Business Ethics for Accounting

Business Ethics for Accounting

I. Situation

The productivity of the firm was on the increase and my colleagues (employees) were highly inspired and motivated with the results. The Company had created a competitive edge relative to other industry players and was on the right track towards the achievement of sustained competitive advantage. Every employee in his highest spirit would strictly leave no stone unturned and put concerted effort towards the realization of the firm mission and vision. There was a sounding teamwork and work delegation was perfect as each employee could easily stand in for the other to ensure there was no slight disruption of the operation and the promising productivity. The question that was growing was whether the wages and salaries paid to the employees were commensurate to their spirited efforts and work.


They had anticipated that the HR department would revise and adjust the pay packages upwards to measure up to their productivity. Unfortunately, this was never forthcoming but they did not lose hope and continued to work more hard to realize the goals and objectives of the firm. It did not however, take so long when the productivity of the firm started to decline due to the dissatisfaction of the employees (Hidalgo, 2013). At this point, there was ethical issues raised by the employees who thought that the HR department did not appreciate their efforts by offering low pay that was much less than and could not measure up to what the massive input they had plugged in the organization (Wanzenried, 2008). In this, I am convinced that the employees were justified to demand for the pay rise to match the levels of their work in the organization.

Despite that fact that the packages were within the wages laws and minimum wages, a good Company should appreciate the inputs and the efforts of the employees and motivate them using a properly constituted and inclusive reward system that captures the productivity and performance of every employee (Monahan, 2012). It was unethical that this farm remained silent and wanted to enjoy the extra efforts put by the workers without really appreciating their work. It is expected that as the productivity rises and thus the profitability, the pay packages should remain sensitive to these changes and moves upwards from the minimum wage. A firm that is success-oriented should value both the external and internal customers (employees) since the workforce remains that the prominent driving force behind any successful firm. A worker feels motivated and ready to offer his best when properly rewarded and compensated for the work or services he renders to the firm. Ethically, the HR department needs to consider the efforts that a given employee does to the Company and should not confine its wages deals and packages to the legal frameworks or laws such as minimum wage when rewarding the employees.

Generally, an employee will feel part of the mainstream success of the organization when he is rewarded and recognized for his inputs in the organization. Even without employees own demand and desire, the top management needs to always give the employees their best interest in the same manner they treat the customers and in cases where the employees are neglected, it is obvious that the productivity will decline which automatically triggers low profitability and failure of the firm. A firm may think that being rigid in terms of wages and salaries payment is more profitable but in the long run, it is the firm that loses due to mass movement of the employees out of the organization and hence poor image and reputation. This situation therefore negatively affects the Company since it is unethical practice that the employees are not paid or remunerated commensurate to their efforts and productivity. As the firm expands and accumulates more profits, the employees should enjoy the benefits of their toiling and concerted efforts put precisely to hit such achievements.

I. Normative Analysis

The people directly involved in this situation majorly include the employees, the HR department and the top management of the Company. The actions of the employees are justified in this case while those of the top manager and the HR department personnel are unjust and unethical. The employees’ actions are justified and ethical since they were working hard to achieve the mission and vision of the firm (Wieland, & Schmiedeknecht, 2010). It is true from the information presented in the situation section that there was an increased and sustained competitive advantage due to the increased productivity of the employees.

The connection between the employees and the organization is that each entry needs to do its part satisfactorily. From the information already presented in the situation section, it is evident that the top managers and the HR department remained insensitive and silent on the concerted efforts put by the employees to raise both productivity and profitability of the firm. They paid a minimum wage and did not even bother to adjust wages upwards slightly thereby demoralizing and demotivating the employees. This is the reason the employees felt it was time they withdraw some of their effort and work within what is given legally and hence low productivity.

The utilitarianism theory was never upheld by both the Department and top management. This is because they never practiced the principle of the ‘greatest happiness’. If they were to embrace this theory, they could have realize that they needed to actions that are right by paying better salaries to make the employees happy and thereby motivating them to work extra hard to maintain the sustained competitive advantage already realized. The laws, guidelines and professional standards applicable in this situation included the minimum wage laws and guidelines.

Even though the Company acted legally by paying the minimum wages and following this guideline, it acted unethically but not revising the wage and salary packages. It failed to adopt any motivational theories to motivate the employees and seemed to incline to law that wellbeing of the employees (Gregory, 2011). The Company therefore, broke the ethical codes of behavior in that requires that employees be given the best of their interest and rewarded accordingly based on both performance and productivity. It is unrealistic that the firm gets such huge profits yet it does not pay the employees better packages.

The employees were therefore harmed by the rigidities of both the top management and the HR department who did not want to appreciate the efforts and the inputs of the employees (Johnson, 2014). They were harmed in the sense that they had disturbances in how they could care for their families with such low pay and yet the economic prices for goods and services were rising and hence the value of the money was declining. The actions of the employees, HR and top management were all unfortunately defensible. For example, the employees, HR and top management legally acted as required.

According to the HR, the wages paid were within those given by the labor laws or the minimum wage and hence were legally viable and justified. On the other hand, the decision by the employees to withdraw their extra efforts and work based on the contract was also legally justified. However, ethically, the actions of the HR and top managers fall short of what is expected in the present competitive industries. The employees’ boycotts are professionally provided for as they form a proper bargaining power to convey their grievances.

Their decision to reduce the productivity to a level commensurate with their pay is professionally relevant to showcase their dissatisfaction. Both the HR and the top managers violated their fiduciary duties since they acted on behalf the business or the Company shareholders who expected more dividends from the Company. By failing to pay better wages, there was an inevitable and looming collapse of the firm and hence loss of dividends. The lack of dividends to the shareholders means a loss but these principals expect better dividends to be generated by their agents (HR and management).

III. Causal Analysis

The poor leadership, improper reward system, and rigidities by HR department culminated in this situation. The employees worked extraordinarily to ensure that the firm had a sustained competitive advantage over other industry players. Nonetheless, due to poor leadership, their inputs were in vain and confined within the minimum wage payment. If we were to have a flexible and a good leaders who embraced a shared leadership style, the grievances of the employees could have been listened, evaluated and addressed to avoid the worsened situation already witnessed in the situation section.

The main challenge and grievance by the fellow employees including myself raise was that the pay was never commensurate to the kind of job we were doing. Therefore, there was an obvious expectation that the HR and the top managers could have addressed these issues amicably by coming up with a proper mechanism to reward the employees. In fact, employees were patient enough and waited in vain for quite long good time until things became worst and got out of hands, because, the employees could not have better living standards while the sole firm they work for was expanding at an alarming rates saves to the employees’ concerted efforts.

We did not operate from ethical blind spot but rather the HR and top managers. They remain deaf and dumb despite the erected and obvious grievances conveyed by the colleagues. It can be well said beyond any reasonable doubt that the HR and top managers granted themselves ethical immunity. This is because, my colleague and myself failed to understand why it was so hard for them to adjust our pay upwards and yet we made a lot of profits per day and this proved a long term (Grey-Bowen & McFarlane, 2010). Moreover, we had outstripped our competitiors and we could use cost leadership strategy as we desired any time to control the market. To my this means that the employees were to be given whatever they needed from the HR and top managers since they had literally worked and proven their value and worth as reflected in the inevitable success of the firm. If it was not that someone had automatically granted himself, ethical immunity at the HR and top management, the employees could have actually received a pay rise and the Company could have continued to shine.

IV. Resolution & Conclusion

To solve the situation, an all-inclusive meeting was convened that incorporated and integrated every firm stakeholders. This was an initiative of the shareholders and board of directors. The meeting became the touchstone and the stepping stone towards getting to understand the grievances of the employees. The meeting made a number of resolutions following the shocking revelation that only 2% of the profits were used to pay the hardworking employees. A number of changes and reorganization took place both at the top management and HR department. For example, the HR manager and the CEO were replaced. To ensure effectiveness in leadership, a shared leadership style was embraced in which the leadership was to remain a collaborative and integrative one.

Every employee’s input in the decision making process was to be considered and appreciated. The utilitarian ethical theory was mentioned as the most appropriate theory to be used in redesigning the reward system and pay packages. The wages were increased progressively by 40%, 50% and 60% depending on the seniority of the employees. Another key change was the introduction of a welfare manager who was responsible for collecting the complaints and grievances of the employees and transferring the findings to the top managers and HR for actions (Snyder, 2008). The employees were motivated further by establishing and elaborate rewards system that was sensitive to even the minor inputs of the employees and this was meant to ensure innovativeness in the organization.

Subsequently, the challenge became a thing of the past and the employees embraced the initial teamwork and the Company expanded rapidly thereafter. It was resolved that both legal and ethical standards remained key elements in ensuring effectiveness in the firm (Ervin, 2012). However, ethical actions in terms of reward system and pay packages was given much emphasis and the Company resolved that its pay packages would be determined majorly through ethical requirement that makes the employees’ wages to remain commensurate with their works and efforts.

V. Ethical Systems Design

The prominent recommendation I would suggest to this Company if I were the consultant is to stress the ethical-based reward system and pay packages over legal payments such as minimum wages. I will emphasize that an employee require and expect to receive a wage that measures up to his efforts to remain more productive (D'Amato, 2010). Therefore, to have a motivated employee, it is appropriate that the wages and salaries as well as rewards should remain commensurate to the worker productivity and performance.

I would change the payment system that is based on legal frameworks luck the provision for minimum wage by plugging in the ethical-based practice where an employee is paid based on what he offers for the firm regardless of the time taken. This is because the payment based on hours of work would not reflect the true productivity of the employee. An employee who does well within a short time ethically deserves a pay that is commensurate to his work. Therefore, the inappropriate norms such as using of hours of work to pay, minimum wages and lack of reward and promotional mechanism that are only based on the duration an individual has taken in the firm will be removed (Callan & Callan, 2005). I will ensure that an employee gets what he deserves every time an employee shows any slight achievement by coming up with an ethnical-informed salaries and wage and reward payment systems.

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