Ethical Leadership And Decision Making: A Case Study On Starbucks Coffee Company Essay.

Write an essay in which you:

• Use an organisation that is or has been in the news during the past two years (work-related learning) and identify an ethical dilemma faced by that organisation as an example.

• Apply at least two theoretical concepts from managerial ethics to examine this dilemma critically.

• Go on to examine and critically evaluate how these theoretical concepts influence managerial practices in the chosen organisation.

• In conclusion, reflect critically on how leaders may ensure organisational decisions are made ethically. 

Understanding Managerial Ethics

Generally, all organizations in operation are guided by a body of morals that cut across all decision-making procedures. A group is sometimes likened to a single person in that it can be held accountable for its decisions as a single entity. Ethics refers to the values and principles that dictate the decision-making processes in an organization. The managers and top officials of any institution have to uphold these principles in the implementation of policies in the programs of the business. There are different ethical philosophies under which a company can choose to operate (Goetsch & Davis, 2014, p.342). Consequently, the ethical philosophy a company adopts will shape its image and reputation, as well as its productivity. For instance, the leaders of an organization will affect the morale of the workers depending on the managerial approach assumed by the leaders. If the management is ethical in their operations, definitely the employees will also work guided by employee policies leading to work completion and honesty operations between the management and the workforce. This will impact positively to the organization as production will be pushed high and the employees work tirelessly to ensure achievement in their areas. Low work turnover will be evident as the ethical approach by the management will not be unfair to the workers hence retention is high. However, sometimes the management may find itself in an ethical dilemma, where the managerial principles and actions by the leaders prove difficult for a smooth running in the organization. This is when the decisions made are not favorable to all stakeholders, from top managers to the workers, and even down to the shareholders (Grant, Arjoon & McGhee, 2016, p.396). This scenario puts the management in a situation of stagnation and worries for the future of the business, hence calling for fresh drawing table meeting for discussing the remedy for the worse situation. This essay will base its argument in Starbucks Coffee Company.

Starbucks coffee restaurant is a company that has been undergoing ethical dilemma for a considerable length of time. Eight years ago, from the year 2009 to the year 2016, the company had tried its expansion to the whole parts of the world. For this reason, Starbucks’ management had been exposed to an experience of ethical dilemma on the actions to take as the counter for the poor expansion of its product market (Ford & Richardson, 2013, p.53). A few years ago, Starbucks aimed at entering the Australian market with the coffee product that aimed at outdoing the Australian coffee shops. Starbucks opened so many coffee shops, employed very large team both from Australia and from America to serve in their shops. When all failed, the manager was interviewed on the ABC HD Television channel where he said that the company examined and evaluated all facts and came to drop more than a half of its employee and closing a large number of its coffee shops in Australia. Considering the ethical cases of the Starbucks restaurants, there is an element of ethical dilemma which led the company to take the actions that it was taking (Pollock, 2014, p.231).

Ethical Dilemma of Starbucks Coffee Company

Last year, 2016, the company was in another dilemma of surveillance and privacy. The company had a problem in balancing the employee privacy and the company's as well. The company sales manager had a complain that the current situation of the organization did not allow the employ to talk about the negatives of the organization in the media. The organization, in this case, had to amend and add policies that concerned the privacy of the organization in the context of the employees and social networking. This resulted from the fact that after the fail of the company in Australia, many Australians would flood in the social media and talk about the company and dislike the pages where Starbuck commodities were disposed while the employee reviewed the negative comments negatively. All these aspects in this organization will be the subject of this essay.

Another theoretical concept that can explain the ditching of a company into dilemma if not adhered to is the Virtue-Based Ethical Theory (Braswell, McCarthy & McCarthy, 2017, p.101). This is a theory that was developed by the great ancient Greek philosophers, the major contributors being Plato and Aristotle. This concept considers the virtues or desires that a company is in, rather than following set rules. The ultimate goal of virtue-based ethical theory is that the decision maker has to do the right thing, in the right place, at the right time and in the right way. For the case of our case study company, Starbucks, in its expansion to Asia and Australia, it ought to have considered the value of such decision instead of choosing to open new markets just for the sake of spreading its branches to cover a longer chain. This inconsideration of the virtues ended up putting the company into a crisis of collapsing these new branches in Australia because of stiff competition from the existing businesses dealing with coffee (Cherry & Jacob, 2016, p.233). The company did not investigate the quality of the substitute of their product hence bringing it into a dark tunnel. Starbucks found itself in the dilemma of closure or bearing with the stiff competition, but it later succumbed to the wide difference in customer taste between it and the other companies. If the management had done a feasibility study, possibly it would have discovered that the characteristics or tastes of the customers they wanted to enter into a relationship with had an unbreakable attachment with another partner. Thus, an appropriate behavior of an action needs to be analyzed before implementing it.

The utilitarian ethical theory is one of the managerial ethics. The utilitarian theory can also be understood as the Rule-Based theory. The principle behind this theory is the idea of “Greatest Good for the Greatest Number.” This means that, for the management to take any step in organizational functions, it needs to do a thorough analysis of the elements of the organization that will be affected. According to the system theory in management, any person who works in certain organization is a member of that system. He is part and parcel of the organization. When decisions are passes, they should be considered so that they may not destroy the production rate of the organization. In this principle, the principle implies that the majority are considered while the minority are left behind (Pycroft & Bartollas, 2014, p.53).

Virtue-Based Ethical Theory and its Impact on Starbucks

For the case of Starbucks coffee company, the situation of sacking a great number of employee due to the failure of the company to pick up well was an ethical case. It is true that the company had failed in its management. However, if an employee is just sent home after the company failure to pick, there would result in poor employee treatment, and this would cause a dilemma in the departments.  However, Starbucks workers were to lose their jobs because the company would not have operated that way with a massive loss each day. The theory can be applied to mean that the company dropped some of the employees to meet the “greater good,” for the organization.

Another ethical theory that Aristotle and Plato formulated in the fifth century B.C. is the Justice-Based Ethical Theory. The theory was later modernized by John Rawls (Weiss, 2014, p.91). This theory has its major components as equity, fairness, and impartiality. It reflects that any action taken should ensure fair treatment of the individuals and groups that are victims of the action. This theory has the ultimate question in; processes by which decisions are made, and the outcomes of the decisions, are they equitable and fair? Starbucks did unfair action by closing down the businesses they had just ventured in, which rendered the already deployed workers unemployed. This was a breach of the employment contracts it had entered with its workers. This action has lowered the reputation of the company in the market hence its image was lowered in the face of the new market such that even in future times it may not be able to convince customers that the company is a reliable employment organization.

When the manager of the Starbucks company appeared before the media in the year 2016 and was talking about the situation of the company, he mentioned things to do with the rights of the employee that should be respected by the organizational leadership (Crane & Matten, 2016, p.76). Among these rights are the right of speech, privacy, expression and many others to which individuals are entitled.  Rights based theory asserts that the employee rights should be held with care.  An employee right to privacy for example in Starbucks which is a big organization with diversified employees; there are people who claim their right to privacy, over their background, their personal life. The management team should honor these rights for ethical reasons. Some cultures like the Australian culture demands that one’s personal rights should be respected. Failure to which, there is breakage of ethical values of the person disrespected.  The company, therefore, faces a lot of dilemma over the employee it recruits. When some questions like one's location, the personal earning history, the marital status and the exact area of location, some people claim to hide some of this information for a reason based on their rights. The company, therefore, ends up in ethical dilemma. In this ethical issue, the theory campaigns for the principle based on acting in a way in which one should be happy if everyone in the same situation would act the same.

Utilitarian Ethical Theory and its impact on Starbucks

The concepts of the managerial ethics are of great significance for the managerial practices. One of the reasons is that, they set the tone of work in the organization on the top (Kadushin, & Harkness, 2014, p.211). The board of management at diverse organizational levels are in a position to demonstrate proper ethical values in work places through the way they give directions, how they perceive their employees, the behavior they seem to possess and the integrity they portray in supporting the functions of the organization internal and external control. The reason is that ethical managerial ethics offers guidelines on the decisions the organizational management seeks to make and also in the implementation processes of the organization. Due to the ethical values upheld in the organization, the company managers would be in a position to evaluate the pros and cons of any decision that is made in the organization. Issues like the change and change management are well taken into account by the ethical standard and values. For instance, when Starbucks company wanted to withdraw its expansion in Australia, it was to observe the ethics of management. It was supposed to consider its employee and know how to handle each case. It would not be proper just to let the employees go anyhow after an immediate termination of job contract. The company was criticized all over in the Australia as many of its employees were left uncompensated. The theoretical knowledge on ethical values would help the managers in carrying out different organization activities by employing the favorable strategies.

The theoretical concepts influence the process of managerial practices through addressing the deviations of the entities (Patton & McMahon, 2014, p.264). The expected standards of conduct are identified and are also remedied on expected time and in a consistent manner. When the ethics of work are laid in place, for instance, the ones that pertain time, effective codes of conduct for the members are likely to follow the laid instructions of the organization (Fayol, 2016, p.67). The organization is properly driven and supported by a culture that encourages employees to consider the principles of integrity to do the right thing and at the best time expecting minimal supervision and under the prevailing circumstances. When the theoretical knowledge in managerial practices are evaluated and considered, the managing team is in a position to evaluate the conducts of the employee and act upon assisting them to improve or campaigning for the change.

The justice based ethical theory influence the way the company managers manages the Human Resource Department. The theory engages the managerial practices towards equity, fairness, and impartiality in treatment of the employee. The principle of this theory asks for the equality of the workers as any worker in the organization should be considered to be important as the other. There should be fairness in sharing of the tasks, allocation of duties and also in incentives allocation as well as when it comes to motivation. Justice in an organization demands that the employer and the top managers should be keen when making promises to the employee. Justice calls for meeting all these promises as agreed. Failure to which, there is breakage of psychological contract of the employee and the employer. All these results to poor performance in the organization. When the justice based theory is maintained and observed, the organization works as a team, and the process runs smoothly. Impartiality is fought by the principles of this theory regarding diversity and accommodation of all kinds of people. Justice seeks to answer the question, “Are the decision processes adapted equitable, impartial and fair to the organization and the workers?"

Justice-Based Ethical Theory and Ethical Decision Making in Organizations

Managerial practices can either be favorable or unfavorable depending on the type of leadership chosen by the business (Wood & Wilberger, 2015, p.160). Favorable managerial practices will enable the business grow bigger and increase its services while unfavorable managerial practices will lead to poor performance of the business and may also lead to the collapsing of the business completely. Managerial practices can be affected or influenced by the theory applied in management for instance Right-based ethical theory developed by John Locke where he mainly based his argument on the belief in the natural goodness of humanity. Communicating clearly is one of managerial practice which will influence the leadership positively. This is because all the information communicated to the employees is well received thereby the action in reference to the information given is correctly performed. Failure to communicate clearly will on the other hand lead to poor completion of the task required in the business because the employee may have heard something different from what is implied and this will therefore to business failure. Selection of the right people in the business in this case the selection the right employees will make it easy for the manager to lead the business well. This is because the employees will be easily monitored under a very minimal supervision since they are guided by the principle that no force from the above should be subjected to them for all the tasks and services to be performed well (McCabe, 2014, p.129). The employees will also work as a team thus causing no friction or rift among themselves which will reflect to fruitful business. Selecting the wrong team on the other hand will result to the business failure since the employees will not co-operate because working as a team will be a big problem.

Virtue-based theory in ethical dilemma has a very effective application (Kaptein, 2017, p.78). It is at most times used to define ‘what to be done,’ ‘where it should take place’ and ‘what time should it take place or the time it should be done.' The theory influences the managerial practices in that, what to be done by specific people at a particular period is carried out as per the guidelines. The theory also does not establish a rule system in the organization. In fact, it emphasizes that people in an organization, such as Starbucks should develop a culture of having internal drives towards doing things that are right to one’s conscience. One’s self-behavior should be unquestionable by the organization management as well by the customers expecting the services provided.

Any organization that has had a problem in the managerial ethics in its operations needs to adopt an ethical framework to review its system so as to avoid the demerits of poor ethical observation by the management (Weiss, 2014, p.213). Even after a failure in its operations, an organization is at a position of improving or changing its operational procedures to fit all the requirements for the stakeholders without disadvantaging any participant. The managers are human beings, and human beings are capable of changing and therefore failing to act ethically should not be treated as ethical flaw. Leaders should observe that they make ethical decisions as well as leading ethically in the day to day interactions with people in the organization. The leaders ought to keep aside their egos for the benefit of their area of operation, for the priority of the people under their service and the better of the community. Good leaders should also take criticism or challenge to their opinion positively and embrace differing opinions from other parties. Leaders should also discuss and make consideration of ethical issues of the culture of the people or community where the company operates so as not to interfere with their body of beliefs. Another important part of ethics observation by the leaders lies in the understanding of leadership power and how to exercise it without causing interruptions in the smooth running of the organizations (Fichman, Nambisan & Halpern, 2014, p.120). They should never abuse it or use it for purposes not benefitting the organization or the society around.  A leadership force that respects everyone in the organization, observes integrity, makes decisions for the sake of the organization or the community around, acts in a manner that the entire team trusts it, empowers the employees to achieve their best and builds a block community that upholds support, fairness and encouragement is the best for the wellbeing and progress of an organization.

References

Pollock, J. M. (2014). Ethical dilemmas and decisions in criminal justice. Nelson Education.

Braswell, M. C., McCarthy, B. R., & McCarthy, B. J. (2017). Justice, crime, and ethics. Taylor & Francis.

Ford, R. C., & Richardson, W. D. (2013). Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer Netherlands.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Cherry, B., & Jacob, S. R. (2016). Contemporary nursing: Issues, trends, & management. Elsevier Health Sciences.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.

Grant, P., Arjoon, S., & McGhee, P. (2016). Reconciling Ethical Theory and Practice: Toward Developing a Business Ethics Pedagogical Model. Business and Professional Ethics Journal.

Pycroft, A., & Bartollas, C. (2014). Applying complexity theory: Whole systems approaches to criminal justice and social work. Policy Press.

Fichman, R. G., Nambisan, S., & Halpern, M. (2014). Configurational thinking and value creation from digital innovation: The case of product lifecycle management implementation. In Innovation and IT in an International Context (pp. 115-139). Palgrave Macmillan UK.

Fayol, H. (2016). General and industrial management. Ravenio Books.

Kadushin, A., & Harkness, D. (2014). Supervision in social work. Columbia University Press.

Wood, V. R., & Wilberger, J. S. (2015). Globalization, Cultural Diversity and Organizational Commitment: Theoretical Underpinnings. World, 6(2), 154-171.

Kaptein, M. (2017). When organizations are too good: Applying Aristotle's doctrine of the mean to the corporate ethical virtues model. Business Ethics: A European Review.

McCabe, S. (2014). Quality Improvement Techniques in Construction: Principles and Methods. Routledge.

Patton, W., & McMahon, M. (2014). Career development and systems theory: Connecting theory and practice (Vol. 2). Springer.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.