UNIVERSITY OF LA VERNEVAFB, CALIFORNIAECBU 346BUSINESS COMMUNICATIONFEBURARY 12, 1997BY DOUG RONINGFrom a business perspective, working under government contracts can bevery lucrative.
In general, a steady stream of orders keep coming in, revenueincreases and the company continues to grow. There are a few obvious downfallsto working with government contracts; a higher quality is to be expected as wellas extensive research accompanied by accurate and complete documentation areusually required. If one part of the process fails to perform correctly it cancause minor flaws as well a problems that can carry some serious repercussions;For example the case of the failed computer chip at Company X. When both theemployee and company are found at fault, the question arises of how extensiveshould the repercussions be? Is the company as a whole liable or do you lookinto individual employees within that company? From an ethical perspective onewould have to look at the available information of both the employees and theirsuperiors along with the role of others in the situation. Next you would haveto analyze the final outcome from a corporate perspective and then examine thecorporate responsibility as a whole in order to find a resolution for cases suchas this. The first mitigating factor involved in the Company X case is theuncertainty, on the part of the employees, on their duties that they wereassigned.
It is possible that during the testing procedure, an employeecouldn’t distinguish between the parts they were to test under governmentstandards and commercial standards. In some cases they might have even beenmisinformed on the final product that they tested. In fact, ignorance on thepart of the employees would fully excuse them from any moral responsibility forany damage that may result from their work. Whether it is decided that anemployee is fully excused, or is given some moral responsibility, would have tobe looked at on an individual basis.
The second mitigating factor is one of threats that an employee mightsuffer if they do not follow through with their assignment. After the bogustesting was completed in the Company X labs, the documentation department alsohad to falsify documents stating that the parts had more than met thegovernments testing standards. From a legal and ethical standpoint, both thetesters and the writers of the reports were merely acting as agents on directorders from upper management. The writers of the reports were well aware of thesituation yet they acted in this manner on the instruction of a supervisor.
Acting in an ethical manner becomes a secondary priority in this type ofenvironment. As stated by Alan Reder, if they the employees feel they willsuffer retribution, if they report a problem, they aren’t too likely to opentheir mouths. (113). The workers knew that if the reports were not falsifiedthey would come under questioning and perhaps their job would be in jeopardy. Although working under these conditions does not fully excuse an employee frommoral fault, it does give a starting point to help narrow down the person ordepartment that issued the original request for the unethical acts.
The third mitigating factor is one that perhaps encompasses the majorityof the employees in the Company X case. We have to balance the directinvolvement that each employee had with the defective parts. Thus, it has to bemade clear that many of the employees did not have direct involvement with thetesting departments or with the parts that eventually failed. Even employees,or sub-contractors that were directly involved with the production were notaware of the ignorance on the part of the testing department. For example, theelectrical engineer that designed the defective computer chip could have statedthat it was tested and it did indeed meet the required government tests.
Also,for the employees that handled the part after the testing process, they weredealing with what they believed to be a piece of equipment that met governmentstandards. If the part was not tested properly, and did eventually fail, isn’tthe testing department more morally responsible than the designer or theassembly line worker that was in charge of installing the chip? In largecorporations there may be several testing departments and in some cases one maybe held more responsible than another depending on their involvement. A processlike this can serve as a dual purpose for finding irresponsible employees aswell as those that are morally excused. The fourth mitigating factor in cases of this nature is the measure ofthe seriousness of the fault or error caused by the product.
Since Company Xwas repeatedly being added to the list of approved government contractors, onecan safely assume that the level of seriousness, in the opinion of thecontractor approval committees, is not of monumental importance. Yet a personhas to wonder how this case would have been different if it caused the loss oflife in a military setting. Perhaps the repercussions would have taken effectmuch faster and been more stringent. The fact that Company X did not cause adeath does not make them a safe company. They are still to be held responsiblefor any errors for which their products cause, no matter the extent.
As for the opposition to the delegating of moral responsibility,mitigating factors and excusing factors, most would argue that the corporationas a whole should be held responsible. The executives within a corporationshould not be forced to bring out all of the employees responsible. A companyshould be reprimanded and be left alone to carry out its own internalinvestigation and repercussions. From a business law perspective this is theideal case since a corporation is defined as being a separate legal entity. Furthermore, opposition would argue that this resolution would benefit both thecompany and the government since it would not inconvenience either party.
Theoriginal resolution in the Company X case was along these lines. The governmentpermanently removed Company X from its approved contractors list and thenCompany X set out to untangle the web of wrongdoing from within. This allowedfor a relatively quick resolution as well as an ideal scenario for Company X. In response, one could argue that the whole corporation has no morals oreven a concept of the word. A corporation is only as moral and ethical as theemployees that work for it. All employees, including top ranking executives areworking towards the advancement of the company as a whole.
All employees,including the sub-contractors and assembly line workers, are in some partmorally responsible. Every employee should have been clear on their employmentduties and aware of which parts were intended for government use. Uncertaintyis not an excuse for moral responsibility in the case of the workers. Also, thefact that some employees failed to act in an ethical manner gives even moremoral responsibility to that employee. While some are definitely more morallyresponsible than others, every employee has to carry some burden of weight inthis case. In fact, when the government reached a final resolution, theydecided to further impose repercussions and certain employees of Company X werebanned from future work in any government office (Velazquez, 54).
Looking at the case from the standpoint of Company X, the outcome wasfavorable considering alternate steps in which the government could have taken. As explained before, it is ideal for a company to be able to conduct its owninvestigation as well as it’s own punishment. After all, it would be best for acompany to determine what specific departments are responsible rather thanhaving a court of law trying to decide which employee is to be blamed. Yet,since there were ethical issues of dishonesty and secrecy involved, Company Xshould have conducted a thorough analysis of their employees as well as theirown practices. It is through such efforts that a corporation can raise theethical standard of everyone in the organization.
This case brings into light the whole issue of corporate responsibility. The two sides that must ultimately be balanced are the self interests of thecompany, with main goal of maximum profit, and the impacts that a corporationcan cause on society (Sawyer, 78). To further strengthen this need, one couldargue that there are very few business decisions that do not have an affect onsociety in one way or another. In fact, with the vast number of growingcorporations, society is being affected on various fronts; everything from watercontamination to air bag safety is becoming a major concern.
Every decisionthat a business makes is gauged by the financial responsibility to theircorporation instead of their social responsibility to the local community. Thiswas pointed out on various occasions as the main reason why Company X falsifiedtheir reports. The cost of reingineering of the defective part did not outweighthe loss of business. In the opinion of the executives, they were acting in asensible manner. After all, no executive wants to think of themselves asmorally irresponsible. The question that naturally arises, in debating corporate responsibility,is what types of checks and balances can be employed within a company to ensurethat a corporation and all of its agents act in an ethical manner.
Taking theexample of the Company X case, one can notice many failures in moralresponsibility. Company X would have to review its employees, particularly thesupervisors, for basic ethical values such as honesty. For example, ultimatelyit was the widespread falsification of the testing documentation that caused thedownfall of Company X, not the integrity of it’s imployees. In the outline ofthe case it is never mentioned that the employees initiated this idea, it wouldseem that it was the supervisors that gave the order to falsify the documents.
Through open communication, a company can resolve a variety of its ethicaldilemmas. As for the financial aspects of the corporation, it has to decidewhether the long term effects that a reprimand can have outweighs their bottomline. In other words, corporations have to start moving away from the thoughtof instant profit and start realizing both the long term effects and benefits. These long term benefits can include a stronger sense of ethics in the workforce as well as a better overall example to society.
In conclusion, I agree with the use of mitigating factors in determiningmoral responsibility. A company, as defined by law, is only a name on a pieceof paper. The company acts and conducts itself according to the employees thatwork for it. I use the word employee because in ethical thinking there shouldbe no distinction of rank within a company. There are times when executives canbe held directly responsible and at the same time, there are cases whereemployees are acting unethically without the executives knowing.
Neither titleof executive or employee are always morally perfect. Therefore, when a companyhas acted irresponsibly, its employees must be held liable in a proportionateamount. As for the future of ethics in business I would speculate that ifemployees started to think more in long term benefits and profits, many of theethical dilemmas that we face today would be greatly reduced. As mentionedbefore, businesses today uses the measuring stick of profitability.
We need tostress the importance of placing ethical weight on all major business decisions. Opponents would argue that this is a long term plan that require toomany radical changes. Also, there is no way that an industry wide standard canbe set due to the vast differences in corporations. In response, I would argue that although there are no industry standardsthat are feasible, but it is possible for every company to examine theirpractices as well as the attitudes of their employees. There will be a numberof companies that will defend that are doing all they can to make sure theiremployees are aware of their moral values. Yet other companies will find thatthey do have areas that need improvement.
It is steps like these that sparkchange in an organization. Once a few companies start to see the benefits, itcan help to encourage other companies to follow suit. After all, as seen in thecase of Company X, mistakes in one department can cause the deterioration of anentire corporation. When a corporation realizes the costs involved withdecisions such as this, the changes required to rectify are small in comparison.
Works CitedPava, Moses. Corporate Responsibility and Financial Performance. Quorum Books, March 1995. Reder, Alan.
In Pursuit of Principle and Profit. G. P. Putnams Sons Publishing, 1995. Sawyer, George.
Business and Society: Managing Corporate Social Impact. Houghton Mifflin Publishing, Feburary 1993. Velazquez, Manuel. Business Ethics: Concepts and Cases. Category: Philosophy
