Business Ethics Boeing Essay
Dealing with business is not as easy as 1-2-3. We also have to think about business ethics. Just like any other settings, the business setting also requires moral and ethical aspects. Business ethics comprise of principles and values that are applied in a ‘commercial’ context. Because of the moral and ethical issues that one might encounter in a business setting, business ethics have become an important part of the corporate world (“Business Ethics”, 2007). Overview of Business Ethics There are different kinds of business ethics that apply to the different aspects of business.
There is what we call general business ethics that can be used or applied to almost all the aspects of a business. There is also professional ethics which apply in specific areas of the business. Under the professional ethics are the accounting information ethics, marketing ethics, human resource management ethics, production ethics and ethics on intellectual property. General business ethics include corporate responsibility, corporate governance, industrial espionage, corporate manslaughter and many more.
Ethics regarding accounting information involve bribery, kickbacks, etc. Marketing ethics, on the other hand, involve price fixing, price discrimination, and content of advertisements, advertising strategies and many more. Human resource management ethics, of course, deal with employer
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Lastly, intellectual property ethics is all about the ownership of knowledge and skills of the employer and employees (“Business Ethics”, 2007). UNETHICAL PRACTICES AT BOEING Boeing is one of the most respected companies when it comes to the Airline industry. The company has been making planes for different airlines and even for individuals. Boeing is actually the largest manufacturer of aircrafts in the world. They have been producing commercial planes for different airlines and are also producing military aircrafts.
Because of this reputation of Boeing, they have also been a major service provider to NASA and their stocks are publicly traded in the New York Stock Exchange. The Michael Sears and Darleen Druyun Conspiracy In 2003, news broke about the firing of Boeing executives due to unethical practices. Michael Sears, then Chief Financial Officer of Boeing Co. was sentenced a 5-month imprisonment due to unethical practices. The case also involved Darleen Druyun, one of America’s greatest military contractors.
Before applying in Boeing in 2002, Druyun first worked at the military. Druyun has a very good reputation since she was the one dealing with billion dollar contracts with fighter jets, cargo planes and other services for the Air Force. Darlene was so much respected in the field that she has to be called the “Dragon Lady” because of her fierceness in dealing with those kinds of contracts (Farber, 2004). On the other hand, ex-CFO Michael Sears is also respected in his field. In fact, many expected him to be the next president of the huge aircraft company.
Despite their own reputations in their field they still did not manage to free themselves from the scandals. But what was really the story behind this Boeing scandal that ruined these two executives’ reputations and so as the aircraft company’s? Sears was said to have talked to Druyun about her transfer to Boeing while she is still working in the military. For some, this would not seem to be a bog deal but Druyun is the one responsible for a billion dollar tanker deal with Boeing and the military.
That time, the military was planning to lease 767 refueling tankers but the said plan was still on hold (Holmes, 2005). What really seemed to be unethical is that Darlene talked to Sears about her transfer to Boeing even before she left the military. What is worse is that Heather, Darlene’s daughter also talked to Sears about the retirement of her mother in the military. After they have been fired from Boeing when the company found out, Druyun was sentenced a nine-month imprisonment. However, the court can reduce the sentence if Ms.
Druyun cooperates with them in finding out other unethical practices at Boeing. Because of Druyun’s cooperation with the further investigation, Michael Sears was proven to commit conspiracy with Darleen Druyun regarding her job negotiations. Druyun also admitted that she has overstated prices on Boeing contracts so that Boeing would have more reasons to hire her. Because of this, a lot of Boeing’s rivals protested about the favorable opportunities given to Boeing by Druyun (Markon, 2004).
If the protests continue, it would cost the Pentagon a huge deal of money if the Defense department decides for reimbursement. If this happens, it will seem that the tax payers’ money will just go to waste because of the fault of some greedy people. Instead of the money adding to national security, hard earned money from the tax payers will just go to waste because of the personal intentions of these corporate thieves. It is very unethical for Druyun to overstate prices just to be in favor of Boeing.
With that, we can consider the overstatement of prices as an accounting ethical breach. What Sears and Druyun did can also be considered as an industrial espionage which is considered as an ethical breach. Industrial espionage is also known as corporate espionage. An industrial espionage is when documents, trade secrets and other confidential information are unlocked for commercial purposes or personal interests and not for national security. Industrial espionage is very common in the automobile industry especially when talking about government deals like the military.
Since Druyun disclosed confidential information about the bids in the tanker deal, we can say that it is very unethical for the two executives to conspire because both parties are involved in the said deal and it is unfair for the other bidders. Harry Stonecipher’s Office Romance Aside from the scandal of the tanker deal and the hiring of the military contractor, there are other practices at Boeing that were said to be “unethical”. One of them is the proven extramarital affair between former CEO Harry Stonecipher and an unnamed executive.
After Stonecipher admitted that he was really having an affair with the said executive, e was forced to step out of the office. Some argue if office romance be considered as an ethical breach in business since it involves the personal lives of the persons involved and not the business itself. There are still questions on whether the personal conduct of an employee be considered as standard in their performance in their job. According to Lewis Platt, former CEO of Hewlett Packard and the one who replaced Phil Condit after his resignation in Boeing, a CEO must act as a role model and must show professionalism.
Stonecipher was forced to resign because he is married and Platt did not think that he is showing professional behavior in the company. Technically, Stonecipher did not violate Boeing’s code of conduct but further investigation inside the company found out that Stonecipher’s capability to lead the company as CEO is questionable. This office romance is not new at Boeing at all. Ex-CEO Phil Condit married one of his secretaries and reportedly dated a receptionist in Boeing in 2003 There are actually no specific rules about office romances at Boeing especially those that involve executives and subordinates.
However, according to Boeing spokesperson Anne Eisele, ethics do matter a lot in the company. When the office romance scandal happened, Boeing hasn’t fully recovered yet from the conspiracy scandal of Sears and Druyun that is why they are very much concerned on how to rebuild the company’s reputation. According to John Dienhart, an ethics professional at Boeing, even of Stonecipher did not violate any specific rule or code of conduct, he did violate the spirit of the code where in you must not take actions that will put the company into a bad light (Holt, 2005).
Personally, I wasn’t sure if there really are rules about having an affair inside the office especially with bosses and subordinates. However, I think it is not morally right since the persons involved are in the corporate scenario and must show professionalism at all times. What made the act more unethical to the people is the marital status of Stonecipher. Also, he was the CEO at that time that is why I agree with Boeing that he should always take the lead and should be a role model to his subordinates.
I also agree with Dienhart that even though the former CEO did not violate a specific rule in the company’s code of conduct, he still somehow violated the spirit of the code that he should not, in any way, especially that he was the CEO that time, give a company a bad reputation. With all the scandals in Boeing, there are still people who think that these are not all the scandals inside the company. Because of the Sears and Druyun scandal, the government and the company itself are still looking for unethical behavior at Boeing. Why the Company chose to be unethical
With the case of Michael Sears and Darleen Druyun, the reason why the two executives chose to be unethical is because of their personal interests. Actually, we are not sure if the two executives are the only people involved because court evidences show that Michael Sears sent an email to other executives about the hiring of Druyun. There were also allegations that Sears even conducted an executive meeting about the transfer of Ms. Druyun to Boeing. With these, we cannot really say if the two executives are the only ones who have been unethical or the whole company.
Well, I think Ms. Druyun chose to be unethical because of her intentions in transferring to Boeing. She falsified some documents to make them favorable to Boeing which can make her more worthy in being one of Boeing’s executives. With Michael Sears, I think his intention is to put Boeing in a more reputable and higher position. If Boeing happened to win the tanker bid, Sears could be acknowledge for being the good Chief Financial Officer. On the other hand, the case of Harry Stonecipher and his unnamed executive mistress does not clearly show a reason for being unethical.
It is more of a personal matter that is why we cannot say why they chose that kind of act. But only one thing is certain, their being unethical is their own personal choice but the consequences also brought the company a bad reputation. References: Business ethics. (2007, July 24). In Wikipedia, The Free Encyclopedia. Retrieved 11:00, July 24, 2007, from http://en. wikipedia. org/w/index. php? title=Business_ethics&oldid=146683092 Farber, G. (2004). The boeing military contractor scandal. Retrieved July 23, 2007, from http://www.
windsofchange. net/archives/005101. php Holmes, S. (2005). What Boeing Needs to Fly Right. Retrieved July 20, 2007, from http://www. businessweek. com/bwdaily/dnflash/mar2005/nf2005038_1218_db042. htm Holt, S. (2005). Personal lives of executives under scrutiny. Retrieved July 22, 2007, from http://seattletimes. nwsource. com/html/businesstechnology/2002200140_boeethics08. html Markon, J. (2004). Ex-Boeing CFO Pleads Guilty in Druyun Case. Retrieved July 21, 2007, from http://www. washingtonpost. com/wp-dyn/articles/A51778-2004Nov15. html