Current Ethical Issue in Business

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Current Ethical Issue in Business
Angela Fraley, Jill LaLonde, Susan Kunz, Klay Gardiner
PHL 323
Aubrey Weekes
October 17, 2011

Current Ethical Issue in Business
Several factors account for the changes in the way business is conducted today. Factors such as increased global competition, economic conditions, technology, electronic commerce, workforce diversity, and ethics have played a significant role in how business is conducted. How a company conducts itself as a business and a corporate citizen is critical to its success. Investment clients of Mr. Madoff operated using both relativistic and entitlement ethics systems. Within the trading business, many organizations exist to monitor and hold traders accountable. The financial system in the economy is not well, which makes this a scary situation thinking that it could happen more. Mr. Madoff did not have the best interest of those he was working with in mind as he just was looking out for himself and making large amounts of money. Ethical business behavior, “behavior that is consistent with the principles, norms, and standards of business practice that have been agreed upon by society” (Trevino & Nelson, 2007, p. 19) is necessary to maintain order and progress within society. The ethical system at work with Bernard Madoffs scheme was an entitlement-based ethics system. Mr. Madoff showed little to no regard for others affected by his actions, yet focused totally on his own best interest. He “ran the business along antediluvian lines: clients and feeder-fund managers were denied online access to their accounts” ("Economist,” 2011). The level of secrecy was irresponsible and deceptive, leaving his clients in the dark about the unethical decisions made. Mr. Madoff’s investment clients operated using both relativistic and entitlement ethics systems. Although many were advised against investing because the suspicions of wrongdoing, few spoke up, going along with the elements of self-interest and what others were doing in the investment community. Investors who were aware of Mr. Madoff’s inappropriate dealings did not seem to mind because “they thought he might be trading illegally for their benefit” ("Economist," 2011). Within the trading business, many organizations exist to monitor and hold traders accountable. Advisory firms and quantitative-research firms had identified red flags in Mr. Madoff’s business strategy, few listened. The trading business itself turned a blind eye choosing greed and profit over transparent honesty. Due diligence was disregarded and the Securities and Exchange Commission failed to monitor Mr. Madoff’s business despite complaints from many sources. Had Mr. Madoff’s dealings been monitored and his business practices screened by financial firms, the negative impact could have been reduced. As it stands, the alleged fraud may have a price tag of more than 50 billion dollars, numerous lives of investors and their families are impacted and the court system will be occupied sorting through the expected litigation. In this case, Mr. Madoff’s investors in addition to the industry management organizations had a responsibility to be engaged with the business. Did the investors ask questions about the business strategy before decided to align with Mr. Madoff? Did they insist on information sharing and transparency about the business decisions made? Did the managing organizations evaluation Mr. Madoff’s performance? Was there a disciplinary strategy in place to manage the wrongdoing? Everyone involved had a responsibility to behave ethically; problem is each group appears to have been operating from different ethical systems. Ethical dilemmas can be destructive to organizations if the business is not aligned, accountable, and operating within the agreed upon behavior and decision-making criteria. The application of these ethics has a far reaching effect on individuals, organizations, and society. The positive...
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