Categories: BUSINESS & FINANCE

When Poor Business Ethics Lead to Downfall

In recent years, starting with the new millennium, business ethics in corporations have taken a turn for the worse. From one of the biggest tax evasion schemes in the Nation’s Capital (US Justice Department) to large conglomerates handing out millions of dollars in the midst of a bailout from the United States Government. Why are so many corporations and ordinary government workers feeling like they can get away with not abiding by following a code of ethics? Surely somewhere in an employee handbook, there are policies in place, but let us start by defining ethics in the workplace.

Definition of Ethics

Business ethics can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization’s culture sets standards for determining the difference between good and bad decision making and behavior. (Gormandy)

Company owners feel that ethics are related to profit. Meaning that the only thing that matters is growing the company by way of increasing sales and revenue. The employees of a company, who practices this type of behavior, will in turn follow their employer. The old adage, “Learn by example” is often utilized in the wrong way when it comes to business ethics.

The corporate culture is riddled with unfair business practices. A company’s mission statement is almost always never followed through when the media splashes clips of unethical behavior in a corporation.
Why Ethics Are Not Taken Seriously

Gender Gap in the Workplace

In the first place, ethics are soon forgotten when companies suffer from major loss. (Johnson) For even the smallest companies, whenever a profit is not showing a huge turnaround, this is where companies to utilize unethical practices. Often times, the company’s manager does not care who suffers in the long run. Most of the time, companies feel that if they got away with it once, they will get away with it again.

Hiring practices are also part of a business’ ethical responsibility. When President Obama signed the Fair Wage Act in January 2009, his wife Michelle and civil rights pioneer Lily Ledbetter were able to breathe a sigh of relief. (AAUW) But will this Act make a difference for those millions of women who, like their male counterparts, have the exact same amount of experience and education? Not only do women who are executives suffer from earning less, the average working single woman with children who has struggled to make ends meet still makes less than a man who has just joined the workforce. For every dollar a man made in 2003, women made 75.5 cents, the Census Bureau said in its annual report on income. That was down from the record 76.6 cents that women earned vs. men’s $1 in 2002. The median income for men working full time in 2003 was $40,668, not significantly different from the prior year, while the median income for women working full time was $30,724, down 0.6% from 2002. (The Census Bureau) There is still work to be done in the arena of gender gap in the workplace which has practiced unfair wages for decades.

Attitude Towards Employees

Some companies do not have a code of ethics, hence formulating a terrible atmosphere for their employees to work in. It is amazing the working conditions that people are still forced to work in because there is a lack of employment. Although working conditions have gotten better for US employees over the years, there is still work to be done just as there is work to get done for gender wage gap.

Wal-Mart is a major corporation with a 2008 net income of $12 billion and sales & revenue totaling $340 billion worldwide. (Wal-Mart) In the turn of the new millennium, the retail conglomerate which was raised from humble beginnings by the late Sam Walton in Arkansas, was faced with explaining the poor working conditions employees claimed they were suffering from. The acclaimed “Made in the USA” slogan on its products exposed the fact that Wal-Mart has over 85% of their products made overseas. (Public Broadcasting System) The call for investigation of illegal workers by federal agents, gave the company a new meaning to look into allowing best and fair practices when it comes to forming a union and receiving more than adequate benefits.

The claim that Wal-Mart, like Microsoft, was monopolizing the retail market, also screams out unethical business tactics. The oversized stores do not just profit from their consumer spending alone. The real estate property values of each warehouse size Wal-Mart allows the corporation to make profit either way without seeing this as an unethical business practice. (Norman)

Financial Rewards

Continuing on with Wal-Mart as the focus of anti-sprawl and unfair working conditions, financial rewards is another aspect of employees not getting what they just deserve. According to America’s Campaign to Change Wal-Mart, a woman from Laurel, MD decries not being able to afford health insurance on her less than $10 per hour wage. She has held the same sales associate position for five years. (Wake Up Wal-Mart)

The world also watched in horror and dismay as the American International Group (AIG), just last week handed out $165 million in bonuses to its executives. This is very flabbergasting considering the US government, 1) bailed AIG, one of the biggest, if not the largest insurance agents in the world, by giving them a bailout of $170 billion, and 2) the US is in deficit of almost $500 billion. (Davidoff) As everyone pointed the finger in terms of “the people deserved it”, I am pretty sure the business ethics of AIG are the last thing on anyone’s mind, even in the midst of a financial crisis.

Pulling a scam can also be considered as poor business ethics. It can also be deemed as thievery and trickery if one knows the story of Bernard Madoff, the mastermind behind the $50 billion Ponzi scheme. Madoff, who was once the NASDAQ chairman, contributed to more than just unethical practices. While jeopardizing the lives of many American investors, including one 90-year old man who now has to work as a store greeter (Lomond), these investors simply listened to this wizard of deceit, as he promised them huge returns on short-term investments.

Safety in an Ethical World

When does the buck stop (literally), at practicing good ethical practices for those that deserve financial and safety rewards? In the local government it just seems to sustain a downward spiral for less than hardworking individuals. Federal investigations have captured three former DC Government workers, Yusuf Acar, the Acting Chief Security Officer of the DC’s Office of the Chief Technology Officer and arrested him last week. (Wilber) As a security official in the IT department, Acar would have had widespread access to the District’s networks and probably also its databases and password files. Also charged with being involved in a bribery scheme with an accomplice was Sushil Bansal, a former District employee and the current CEO of Advanced Integrated Technologies Corporation. Acar was charged in a four-count complaint with conspiracy to commit bribery, honest services wire fraud, conflict of interest, and conspiracy to launder monetary instruments.

This level of unethical behavior have made room for other employees, who were in fact part of his scheme, to follow without precedence or notoriety of the DC government’s laws. Should there be pity for people like Madoff and Acar? I do not think so.

The Good In Ethics

After pinpointing all of the criminalist behavior of ethics in major businesses and government agencies, one would have to question, “Is there anyone following ethics?” Or, “Why aren’t companies being socially responsible when it comes to building a business with honesty and decency, reaping the rewards in a positive swift manner?” America is built on the hardworking ethics of making a living, living the American dream, and retiring with a ton of money. America has suffered a many recession, war, and depression, but somehow we have managed to bounce back from that.

Could it be that some of those that are in power have this “I will never get caught” mentality? Could it also be that America, or a portion of us, do not want to work our lives away and want to do away with business ethics? Do people even value the momentum of “good things come to those who wait?” I can only think that the examples that I have portrayed throughout this essay feel that once they started to get away with what started as a few bucks in their pockets to factually downsizing our economy, business ethics, mission statement and the values of employees’ hard work and determination did not matter. It does not matter that Bernard Madoff will go to federal prison, he is up in age. And as for Wal-Mart, they have made their money by one of the oldest businesses in the world which is real estate. However, it goes without saying that American workers and leaders of companies should not ignore business ethics. If workers do not start listening to what they know is right instead of following their CEO’s approach of, “I have to get mine”, then business ethics are not the only codes that will have to be rewritten. I suppose there will be new laws written for those that continue to think they can get away with taking the fruits of hard workers’ labor.

Works Cited:

United States Department of Justice Press Release. (March 16, 2009).

“Niece of leader in DC property tax refund fraud scheme sentenced to 9 years in prison.”http://www.usdoj.gov/usao/md/Public-Affairs/press_releases/press08/NieceofLeaderinD.C.PropertyTaxRefundFraudSchemeSentencedto9YearsinPrison.html

Gormandy White, Mary, et. al. (February 2008). A Definition for Business Ethics.http://business.lovetoknow.com/wiki/A_Definition_for_Business_Ethics

Johnson, Kenneth. (July 27, 2002). Enron to WorldCom and Beyond: Where was the Ethics Industry?http://www.ethicaledge.com/enron.html

American Association of University Women. (January 29, 2009). AAUW Applauds President Obama for Signing Lilly Ledbetter Fair Pay Act into Lawhttp://www.aauw.org/About/newsroom/pressreleases/Ledbetter_0129.cfm

US Bureau of the Census, Female to Male Earnings Ratio, 2002 Current Population Reports, Series P-60.

Wal-Mart Stores. (June 2001). History of Wal-Marthttp://walmartstores.com/AboutUs/297.aspx

Public Broadcasting System (PBS). (June 2001). STORE WARS: When Wal-Mart Comes to Townhttp://www.pbs.org/itvs/storewars/story.html

Norman, Al. (1999). Slam-Dunking Wal-Mart! Raphel Marketing, Atlantic City, NJ

Wake-Up Wal-Mart, America’s Campaign to Change Wal-Mart, Wal-Mart Worker Stories 2005 http://www.wakeupwalmart.com/workers/cynthia-murray.html

Davidoff, Steven M. (March 18, 2009). Dissecting the AIG Bonus Contract. The New York Times. http://dealbook.blogs.nytimes.com/2009/03/18/dissecting-the-aig-bonus-contract/?em

Lomond, Ben. (February 19, 2009). Madoff Victim, 90, Is Back In “The Market”. CBS News. http://www.cbsnews.com/stories/2009/02/19/eveningnews/main4813983.shtml

Wilber, Del Quentin, and Stewart, N., (March 13, 2009). DC Technology Official is Accused of Bribery. The Washington Post. http://www.washingtonpost.com/wp- dyn/content/article/2009/03/12/AR2009031201426.html?nav=emailpage