The Result of a Decline in Business Ethics
The Result of a Decline in Business Ethics
Business ethics is defined by “the application of ethics to the special problems and opportunities businesspeople experience” (Kubasek, Browne, Barkacs, Herron & Dhooge, 2016, p. 16). When ethical decisions appear in a person’s life, more likely than not, a plethora of choices are considered when determining the best course to take for justifying our actions. In many cases, we consider our Lord and Savior Jesus Christ, his heavenly father God, our parents, our spouses, our children, friends, colleagues, physical and mental emotions, plus more before committing to one-way or the other. However, when the word “business” is placed in front of ethics, the ramifications are often much larger, including monetary value, and the effect decisions will have on stakeholders and the public. First Timothy 6 verses 10 states “For the love of money is the root of all-evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows” (KJV). By highlighting the definition of Business Ethics as well as 1 Timothy 6:10, we expose the very public lambasting of Volkswagen Group, whom recently stated “11 million of its diesel cars worldwide were equipped with software that was used to cheat on emissions test” (Lippe, 2015). A multitude of responses, questions, and political backlash reduced Volkswagen’s image in the public, however, we will identify the steps that should have been enforced to prevent this incident, starting at the managerial level and ending with the Chief Executive Officer (CEO).
As children of God, we are instilled with the rationale between what is right and wrong. James 4 verse 17 (KJV) states “Therefore to him that knoweth to do good, and doeth (it) not, to him it is sin”. We are endowed with the conscious capability to distinguish between doing something right and doing something wrong, however, when we choose to do something wrong, it is considered a Sin. Other factors may weigh heavily for or against the determination of right or wrong to include family beliefs, childhood, and life experiences. Nevertheless, as employees working in the Legal office or the Engineering department of Volkswagen, the responsibility to determine the best ethical, moral, and legal path fell squarely on each and every employee to make the correct decision, and if something was legally, morally, or ethically wrong, say something to someone such as the Department Director, or CEO. If fear of retribution was prevalent amongst the employees in these departments, they should have contacted an anonymous reporting service to present the evidence in question.
First, employees should have known there had to be something or someone who they could report the infractions to regarding the software which cheated diesel testing requirements. For instance, the Sarbanes-Oxley Act of 2002 was established by Congress to protect corporate insiders and create an anonymous reporting system for employees to present suspicious activity by companies (McClurg, 2017). Additionally, the Dodd-Frank Act prevents Whistleblower’s, or those who implicate their company for illegal activity, from being discharged, demoted, suspended, threated, harassed, or removed for any attempt of reporting the illegal activity (McClurg, 2017). Aside from these provisions by Congress, there are multiple employee guidelines for reporting suspicious behavior, on top of the character and courage to stand up for what is right, and socially responsible from a company, and an individual. Ideally, managers should have prevented this by asking questions, remaining aware, and conscious towards the behavior of employees and the reporting systems in place for protection, especially since “If God is for us, who can be against us?” (Romans 8:31 KJV).
Secondly, managers or employees in Volkswagen Legal or Engineering department, must have known that the people affected most by this decision to cheat the software detecting system was there stakeholders, which includes the company. For instance, Cremer and Taylor (2016) reported that Volkswagen would take a $18.2 billion loss due to the diesel deception scandal the company attempted in 2015. Although a loss of $18 billion may not deplete Volkswagen of their assets, as it may numerous companies across the world, the image and trust from customers have drastically been impacted, and that is something that cannot be repaired so quickly.
As the CEO of the diesel division of Volkswagen, they should have taken full responsibility for the mistake and attempt to cheat software detection. Afterwards, if not arrested by the Police, could have launched a massive legal investigation into the reason why 11 million cars were equipped with diesel deception software, in order to identify the areas of failure from the management and legal/engineering offices, and hold as many people accountable as possible. This response would have revealed to the public, business ethics is much more complicated than people imagine. In a competitive, business-run environment, money and production become the figures of success, and through cheating the diesel software technology, Volkswagen was able to attract more money, product, and customers around the world. Additionally, this type of legal investigation would perhaps reveal as Clegg, Kornberger and Rhodes (2007) stated:
Ethics cannot be encapsulated in lists of rules that inform action; thus, there can be no ‘one best way’ in which good ethics may be guaranteed through prescription, judgment or legislation. The concept of ethics as practice cannot offer a clear black and white grid that divides the world into good and bad; things are more complicated. (p. 13)
Business ethics is not as easy as deciding upon right and wrong. There are multiple ethical dilemmas that could appear, however, the basis for decisions should be the best legal course that would potentially increase value for the stakeholders, no matter the situation. Additionally, an investigation into the failures of the Volkswagen reporting system, would identify the reinvigoration of legal outlets for suspicious reporting such as the anonymous report hotlines, employee confidentiality policies, and clear guidelines to preventing something like this from happening again. Also, the CEO or investigator leading the investigation may unveil what systemic or deliberate cover-up occurred such as Lippe (2015) belief that Volkswagen engineers neither discussed with nor hid what they were doing from Volkswagen’s in-house lawyers, and the in-house lawyers didn’t realize what was going on.
Ultimately, Volkswagen’s decline in business ethics stemmed from the competitive misconception that cheating was an attempt at achieving company goals. The sorrows that follow the obsession with money can lead to illegal activity, penalties, fines, and supporting the wrong-doings of others. Furthermore, the lack of character or failure to report the wrongdoings by employees, must be fortified and consistently addressed from the executive level down to the lowest employee. Although an $18 billion loss is large and galvanizing, the timeline for repairing the damage done to the environment, customers, and other stakeholders could take decades and cost exorbitant figures.
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Cremer, A., & Taylor, E. (2016). Volkswagen takes $18 billion hit over Emissions Scandal.
Retrieved from https://www.reuters.com/article/us-volkswagen-emissions-germany-
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