Businesses are expected to conduct themselves in an ethically acceptable and socially responsible manner. They must operate in an environmentally and socially responsible manner for the benefit of the local community and society at large. However, when these enterprises lack sophisticated policies on ethics and social corporate responsibility, the employees may engage in practices that evoke ethical dilemmas. This issue occurs when a choice must be made between two options, none of which is ethically acceptable in all circumstances. Even though organizations experience a variety of moral and ethical issues among the employees in the workplace, they can always strive to employ effective solutions out of the multiple choices that they have so as to benefit every stakeholder without exploiting anyone. Therefore, this paper seeks to analyze the ethical issues in the case of Madoff while highlighting the best alternative causes of action to end the fraud issue in the company through a reasoned argument.
According to the PBS documentary (2009), Michael Bienes, Madoff’s accountant, was caught in an ethical bind and failed to take the necessary precautions to avoid becoming a victim of the scene. Various ethical difficulties occurred as a result of the Madoff investment scam, many of which were in violation of corporate ethics. Fraud was one of these difficulties. Fraud is not expected of businesses because it is not only against the business’s best interests but against the law. When Madoff and his team committed fraud, they not only violated the ethical obligation they owed to organizational stakeholders, but they also broke the law.
Framework for decision making
Understanding how individuals make organizational decisions is necessary to improve ethical decision-making in business. Ferrell (2021) did research stating that people in organizations are frequently presumed to define ethical decisions in the same manner they would at home or in their personal life. However, the research also states that few individuals have the freedom to make ethical decisions independently of the company and its stakeholders within the context of an organizational work group. In order to make an ethical decision, one has to follow certain steps, which include recognizing the ethical issue. For instance, in the Madoff affair, locating the aspect of the issue at hand should be the beginning of the liberation process (Pressbooks 2016). Highlighting fraud as an ethical problem enables people to handle it as an ethical threat, drawing ethical views and decisions to tackle it.
Consequently, getting relevant information and determining ethical principles form the basis of the second step in the ethical decision-making process. Given that ethical concerns frequently occur as a result of a lack of sufficient information or proof, as well as conflicts over the facts, adequate information is key in identifying the needed facts. This aids in the resolution of some problems while laying the groundwork for a successful procedure in others. This step necessitates a review of the nature and extent of the identified ethical principles, as well as deliberation about the relative weights to be assigned to them (Pressbooks 2016). The decision-making process is then guided by the prioritized set of principles that have been agreed upon.
The third step involves the formulation of sophisticated actions toward the problem. It promotes brainstorming and introspection about a variety of potential alternative courses of action. At this stage, attempts are made to identify the possible causes of action. Each option’s advantages and disadvantages are examined, and those that are compliant with applicable laws and policies are highlighted. Options must be in line with the organization’s goals, vision, and values. According to Brown University (2022), there are different ethical theories and methods of thinking about right and wrong conduct, as well as good and poor character. These theories include the utilitarian approach, which encourages individuals to consider the varying amounts of good and harm that will be produced by their acts and chooses the best action that addresses the given situation. For instance, in this case, relieving Michael of his duties would be the least harm to the company’s reputation.
On the other hand, the rights approach advocates for the actions that serve the rights of the affected individuals. And in this capacity, Michael should be compelled to pay for the damages caused by his actions to all the stakeholders, including being jailed. The third approach is the justice approach which advocates for fair treatment without any form of favoritism or discrimination. In this capacity, Michael should be judged without considering his position or relationship with the management. The other approach is the common good approach which entails the practice of activities or policies that benefit not only a specific set of people but society as a whole. It is regarded as the best option for achieving positive and useful outcomes. For instance, in the Madoff affair, the victims that were affected by the fraudulent acts of Michael should be compensated. In order to repay these stakeholders, various assets, revenues, and accounts linked to Madoff Investments should be used to fund the aggregated.
Lastly, the virtue approach can be employed to reach the best decision in this case. It assumes that there are some ideas toward which individuals should aspire that will allow them to reach their greatest potential as human beings. The theory emphasizes the relevance of education and training, as well as acting as role models in maintaining ethical standards by engaging in activities that strive to eliminate ethical discourse in the organization.
Making Decision
According to Ohio University (2021), People intuitively believe that the more options they have, the better their chances of choosing the best option to meet their needs. This intuitive notion, however, seems to be a fallacy: the more options individuals have, the less likely they are to make a decision. Therefore, after carefully analyzing and considering the many options, a decision must be made that best addresses the circumstance. With the various actions available to take against Michael for the practice of fraud. The best decision would be to relieve him from his duties and sue him for the damages caused by the fraud. This action is the key determinant of the later outcomes that the company will enjoy, whether positive or negative. Implementing the above decision is advised for the most ethically justifiable option found in the previous steps.
Outcome of the Action
It’s easy to get caught up in the outcome while thinking about what constitutes a good decision. In reality, every decision involves some level of risk. There are no guarantees when it comes to outcomes. The quality of a decision may not be directly reflected in the decision’s outcome. As stated in the PBS documentary (2009), Madoff was eventually apprehended, and the creditors were paid for the services they had provided to Madoff Investments. This is critical to serve as an example to the other members of staff, who may also have such behaviors. Moreover, this action builds trust in the investors, creditors, and other stakeholders of the business, thereby building the company’s positive reputation. The unintended outcome of the action would be the suspicion on the competency of the management and the company’s laid down techniques in managing ethical issues. Therefore, in response to the unplanned consequence, the company should strive to outline well-stated and defined ways of mitigating unethical behavior. Moreover, the company should change its mode of management and employ top-level managers who exhibit high competency levels.
References
Brown University. (2022). A framework for making ethical decisions | science and technology studies. Web.
Ferrell, O. C., & Fraedrich, J. (2021). Business ethics: Ethical decision making and cases. Cengage Learning. Business Ethics: Ethical Decision Making and Cases – O. C. Ferrell, John Fraedrich, Ferrell – Google Books
Ohio University. (2021). 3 Ethical decision-making frameworks. Web.
PBS documentary. (2009). The Madoff Affair: Inside the world’s first global Ponzi scheme – and how he got away with it for so long (Season 2009, episode 10) [TV documentaries]. Public Broadcasting Service. Web.
Pressbooks. (2016). 2.3 Identifying Ethical Issues – Exploring business. Web.