Section Exam I of business ethics

Question II:

        The first ethical issue is about employee theft. The problem is that the value-added-tax system in Vietnam requires that all expenses above VND 100,000 need a red invoice (a term refers to VAT invoice). Because of this reason, some employees have been stealing money from companies by claiming the expenditures that are not expensed at all. Expenses that exceed VND 100,000 would be broken down into smaller amounts and these amounts will be stated in non-VAT tax invoices and those non-VAT invoices are not eligible for VAT returns. To prevent this employee theft, possible solutions could be the implementation of one-invoice policy which requires the employees to present one invoice for one purchased service or item. Companies also require employees purchase items from suppliers that can provide a VAT invoice, failing to do so employees are not allowed to make any purchases from that supplier

        The second problem facing business organization is the price collusion in which salespersons would agree a higher selling price with customers than the actual price the salespersons could sell a particular product. They would collect the payment from clients, keep the difference and surrender the amount that they report to the company. This is also a kind of employee theft that business organization should be aware of. Some solutions applied are: (1) Salespersons are required to present all correspondences with clients in writing (emails, faxes or written contracts) instead of verbal communication by phone or by meeting directly with clients and (2) to encourage clients to make payment via bank transfer instead of by cash. These issues have proved to effectively eliminate any possible unethical acts committed by employees

        The third ethical issue is a situation. When we were on board a cruise on the Mekong River. After an enormous dinner, we were having some drinks over chatting and we suddenly we saw that one of the crew members were clearing the table and starting to dumpling the waste into the river.  We suddenly stopped him from doing so and explained to him that he needed to separate the waste into organic and inorganic waste and of the organic waste such as fish bones, crab shells, shrimp shells and other leftovers from water creatures that can be dumped into the river. Others inorganic waste such as plastic bags, papers should not be thrown into the river because it would pollute the environment and if the media catch us polluting the environment, they can make it public and that would create a negative impact on our business. For this situation, we realized that it is important to educate, to get the ethical messages across all levels of the company

Question III:

The Sarbanes-Oxley Act (SOA) was passed in 2002 after some famous accounting scandals commited by hundreds of small and big companies, the act had added to the current existing institutionalizations of business ethics such as laws regulating competition, laws protecting consumers, and laws promoting Equity and Safety etc. The SOA can somehow be understood as laws protecting investors and other stakeholders and it created the Public Company Accounting Oversight Board whose major duties are:

1. Registration of public accounting firms: Public accounting firms need to register with the Board in order to be legitimate in the preparation or issuance of any audit reports
2. Inspection of accounting firms: The Board shall conduct periodical inspection to assess the compliance level of the registered public accounting firms
3. Investigations, disciplinary proceedings, and imposition of sanctions: A registered public accounting firm may be investigated if found to violate any provision of the SOA. Any disciplinary proceedings or imposition of sanctions should be applied if any violations are found and some of the sanctions are revocation of registration, civil money penalties, and temporary or permanent limitations on the activities, operations of such firm

These duties are more or less related to my current job in Vietnam. Although the legal system between the US and Vietnam is different, these duties serve as guidelines in term of consistent compliance to prevailing laws and regulations. Annually, we need to contract an auditing company to audit our annual financial reports and we usually choose the auditing company who has clean history of doing business, abides the Vietnamese Auditing Standards (VAS) promulgated by the Ministry of Finance. There is no such kind of Oversight Board in Vietnam yet thus it is important for the accountant team to generate financial reports in conformity to the accounting principles from the first stage so as to reduce any possible errors that can be spotted by the auditing firm.

Question IV: 

        A hostile work environment is defined by the three criteria as follows:

1. The conduct of sexual nature (verbal or written, nonverbal, visual, physical) was not welcome by the harassed and that the harassed wanted it to stop because they did not feel comfortable with those conducts
2. The conduct was to such a severe level as rape attempt or the conduct of sexual nature repeated a number of times which the harassed felt hostile in their work environment and affected their conditions of employment
3. The conduct was perceived by reasonable person that it was offensive or hostile such as inappropriate touching, sexual comment on a person’s body

Sexual relationship between people who has professional responsibilities in common is called dual relationship and this dual relationship would become unethical dual relationship if the purpose of the sexual relationship is to influence their profession or to achieve some certain goals in their profession. To this standpoint, the key ethical issue within sexual harassment is the concept of dual relationship. A sexual conduct cannot be viewed as sexual harassment if a mutual consent in writing is created between the two parties

        In Vietnam since the laws have not been as strict as those of the US, severe sexual harassment such as raping would be prosecuted only if reported by the victims or known by the authority. Pervasive sexual conducts are heard here and there but there was no obvious evidence for lawsuits so that the condition of employment of the harassed is affected. Some have reported to leave their current position or to move to another department in order to avoid the harassment. To deal with such cases of harassment, it depends on whether it is severe or pervasive. If it is of severe level, a file should be done for police’s investigation otherwise, relocation of staff to different departments to separate the alleged harasser and the harassed

Question V:

        The ethical decision-making framework was built as a guideline to provide insight and knowledge on the process of making ethical decisions in business organization. Ethical issue intensity, organizational, individual factors and opportunities are the major concepts taken into considerations when making ethical decisions.

        Each of the concept influences the ethical decision-making process. For example, the ethical issue intensity deals with the perceived importance of individual toward ethical decision and each individual is influenced by “6 spheres of influences” namely workplace, family, religion, legal system, community and profession. So people come from different religion or profession may perceive the importance of the decision differently. Corporate culture and organization’s values in the organizational factors influence individual’s decision more than that of the individual’s values so a set of values, beliefs, goals of an organization may prevail those of individual’s. Knowing the individual factors such as age, education, nationality, gender etc help identify the tendency of making ethical or unethical decision. It is obvious that people with higher education plus more experienced in their work tend to be more ethical in their decision. However, ethical decision can be made in accordance to different perspectives. Some can choose the decision to bring about best results for the most number of people. They care about the consequences rather than other elements (teleologist). Some can opt for the rights of individual so that their basic rights are preserved (deontologist).

        The framework for ethical decision-making does stress the importance of organization’s own values and culture rather than the employees’ personal values and morals and this is a significant guideline in the ethical decision-making process.

Question VI:

        Leader in a business organization is not only concerned with business orientation but also with the ethical orientation of that organization. Strong leaders should possess some ethical habits as such:

1. Strong personal character:  In which a leader should have intellectual skills to insert his or her own sets of ethical principles to orient, to train the staff so that the staff can recognize the best ethical choice for decision making
2. Passion to do right: Once recognized the emerging ethical issues, leaders would do their utmost due duties to resolve the problems regardless of whatever challenges they might have to face. Rightness is the focal point in their ethical actions
3. Proactive: this habit of a strong ethical leaders reflects in their pioneering programs to prevent possible unethical issues
4. Consideration of stakeholders’ interests: the stakeholders’ interests are met and ethical leaders act to satisfy the stakeholders’ interests not only in term of profitability but also other rights and interests of other stakeholders who do not benefit from an organization’s profit
5. Role models for the organization’s values: This is the typical habit for any strong ethical leaders. They should serve as an example of ethical image in an organization. Their behaviors, ethical or unethical would influence their subordinates or the organization as a whole.

In Vietnam, China, Malaysia, few cases have ever been heard of a strong ethical leaders but more negative cases are heard such as the high content of melamine in milk productions in China in which the most affected stakeholders are consumers. The leaders had not had the considerations for stakeholders’ interests. Once case in Vietnam is the Vedan whose main famous product is monosodium glutamate (MSG), Vedan littered the untreated waster water directly to the river that harms the ecological conditions of the water and affected people who lived in the area. These examples reflect the needs for strong ethical leaders with such habits described above.

Question VII: 

The three levels of Kohlberg’s six stages of cognitive moral development can be reduced to three levels. In level 1, individuals’ behaviors revolve around the matters of self-interests and punishment. What they do is to their best interest and their concerns whether the act is morally right or wrong and any punishments related to the act. This level is similar to the first two stages of the model. In level 2, a higher level of moral development in which an individual’s action focus on the social norms. Individual would compare his or her morality of actions to the views and expectation of the society. This level is similar to the stage 3 and 4 of the model. In level 3, an individual goes beyond the social norms, laws. A person would act according to the universal ethical principles which he or she think that people should follow. The actions are usually thought to be due moral without the interference of external pressure.

Kohlberg’s model has just introduced the cognitive development of morality through different stages. The model shows that an individual may make different decision for the same situation depending on the stage of his or her moral development thus knowing the individual’s stage of moral development would help the decision-making process.

The view on moral development of Kohlberg is somehow not identical to the view of eastern culture such as Vietnam and China where sets of Confucius and Taoist moral principles were imbedded in a person from childhood through family, schools. Moral development does not seem to evolve fast enough to be on the same level of business development.
Question VIII:

Justice is one of the moral philosophies that contribute to the ethical decision making process and it evaluates the fairness in business interactions.  

There are three types of justice: Distributive, procedural, and interactional justice

1. Distributive justice: is the fairness in result or outcome of the business relationship. For example two employees are rewarded different bonus for the same work. It means that the fairness in reward is not distributed equally
2. Procedural justice: is dealt with the matter of procedures or processes used to create the outcomes or results. For example, companies should have a transparent process to resolve any disputes should there be any arising perception from employees about the inconsistency of justice in the processes
3. Interactional justice: is the evaluation of the communication processes in business relationship. It deals with the accuracy of information throughout the organization. For example, many employees may exaggerate their business expenditures but in fact they have not spent that much for business purpose. This is an example of untruthfulness about the reason for spending company’s fund.

Justice is viewed differently amongst different cultures. Western countries such as the US or Canada usually have a clearer cut for justice, fairer treatment toward employees and more appropriate reward whereas in eastern countries such as Vietnam or China, the matter of justice has not been paid much attention to. Empirically, many disputes within business organization arise from unfair treatment. Labor disputes and strikes happen here and there due to the distributive, procedural and interactional unjust in business organization.

Reference

Ferrell, O.C., Ferrell, L., & Fraedrich, J (2008). Business Ethics: Ethical Decision Making and Cases (7th ed.). South-Western, Cengage Learning