Ethical Issues in Business

Introduction

The ultimate objective of one company is to generate maximum income from it operation. The management will develop strategies and using any means to achieve the objective. Generally, the manager has responsible to the shareholders and less concern on the other stakeholders in running on the company. By ignoring the interest of other stakeholder, it will lead the management to ignore to adopt ethic in their management. However, the management should realize that by ignoring ethics, it would affect the company in the long terms and become major issue in the business world and society.

Why is a major issue

The unethical practice definitely will harm and creating problem to the living and non-living things on the planet. For the nation, the unethical practice for example corruption and manipulation of workers would develop bad image especially in the eyes of foreigners. The bad reputation would shy away investors from coming here and made investment because they did not have trust to the economic system that be building based on the corruption practice.

The corruption practice would lead to the increase of cost of production, low quality products and expose people to the unsafe and unhealthy products, services and environment. Definitely, corruption would bring the cost high because to cover the amount paying for corruption, the company will include it in the operation cost, which later transferred into the unit price of products. To the business company, whatever action should not cause the decreasing of profit margin. It is clearly the people are the victim to this unethical practice, where the people have to pay more because of other people interest. For the project which it cost had been fixed, the money spent on corruption will be absorbing in the cost of material used in developing the project. For example in the construction industry, if the developer paid the under table money for whatever reason, the cost will absorbed by using material that do not according to the specification that set by the quantity surveyor. The project was completed, but the safety of the building is cannot be guaranteed. In Malaysia, many buildings were collapsed and the finding was the failure of developer to adhere to the plan and recommendation from authoritative parties that involved in that development project. The most memorable is the collapse of the Highland Tower. Recently, the collapse of the Sultan Mizan Zainal Abidin Stadium in Kuala Terengganu which lost estimated at RM30 million, and before this a series of incident where the roof of school collapse in Pahang and in Terengganu. It was determined that the incident happen because of using substandard material and not according to specification.

The unethical will be distorting economic development not because foreign investors would not investing their money here, but also because some portion of the allocation needs to be spent on the corrective action. For example, government need to spent more than RM70 million to rectify the crack lines that occur at 31 of 33 pillars in Middle Ring Road 2 (MRR2). As comparative, the same amount of money could be used to build 200 unit of low cost house at price of RM35 thousand per unit. The unethical practice had robbed the opportunities of 200 families to have the house.

The unethical is a major issue because it will harm the quality of living of the society. In opening forest areas for development project or for logging activities, many ethical issues are discovered and need to be addressed by the relevant parties. In efforts of extracting logs from the forest either due to land clearance for development project of logging activities, generally the concessionaires have less concern on the impact to the biodiversity, water quality and degradation of environment. There are many cases that logging activities have contributing problem to the living of the people who depend on forest for food and fresh water in their live. Many people did not know or realize that forest does not only provide wood, but also have other important roles such as controlling the global temperature, supplying water for consumption and agriculture activities, enrich with flora and fauna that important for human living such as sources of food, medicine, building material and recreation. The logging activities and forest clearance did only destructive forest ecology, but also polluting water and soil erosion, which cause landslide and flood. Many cases of disaster happen because of this unethical practice among the business community, which fail to taking account other stakeholder interest in their business activity.

A lot of money and resources needed to take on the corrective programmes. However, when the destructive occurred, it could not be reverse back to the original condition, even thought a lot effort and resources had been putting on the corrective action. The people will be suffered, causing extinct of endanger species of flora and fauna and change in the environment climate.
In business area that provide products and service, the unethical practice would bring effect to the business especially in the long-terms. In Malaysia, in few years back, there were cases where the coarse sugar and packet cooking oil are suddenly disappeared from the market because of hoarding activity taken by the producers and distributors. They did it as a way to force the government to increase that products price. It was true, when the government agreed to increase the price for both products, the stock immediately available in the market. This action had affected many other business activities especially in the food servicing industry as well as affected family consumption. This action definitely oppose to the Islamic ethics where prohibited business people from hoarding and creating artificial shortage of supply which aims to increase price of products.

In the other businesses, the unethical practice would shy away people from revisit their outlet. It was proven that cheating and dishonest to customer will shy away them and fail to build a customer loyalty because many customers nowadays concern on the value for money on the product that they purchased. Dishonest, providing substandard products and services, over charging and fail to fulfill promise and contracts eventually would bring down the company. At the end of the day, the shareholders will lose the money that they invested in that company.

In the human resource, in many cases employee always become victim of decision made by management. Many companies are less concern on the ethical issue in hiring and lay off the employees, and in building relationships between employer and employee. Power distance and hierarchy structure has creating barrier in relationship between employer and employee. Although in many companies, employees have been empower to make a decision in execution their job, but the practice of employee meeting with employer is very rare and the management only keen to listen on the good things, but the bad things or problems must be solved by the employee. It is commonly know that the top management will be getting better rewards as compared to the middle and lower ranks employees on the belief that the top management, who are the one creaking the head in thinking of planning and strategies for the company. This will create unhappiness and crises in the company and later will translate into low productivity, high absentees and high turnover.

If the company earning high profits, the top management get the praise most as compared to the employee, but when the company has a financial problem, the first thing that many companies did are to lay off their employee either through voluntary separation scheme (VSS) or terminating the service via a short notice. In some cases, the company just shut down the operation and run away without paying any compensation to their employees. The company will never try in thinking the best way in keeping the employee during the bad time because they know that they could employ other people especially the foreign workers when the economy recover.