Essay: Stakeholder Theory & Utilitarianism - A Case Study Analysis

Impact of Actions on Different Stakeholder Groups

Question:

Discuss about the Corporate Responsibility and Governance.

Ethics can be best put as the values which are followed by the individuals when they make the different choices. The ethics are the factor which guide the actions of the different people, be it natural entities or manmade entities (Mizzoni, 2009). When it comes to the business scenarios, the ethics play a crucial role. This is again amplified when the people in workplace are faced with situations covering ethical dilemmas. Ethical dilemmas are such situations where the individual is asked to make a choice between two options, where none of the two options prove to be the best ones (Smith, 2008). This is the reason why it is suggested that when a person faces such ethically dilemmatic situations, they should make use of the leading ethical theories. Each theory has a different focus group (Ferrell & Fraedrich, 2015). For instance, the utilitarian view focuses on maximizing the utility for the majority (Kahane, Everett, Earp, Farias & Savulescu, 2015). This essay is concerned with examination of the case study, from the utilitarian viewpoint, to hold the acts of the geologists as ethical or unethical.

The operations of any business are undertaken for the stakeholders, where their work is undertaken in a manner which takes care of the needs of the different stakeholder groups like the consumer, government, suppliers, investors, and creditors. The stakeholder theory presents that the business is not to be operated for earning profits for the shareholders but for bettering the cause of all the stakeholders (Mansell, 2015). The case study presented in the assignment also showcases a number of stakeholder groups, which include the employees, the company itself, the geologists and even their family members, in addition to the consumers and the tax department. The impact of the actions of the geologists was unique based on the stakeholder group. To elucidate upon this further, the impact of these actions on each stakeholder groups are elucidated.

For the first stakeholder group, i.e., for the company, the actions of the geologists held the most negative impact. The reason for this stems from the fact that the geologists made use of the money allocated to them by the company for a different purpose, and without taking the permission for doing the same. They took the full costs from the company, but decided to save money by using the alternative modes of living at the outside location. They could have easily informed the company about this alternative mode, and yet the geologists stayed mum about it. As a result, the company incurred higher costs, which could have been easily saved, and used for the better of the other stakeholder groups.

Ethical Theories and Judging the Actions of the Geologists

The employees of the company for which the geologists worked, were also the stakeholder group affected in this case study. The reason for this stems from the fact that the company provides expenses to the individuals based on their profile. Due to the profile of geologists and them leaving away from their families, they are given higher allowances in comparison to general employees. Due to this, the allowances of the employees are restricted. Also, the employees do not get such opportunity to save money owing to restricted allowances. The possible savings in costs, which the geologists tap for themselves, could be used for giving higher allowances to the employees.

A very interesting stakeholder group here is the geologists themselves. The reason for this lies in their misappropriation of the money of the company, which is a major ethical issue. For this action of the geologists, they would not only have to face legal costs but ethical ones as well. This could even lead to them being expelled from their jobs owing to the misuse of the money of the company. As a result of this, the family members of the geologists would also face a negative impact, due to lost earnings and even a loss of lifestyle. Again, the geologists who do not adopt this approach would not be able to save as much as the unethical geologists, resulting in their families getting a lesser share for spending.

The tax department would also face hardships as they would not be able to tax the geologists properly. This is particularly true due to the requirement of receipts not being a compulsion for claiming the allowance from company. The geologists would thus be improperly taxed, and loss of revenue would be the result for the tax department. The actions of the company do impact the most important stakeholder group of any company, i.e., the consumers. This action of geologists would also impact the consumers as the availability of lesser profits with the company, owing to higher money being spent on the geologists, would be a hurdle in benefiting the consumers, from the operations undertaken by the company.

Thus, till now, it has been established that what the geologists did was not an ethical task, due to the negative impact which it left on the various stakeholder groups. However, as highlighted in the introduction segment, the ethical theories clarify on the matters of actions being ethical or unethical. In this context, now the utilitarian view is applied to judge the actions of the stakeholders. The utilitarian provides that an action would be ethical when it maximizes the utility of the undertaken action, for the majority (Bykvist, 2010). This theory presents that when most of the people are given happiness owing to a particular decision being undertaken, it would be an ethical decision (Mill, 2017). As a result of this theory, the total of bliss of any action, without the sufferings being resulted from undertaking such action, would be taken as the best action. So, the crux of utilitarian view is on the consequence of the undertaken acts, instead of the action being judged (Albee, 2014).

Applying Utilitarianism to the Case Study

Based on the utilitarian view, the consequences of the actions need to be analysed for judging the acts done by the geologists. The crux of what geologists did is that they applied their brains and found a manner to bring down their travel costs and maximize their savings. This was particularly beneficial for the geologists and their families, and it is almost undisputed. They got more money to maximize their interests and to improve their lifestyle. This would allow them to improve their future by getting better education, and the like.

If the case of company as a stakeholder group is carefully analysed, the viewpoint presented earlier proves to be wrong. This is because the actions of geologists gave a very important learning for the company, where they learned the way of bringing down the costs for the future group of geologists they hire. Even in the present, the geologists are providing the company with the best standards of work, and the quality of work is never hampered. The company also gets to continue taking the services of the geologists due to their reason, instead of losing them to the rival company. Where this happens, the company would lose due to the loss of talent pool, which would in turn hurt all the stakeholders, even the ones not mentioned here. Further, this would come with additional costs for the company, where they would have to hire new geologists’ talent pool, which involves costs of training them as well.

Another important point worth mentioned here is that where the process of invoicing of expenses is made, for acquitting the payment of costs of the geologists, it would prove momentous task due to the need for adding up new people for processing these invoices, along with the added burden of paperwork. There is also the issue of fake receipts, which would open another Pandora box. In terms of the utility of actions undertaken by the geologists, this would be a waste of time and resources. This would also prove as a hassle for the tax department, who would have to track down each and every invoice and check for its authenticity. The employees of the company can also learn from geologists in coming up with unique manner for saving costs. Even though this does seem wrong, but where this results in company learning new ways of saving costs, it would ultimately be beneficial, due to maximizing of utility for the majority of people.

To conclude the entire discussion, it becomes clear that a particular matter could look like being an unethical task, but where the ethical theories are applied; the actions of the different individuals could be justified as being ethical. This provides the crucial learning that every action can be justified by using the proper reasoning for the same. However, this does show that by using a different ethical theory, the same action could be proved as unethical. Thus, it is crucial that when the individuals are faced with such situations where they face ethical dilemma, it is better to adopt a single ethical theory, and undertake the actions based on that theory. This case study was just an example of how the perceptions regarding the undertaken actions of the individuals can be changed, with the application of relevant ethical theory. Thus, by applying the utilitarian view in this case study, the initially proven unethical actions of the geologists were proven to be ethical for the different stakeholders. 

References

Albee, E. (2014). A history of English utilitarianism. Oxon: Routledge.

Bykvist, K. (2010). Utilitarianism: A Guide for the Perplexed. London: Bloomsbury Academic.

Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Scarborough: Nelson Education.

Mansell, S. (2015). Book Review: Rejoinder to Veldman’s review of Capitalism, Corporations and the Social Contract: A Critique of Stakeholder Theory (Vol. 22, No. 2, pp. 271-275). Sage UK: London, England: Sage Publications.

Mill, J.S. (2017). Utilitarianism. Dublin, OH: Coventry House Publishing.

Mizzoni, J. (2009). Ethics: The Basics. West Sussex: John Wiley & Sons.

Smith, J.D. (2008). Normative Theory and Business Ethics. Plymouth, UK: Rowman & Littlefield Publishers.