The club has two options. It could either opt to
hire, thus breaching salary cap rules, or it could opt to abide by salary cap
rules and not hire the high-profile players. This would however lead to
sustained poor performance, a sustained decline in membership, and declines in
revenue. Based on a rule-utilitarianism standpoint, the most ethical decision
is for the club to not hire. The rule defined for this ethical problem is ‘what
would happen if every team were allowed to break the salary cap rules in order
to procure an advantage?’. If every team were to be allowed to break salary cap
rules, then the game would no longer be as competitive. Moreover, clubs would
find themselves paying much higher wages in a bid to acquire high-profile
players. This would further lead to a huge disparity in wages as higher profile
players receive higher wages while lower profile players receive the same level
of wages. Overall, higher profile players may end up playing only for
particular clubs that have the financial resources. The smaller clubs, on the
other hand, would lack high-profile players thereby making the entire sport
less competitive.
References
Agalgatti, B.H., and Krishna. Business Ethics: Concepts and Practices. India: Nirali Prakashan, 2007.
Ferrell, Odies C., John Fraedrich, and Linda Ferrell. Business Ethics: Ethical Decision Making and Cases. 8th. Mason, OH: Cengage Learning, 2016.
Frederick, Robert E. A Companion to Business Ethics. New York: John Wiley & Sons, 2008.
Hasnas, John. “The normative theories of business ethics: a guide for the perplexed.” Business Ethics Quarterly, 1998: 19-42.
Lodewyckx, E., W. Lötter, N. Rhodes, C. Seedat, and L. Claase. Financial accounting: Fresh perspectives. . Cape Town: Pearson Education, 2007.
PA Sports. Salford charged over alleged salary cap regulations breach. March 04, 2016. http://www.skysports.com/rugby-league/news/12207/10191051/salford-charged-over-alleged-salary-cap-regulations-breach (accessed March 26, 2016).
Shaw, William H. Business Ethics. New York: Cengage Learning, 2016.
Trevino, Linda K., and Katherine A. Nelson. Managing business ethics: Straight talk about how to do it right. New York : John Wiley, 2011.
Weiss, J. W. Business ethics: A stakeholder and issues management approach with cases. Mason, OH: South-Western Cengage Learning, 2009.
