A concise introduction

by Richard Pettinger

Chapter 4

You need to be clear about the standards that you set for yourself and why you have set these standards. You have to have a detailed and complex view of on the one hand:
  • the need to survive and be effective, and to be able to carry out your job and duties, how you will treat people – everyone, customers, staff, colleagues, peers, superiors, financiers, suppliers
and on the other hand, you have to relate this to your own view of:
  • what is right and wrong, what you will and will not do and why, what your attitude is to dishonesty and duplicity.
You have also to know and understand how you are going to deal with the grey areas – things that are not quite true, not quite false, and not quite accurate (but not inaccurate). You have then to be able to reconcile the different pressures and dilemmas that all of this complexity brings, so that you can be comfortable as well as effective.

You have to recognise that everyone has their own set of ethics, moral compass and work ethic. You are entitled to have people do things your way – but only if you are not breaking legal, moral or social boundaries and pressures. You are entitled to have people work to the best of their abilities – you are not entitled to have them do wrong things, or break their own codes, just because you say so.

You have also to recognise that very little human and business activity has no material ethical effect or dilemma. For example:
  • supermarket deliveries at quiet times (eg the middle of the night) are convenient for not clogging up the roads but bring noise, heat and light pollution;
  • organic food grown in remote parts of the world often has a large carbon footprint as it is transported to western markets;
  • coffee bars have continuous running water (which is overtly wasteful)  in order to ensure that the water that is used to make the coffee complies with hygiene regulations.

Additional reading

For a clear and comprehensive approach to business and management ethics, you can go to:
P Griseri and N Seppala (2010) Ethics and Corporate Social Responsibility – Cengage
The book covers the whole field of what business and management ethics are about, and deals in detail with the complexities and contradictions in balancing conflicting demands, as well as complying with laws and regulations, and treating all stakeholders as valued by organisations in their own terms.

You should also read:
B Cruver (2003) Enron: Anatomy of Greed – HarperCollins 
The author, Brian Cruver, worked for Enron during the collapse of the company; and he has produced a totally absorbing account of how everyone behaved, the corrupted nature of the company’s products and services, the attitudes and values that prevailed, and the effects on the lives of ultimately millions of people.

Case studies and examples

The Laidlaw Hotel

The Laidlaw Hotel is a five star 300 bed facility on a beautiful location on the coast at a small but wealthy resort in southern England. It employs over 800 staff in all of the different occupations required: catering, cleaning, conference work, resort management, and handling the large numbers of wealthy visitors from overseas who come to visit. There is a golf course attached to the hotel, and a marina close by with which the hotel has links – guests can hire boats and crew for the hour, day or half day. There is a gym and fitness centre and swimming pool and spa. There are four restaurants, four bars also, a coffee bar and quiet area. There is round the clock room service.

The hotel charges up to #450 per room per night. It has an occupancy rate of 78%. It makes an average return on investment of 11% and turns in a profit of 15% per annum.

To do this, its carbon and ecological footprint are very high. Electricity and water usage are about forty times as high as for a small guest house. The golf course is kept immaculate, and this resulted in controversy when the hotel gained exemptions from water restrictions last summer when there was a domestic hosepipe ban. Room service alone adds 9% to the electricity tariffs by way of lift usage and instant responsiveness.

The ethical dilemmas faced are therefore many and complex. On the one hand, the hotel is a successful and effective business, providing hundreds of jobs as well as a facility which many people want to come and use and stay at. On the other, there are direct consequences for the environment in terms of resource consumption and facility management. These provide a constant issue to be faced by the hotel's owners and managers.

Marketing Pharmaceuticals

A small research laboratory was working on treatments for cancers. The laboratory eventually came up with a strong serum, which could be applied directly to the tumours that it was designed to treat. One application only was required, and the treatment could be conducted on an out patient basis, or at a doctor's surgery. Initial tests showed a very high success rate; and while there were some side effects, especially concerning exhaustion and feelings of sickness in the patients, these seemed to wear of after three or four days. The laboratory submitted its work for full clinical trials.

At this point, the laboratory was taken over by one of the world's largest pharmaceutical multi national companies. This company took the new product and turned it into tablet form. This was so that, rather than only being able to sell each treatment once, it could now be sold on repeat prescription basis for many months to the same patient.

Discussion questions

Discuss the view that it is impossible to be ethical in certain industries and sectors (eg financial services; armaments) simply because of the nature of the activities in the sector and the industry itself.

What impact does regulation have on corporate and managerial behaviour and activities? Why do so many managers only change their behaviour when required to do so by regulatory changes; why do they not do so anyway?

What are the ethical issues that have to be faced when balancing the demands of staff, shareholders, customers and suppliers – all of whom have a legitimate stake in the companies and organisations with which they work?

Web links to other examples, materials and sources

You need to be familiar with the main regulatory drives that influence business and managerial behaviour and the ways in which companies and organisations are supposed to conduct their business. The most high profile regulatory approach is the US Sarbanes-Oxley Act 2002, which was brought in to try and ensure that companies worked to a universal set of standards in the wake of the collapse of Enron. The link is:

You should also be familiar with the links to the regulatory and statutory bodies with which you have dealings as the result of involvement in particular industries, sectors and locations.

You should also be familiar with universal statutory bodies: