The background and development of theoretical ethical approaches in business
Ethics undergo evolution, develop over time, and vary from one community to the other. For example, in Japan and Korea, corruption was at one point morally acceptable, but as the countries adjusted their laws to fit in the global business community, the situation changed and the practice became illegal. An act that is perceived to be right in a certain society may be wrong in another. Therefore, it is difficult for companies to act within the principles of a single set of rules due to variations in culture. However, business ethics trace their origin to the following theoretical approaches, which were developed by ancient scholars: –
Deontological ethics
This theory is based on the individual’s obligations to do the right thing. The right action according to this theory is dependent of two factors, viz. the situation and the duty that one owes to society regarding that particular action.
Virtue theory
Virtue ethics are founded on the moral framework (Cannon 116). The theory links ethics to moral behaviour. According to the theory, ethics refer to what an individual perceives as right. The right thing depends on the context and it is guided by the individual’s conscience as opposed to the perception of society regarding ethical behaviour. Proponents of this theory argue that ethics are character-based and in a business, a morally upright leader may influence his/her subordinates since in most cases, a leader is perceived to be the role model.
Utilitarianism theory
The utilitarianism theory holds that for a decision to count as morally upright, it must be for the good of all or the majority of the stakeholders. Therefore, business decisions should maximise satisfaction for all the involved stakeholders. The main idea behind this theory is maximising satisfaction of the majority.
Compare and contrast absolute and relative ethics in relation to Anglo American
Absolute ethics
According to this theory, the doer of an action is informed by the society’s take on the right thing to do in a particular situation (Vaughn 145). Under this theory, an individual ought to act towards the fulfilment of his/her obligation. The theory’s application in the Anglo American case is straightforward as each employee in the company is under an obligation to observe the code of ethics outlined by the company’s management. An employee’s decision is guided by the duty that s/he owes to the company.
Relativist ethics
This theory focuses on the outcomes of an action. In the Anglo American case, the theory is applicable in the management. The management must choose the course of action that maximises the company’s net gain. For instance, the management should select projects that maximise the shareholders’ wealth.
Ethical issues that can affect the operational activities of a company
Environment
The environment denotes the surrounding of the business. Businesses must be careful not to cause pollution in areas where they operate. Most mining companies have closed down for acting irresponsibly coupled with failure to control environmental pollution. Anglo American has been forced to close down some of its subsidiaries due to alleged environmental pollution. For example, the company was forced to close its gold and copper plant in Alaska in 2013. The decision followed protest from fish farmers in the area who claimed that the operations would cause water pollution, thus affecting their fish farming activities.
Tax evasion and fraud
Tax evasion underscores the use of illegal means to avoid paying taxes (Vaughn 122). Tax evasion is unethical and it can lead to the closure of a business. Every country has its laws regarding accounting disclosure and taxation and for a company to operate in a certain country, it must follow the set laws strictly. On the other hand, fraud refers to the collusion of the management with the company’s auditors to defraud the company or its investors. In such cases, creditors or shareholders may file a liquidation suit against the company in question.
Disregard of social responsibility
Businesses ought to act in a socially responsible manner and give back to society coupled with avoiding acts that may be socially unacceptable. Moreover, businesses ought to initiate projects aimed at empowering societies.
Corruption
Corruption refers to the wrongful receipt of bribes in exchange of a service. Contemporarily, corruption is the main unethical conduct in most organisations and it may lead to the loss of public confidence over a business. Corruption may extend to the recruitment of staff members, thus leading to inappropriate selection of workforce and lack of diversity thereof.
How business objectives of Anglo American are affected by ethical considerations
The key objective of every business is to maximise profits and minimise the operational costs. However, this objective is limited by ethical factors that should be considered for business to prosper in the end. In the case of Anglo American Company, the conflicting interests among various stakeholders limit the company’s objective of maximising shareholders wealth. While the company aims at maximising its earnings, it has to produce high quality products for its customers at a reasonable cost. In order for the company to achieve high quality products, it has to offer competitive salaries to its employees in a bid to maintain their talents.
In addition, the company has to avail developmental opportunities for employees through continuous training, which adds to the operational cost. Anglo American Company, as a mining company, has to ensure that pollution is minimal. In a number of cases, the company has been accused of neglecting the role of maintaining a clean environment. In South Africa, the company faced protest in 2003 due to its inability to cut down Sulphur dioxide emissions. In order to remain ethical, the company has to come up with measures to conserve the environment and prevent air pollution, which further balloons the cost and reduces profits.
Anglo American’s second objective is to dominate the mining industry, but this goal has been tainted by ethics in a number of occasions. The company has faced numerous ethical challenges in its attempt to realise this goal due to environmental concerns. For instance, the company was forced to abandon its plans to exploit gold and copper in Alaska in 2013. The decision followed protests from fish farmers in the area who claimed that the operation would cause water pollution, thus affecting their fish farming activities. At the Lisheen plant in Ireland, the company was accused of water pollution in river Drish when the water was found to contain traces of zinc and lead. The company was forced to withdrawal its operation in the area for ethical purposes.
The implications to Anglo American and its stakeholders to operate ethically
The motive behind businesses acting ethically is to create good reputation and thus attract many customers. In order for Anglo American Company to succeed in its objectives, it must operate under the ethical framework laid down in the law. By empowering employees and paying them competitive salaries, the company would retain the best talents leading to high quality products. The company will in turn win the confidence of its clients due to the high quality of its products. A company that operates ethically builds reputation and acquires loyal customers as opposed to companies that operate unethically.
Ethical conducts attract investors into a business and they introduce new ideas on top of providing extra capital for the business. Anglo American Company’s main concern is environmental pollution. The company should seek solutions to the challenge and engage the local community in search of an amicable solution. Helping local communities through social responsibility initiatives also boosts a company’s reputation, thus leading to high sales, and high profits. Therefore, the company will gain a lot in terms of increased revenues by acting ethically and embracing the concepts of social responsibility.
Assess the role of Anglo American acting as a moral agent in its mining projects
Nations endowed with a wide range of natural resources benefit from their exploitation (Vaughn 169). Companies involved in mining and processing of such minerals must pay taxes to the respective governments on top of licensing fees to acquire the right to conduct such businesses. However, a nation may be affected negatively by such activities if proper codes of ethics are not enforced. Mining activities result in environmental pollution due to hazardous wastes emitted in the process. Anglo American Company has put in place measures to control environmental pollution in order to remain ethical.
The company has come up with measures to control noise pollution through advanced machines that produce minimal noise. In addition, the company has developed initiatives aimed at preserving the environment in all countries in which it operates. The company, in partnership with the local communities, has established reed beds along the rivers and other water catchment areas at the Tarmac’s Langford Quarry in the UK. Reed is one of the plants that are going into extinction in the country and the company’s attempt to preserve it is a welcome move towards saving the environment.
Secondly, Anglo American Company is conscious of the concept of social responsibility. The company’s management embraces the concept of social responsibility by giving back to the society. The company is known for its role in empowering communities living around its plants. The support is availed through financing new small businesses, offering training for the young entrepreneurs, and availing low-interest capital loans.
The company also supports farmers from the local communities. In South Africa, the company has assisted people to open small businesses coupled with training them on entrepreneurship. In addition, the company has launched a water purifying plant at Kleinkopje plant in South Africa where contaminated water from coalmines is collected and treated. In the UK, the company has refrained from using water from rivers and other catchment areas and instead opted to recycle water from industrial processes. This move demonstrates the company’s commitment to social responsibility.
For a business to prosper, it should consider the interests of all its stakeholders when making certain fundamental decisions. Anglo American Company considers the rights of every stakeholder in its undertakings. The company aims at creating real value for its stakeholders. From its accounts, it is evident that the company proportionally distributes its annual benefits to all its stakeholders. Additionally, stakeholders, who are mainly customers, shareholders, government, and employees, have varying interests that have to be met if the company is to remain ethical. In a bid to satisfy the conflicting interests and ensure satisfaction for all its stakeholders, the company distributes its annual benefits to all its stakeholders.
Shareholders get their portion through increased share capital on top of annual dividends. Employees get competitive salaries and benefits from empowerment opportunities afforded by the company. On the other hand, customers get high quality products from highly experienced staff members. Lastly, government benefits from taxes from the company and the developmental projects initiated by the company.
Anglo American Company complies with the provisions of the Extractive Industries Transparency Initiative (EITI) regarding full disclosure in its financial statements. The company presents its audited reports annually in all its subsidiaries. The financial statements are used for calculating tax payable to the respective governments. In addition to complying with tax laws, the company does not condone corruption amongst its staff.
The company has an internal assessment tool, which is used to assess the risk of bribery and corruption at individual business levels. Employees are prohibited from receiving or paying bribes. The company’s business integrity policy prohibits employees from receiving gifts and other forms of payments from clients. The company’s rules recognise employees as agents of the company and expect them to maintain a fiduciary relationship with the company. Any profits made by an employee in the course of doing business with the company should thus be disclosed to the company.
The development of mechanisms for achieving employee involvement and empowerment – how Anglo American operates ethically
Anglo American Company is also conscious on the need to empower its employees. The company affords empowerment opportunities for its employees in a bid to boost their capacity. Employee empowerment is a component of ethical framework (Cannon 64). The company ensures that its employees work in favourable conditions devoid of accidents and other health hazards. The company, through the ‘zero mind-set’ strategy, has set a number of principles that aim at preventing the recurrence of accidents. Under the strategy, an accident should not recur and the occurrence of a single accident is used as the basis for formulating strategies to deter its reoccurrence. The company is also credited for its efforts in supporting HIV/AIDS infected employees. The company has put in place a non-discriminative medical plan for all its HIV infected employees.
Research a current ethical issue affecting a business in your locale
Apple Company is an electronic manufacturing company headquartered in the United States. The company has subsidiaries in other countries including China. The company has faced serious ethical issues in the recent past as discussed below:
Hazardous working environment
The company has been accused of exposing its employees to dangerous chemicals without offering protective clothing. Chemicals used in the production of electronics are dangerous and they can result in health complications. The emergence of this report has destroyed public confidence on the company and it has led to reduced annual turnover for the firm.
Employment of underage students
The company has also been condemned for hiring minors in its factories. The practice is highly prevalent in China where underage students have found themselves working in the company. The practice is unethical since the minors are exploited through being forced to work in poor conditions with poor remunerations. Employing minors has resulted in unemployment since they replace adults.
Corruption and exploitation of employees
Apparently, Apple has been exploiting its workers. Employees in the company are forced to work for long hours for 7 days a week. In addition, the company has been accused of collecting money from its employees in the name of recruitment fees. Leaders of the company are said to employ the authoritarian style of leadership and communication between employees and managers is denied.
How the businesses could improve the ethics of their operations whilst meeting objectives and ensuring good employer/employee relationships
The company could save its reputation by adopting a code of ethics that accommodates employees’ empowerment. The company should avail a non-discriminatory training program for all its employees. Employees should be trained on the best ways to protect themselves from the dangerous chemicals in the workplace. In addition, the company should provide protective garments for all its employees.
The company should aim at maintaining talent through training its employees coupled with paying them competitive salaries in order to retain them as opposed to recruiting minors. The company ought to consider increasing the number of its employees so that each employee works for the normal official hours. The leadership of the company needs to undergo training on the best ways to relate with their employees. Communication channels should be created so that employees can raise their concerns in time.
A suitable ethical code for Anglo American
Anglo American financial statements
Anglo American Company and its subsidiaries shall make full, fair, and accurate disclosures of its financial status in accordance with the law. Therefore, it is the duty of all employees in the company to maintain accurate and sincere records. Records regarding travelling and other expenses must be maintained by each employee and submitted to the accounting department upon request.
Political Activity
Anglo American shall allow its employees to participate in political activities in their respective countries. However, this privilege does not include endorsing a particular candidate or using the company’s funds to support a preferential candidate. Donations towards non-political referendums are authorised in nations where such donations are legal as per the country’s laws.
Gifts and Entertainment
All employees in a company are in fiduciary relationship with the company (Thiroux and Krasemann 49). The company prohibits its staff from receiving any form of gifts from anyone likely to affect the employees’ judgment. However, gifts not likely to alter the employee’s judgment are acceptable.
Open Communication
Managers at different levels shall be informed of all matters that are likely to affect the company’s reputation. Appropriate communication channels shall be maintained all the time. All relevant information shall be submitted to the auditors when necessary.
Employee recruitment
The company shall recruit qualified adult staff to serve in all its branches. The employees shall be remunerated depending on their capacity and expertise.
Fair Dealings
Anglo American Company shall maintain fair dealing with all the stakeholders. Taking unfair advantage over any of the stakeholders through manipulation or misrepresentation of financial accounts is prohibited.
Disciplinary Action
These provisions bind all the stakeholders in the company and failure to comply may lead to disciplinary actions, which may be in form of suspension, expulsion, or other legal actions.
Confidentiality
All staff members should keep the secrets of an organisation except in cases where the law requires the disclosure of the same. The confidential information entails anything that is not availed to the public.
Safety in the Workplace
Safety and security of the workforce is the priority of every individual (Vaughn 106). Each employee is obliged to maintain a clean working place free from reasonably recognisable hazards. Anglo American Company is a drug free zone. No drugs shall be accepted at the workplace.
Reports regarding accounting matters
Anglo American is dedicated to complying with countries’ securities laws, accounting standards, and taxation laws. Every employee is obliged to act as a watchdog and in case of any accounting problem, s/he should report to the relevant authorities immediately. Confidentiality of such concerns will be maintained.
Works Cited
Cannon, Katie. Black womanist ethics, Oregon: Wipf and Stock Publishers, 2006. Print.
Thiroux, Jacques, and Keith Krasemann. Ethics: Theory and practice, Boston: Pearson, 2009. Print.
Vaughn, Lewis. Doing ethics: Moral reasoning and contemporary issues, New York: Norton, 2013. Print.