Business Communication and Ethics
Business schools have been teaching students of basic theories for good management, but these theories resulted to bad management as well. Students are indoctrinated into using scientific approach theories and principles; and application of deductive reasoning that eliminates moral and ethical judgment (Gioia, 1992).
Students are taught not to trust their managers, to keep vigilant over their coworkers, and to maintain a competition not only with other companies, but also with their customers and employees (Ghoshal, 2005). As a result, some companies treated their employees badly while some conspire with them; and some acquired huge stocks. Tyco and Enron scandals have been one of the centers of controversies from fraud leading to bankruptcy.
The scandal caused by Enron fired up political issues knowing that the company has a strong tie to the White House. Rumors spread that members of Bush administration has something to do with the case. Investors too lost their confidence from Enron causing financial disrupt.
Ford Motor Company, on the other hand, obviously competed with their clients. In the 1970s, there were cases of accidents and deaths with their Pinto model. The company was earning a lot of money that time. They had produced the model domestically and there were competitions and demands. Ford was competing with other European cars and hurriedly came up with their own design. The production of cars was in fast pace with the minimum production of 2000 to maximize profit (Gioia, 1992).
The cars were selling and Ford was earning profit, but the accidents and death of their consumer got the attention of the media. There were also cases filed against the company by the victims including Lily Gray and the death of three women. To justify Ford’s cause, they adopted the use of risk/benefit analysis. In this method, the human life was given a value in monetary terms and the cost of sticking to the model was computed.
The method revealed that it would cost them $137 million against $49.5 million dollars of damages. They concluded that implementing a new model is not necessary, but the risk/benefit analysis that they used is unjustifiable. The value they put on human life is not reasonable. Besides, the method was used before only in a special case. The issue brought up debates and ethical concerns especially on the amount placed on human life. Others argued that it was very unethical.
It is argued that unrealistic claims, lack of communication and planning used in management can result to bad management practice (Ghoshal, 2005). The use of business model too that are monetary based are not reliable all the time. It must also include human judgment to measure issues that are not equitable to any amount. The lack of effective communication too between departments would lead company into resorting unnecessary means. It will resort to earning the public trust by giving unrealistic claims. Effective communication is very important in making internal decisions and once failed, it’ll continue into a chain reaction.
Gioia, who worked for Ford Motor, was assigned in the analysis of the safety of the cars and other functions. He was the one who gave recommendations for needed changes. He knew that in some point their cars can have potential damages for their costumers; but for a car business to stay on ground, change of design won’t be necessary. He was aware of some accidents and burned car that they had produced and he became very concerned to the safety of every person driving their cars. He knew of the evidences that would justify potential deaths of their latest model, Pinto. Much of the issue, the media and many people grew concerned over the defective cars that Ford was selling.
Gioia admitted that he failed to act on the fire problem of Pinto. He knew of the consequences, but they failed to communicate effectively (Gioia, 1992). Only he realized when he introduced the case to his MBA students. That was the time when everything started to fire back at him.
The pattern of business management has been through a lot of discussions and plans of revision. There are several reasons for changing so such as the scientific theme of theories and principles being taught to students. Philosophy of science points out that application of scientific principles to business denies the differences present in the two different fields of study.
Physical science focuses on the study of physics and biology that are explained merely though ‘causal mode’ which lacks the explanation on benefits, evolution, progress, human intentions and theology (Ghoshal, 2005). Through all these, physical science becomes a total opposite of the study of humanities, which dwell on social sciences such as economics, psychology and aesthetic disciplines. Besides, social sciences consider individual actions as a fundamental element, human intentions that are not bounded by any theory or principle.
The study of management makes use of statistics to estimate aggregate outcomes only, but it does not include intentions of persons involved. Human intentions, ethics or moral judgment are eliminated in any scientific theory. Human choices, experience and common sense are not included which causes ‘dehumanization’ of business management (Ghoshal, 2005.
Enron scandal at-a-glance. (2002). Retrieved 10 August, 2007, from http://news.bbc.co.uk/1/hi/business/1780075.stm
Ghoshal, S. (2005). Bad Management Theories Are Destroying Good Management Practices. Academy of Management Learning and Education, 75-91.
Gioia, D. A. (1992). Pinto Fires and Personal Ethica: A Script Analysis of Missed Opportuinites Journal of Business and Ethics, 11(5,6), 379-389.
Kadlec, D. (2002). Who’s Accountable? [Electronic Version]. Time
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Leggett, C. (1999). The Ford Pinto case: The valuation of life as it Applies to the Negligience-Efficiency Argument. Retrieved 10 Aug, 2007, from http://www.wfu.edu/~palmitar/Law&Valuation/Papers/1999/Leggett-pinto.html
Timeline of the Tyco International scandal. (2005). Retrieved 10 Aug, 2007, from http://www.usatoday.com/money/industries/manufacturing/2005-06-17-tyco-timeline_x.htm