Managing Change Ethically

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Managing Change Ethically
Argosy University Online
Ethics in Business

Managing change ethically has become a ubiquitous concern in organizations as they evaluate strategies to increase profit margins and remain competitive in their industry. Outsourcing and offshoring are common business methods used to manage economies. An increase in the use of outsourcing by U.S manufacturing companies in 2001 generated approximately 7.8 billion dollars in spending (Robertson, Lamin & Livanis, 2010). Although outsourcing and offshoring contribute to organizational gains by reducing costs, improving efficiency and increasing profitability, the Bureau of Labor Statistics reported in 2004, 60% of all layoffs entailed domestic relocation of business activities with outsourcing representing approximately 11% of all layoff actions and offshoring roughly 20% (Robertson, Lamin & Livanis, 2010). According to Argosy (2010), “outsourcing business operations requires careful ethical considerations that should include the interests of all stakeholders” p 2. Consumers and shareholders are more aware and sensitive to the ethical issues concerning these practices (Robertson, Lamin & Livanis, 2010). It is essential that key decisions regarding organizational change are weighed against its impact on the company’s stakeholders; employees, consumers, investors, and society (Robertson, Lamin & Livanis, 2010). According to Roberston, Lamin & Livanis (2010), “the perceptions of external stakeholders affect marketplace success. Attention to their concerns may help a firm avoid decisions that hinder objectives” pg. 169. From an ethical stance, we need to examine the most important issues concerning outsourcing and offshoring which are product quality, information security and labor conditions (Robertson, Lamin & Livanis, 2010). A decline in product quality is possible due to a reduction in management oversight (Robertson, Lamin & Livanis, 2010). Several years ago, Proctor & Gamble and Mattel experienced setbacks when Proctor had a major pet food recall involving Chinese producers and Mattel announced lead paint was discovered in some toys produced by a Chinese manufacturer (Robertson, Lamin & Livanis, 2010). Consumers and shareholders have a negative perception of recalls which can cause a firm’s stock price to fall due to lack of consumer trust (Robertson, Lamin & Livanis, 2010). Robertson, Lamin & Livanis (2010) notes that “corporations have an ethical obligation to produce quality products and services to meet the expectations of their stakeholders, the major constituents of any organization” p 170. Data security and privacy is a core concern with outsourcing and offshoring (Robertson, Lamin & Livanis, 2010). The ability to protect a customers’ information and ensure their privacy is extremely important. Due to a decrease in management controls, deterioration in information security is common with outsourcing and offshoring (Robertson, Lamin & Livanis, 2010). Technology professionals concur that security breaches are difficult to identify and physically protecting data at a foreign site is complicated (Robertson, Lamin & Livanis, 2010). There are additional risks in offshoring due to poor infrastructure and legal systems in various host countries (Robertson, Lamin & Livanis, 2010). As a result of the high costs associated with information technology controls and monitoring less than 20% of corporations audit security of offshore providers (Robertson, Lamin & Livanis, 2010). Security breaches are also perceived negatively by shareholders and consumers resulting in lost confidence in the organization (Robertson, Lamin & Livanis, 2010). Poor labor conditions and child labor practices produce the most unfavorable opinions in regard to outsourcing and offshore decisions (Robertson, Lamin & Livanis, 2010). Companies...
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