Moral justification of making profits

Sheryll May P. Briones

For every study claiming that ethical behavior pays, there will always be another claiming that it does not. The reality is nuanced. There are companies that have made money through moral indifference and companies concerned with social responsibility that have not made much money at all. Other firms have lost billions as a result of ethical miscalculations, just as some can attribute a proportion of profits to their moral character, or exist solely for it. The issues of profit, its moral meaning, justification and role, need careful examination. Mistakes to be avoided in making moral sense of profit include the assumption that profitability establishes company’s moral rectitude (Camenisch, 1987)

A business is any undertaking whose goal or was established to make a profit. Profits on the other hand is the excess of inflows over the outflows or simply the difference between the benefits obtained during the period over the sacrifices you’ve made. Simply speaking, business exists because of profit. Miksen (2015) said that a company’s ultimate goal is to gain and increase profits. Many companies grow profits ethically, while others maximize profits unethically via marketing frauds, slashing employee expenses, lowering product quality or impacting the environment negatively.

Questions involving moral justification for profits requires us to look into the definition of what values, morals and ethics are in relation to a business organization. How are values, morals and ethics different from each other? How do they relate to business and what has profit got to do with it. According to Mcnamera (2012), values are things that have an intrinsic worth in usefulness or importance to the possessor or principles, standards or qualities considered worthwhile or desirable. Values are driven by culture, religion, habit, circumstance or environment. From the definition of it, we may say that values are something good, but the definition of what is good or not is relative. Mujtaba (2005) further states that, values are core beliefs or desires that guide or motivate our attitude and actions. Moral values, on the other hand, are relative values that protect life and are respectful of the dual life value of self and others (Mcnamera, 2012). Morals are judgements, standards and rules of good conduct in the society. They guide people toward permissible behaviour with regard to basic values. Mjutaba (2005) defines ethics the branch of philosophy that theoretically, logically and rationally determines right from wrong, good from bad, moral from immoral and just from unjust actions, conducts and behaviour. Some people define ethics simply as doing what you say you will do or walking the talk. A person who knows the difference between right and wrong and chooses right is moral. A person, whose morality is reflected in his willingness to do the right thing, even if it is hard or dangerous, is ethical. Ethics are moral values in actions. Simply stated, values are professed statement of one’s beliefs, ethics is delivering on one’s professes values and morals are actions of good conduct as judged by the society that enhance the welfare of human beings.

A business with an understanding of values, morals and ethics, the management could then develop a framework for effective decision-making with formalized strategies.

In the perfect world, all business would be ethical (Ong, 2014). A business has an underlying objective to create wealth by meeting human demands at a profit. The survival of a business through the fulfilment of this objective is thus dependent on its ability to secure monetary gain. Ethical businesses recognizes the power of conducting business in a socially responsible ways and they realize that doing so leads to increases in profits and customer satisfaction and at the same time decreasing employee turnovers. However, among the key performance indicators of the best performing companies in the world, is financial rather than altruistic. These measures may lead to companies doing unacceptable means to achieve it such as slashing employee benefits, fake advertising and sacrificing quality. It shall also be noted that instilling ethical policies in the company involves or entails cost which would most likely lessen our gain.

Business ethics is concerned with applying a moral framework to the way organizations do business, from dealing with human resources issues to sales and marketing policies.  Ethics defines the good as being that which corresponds to the nature and the bad that which does not correspond (d’ Estaing, 2001). We may then conclude, ethically speaking, that there is a good and a bad profit. However, keep in mind that profit, in itself, is neither good nor bad for it is only the result of an activity you been involved to. The question on what is good or bad shall not be directed on profits but in the processes a company has undertaken to obtain it. Profits are just results.

Incorporating ethical frameworks into business has to be done with a great amount of respect and appreciation for others’ views. We shall give importance to respect. Stakeholders, consumers and employers, come from various social and economic backgrounds; therefore any attempt to institutionalize an ethical principle must be balanced with a sense of respect from other that you serve. Business ethics can thus be a fruitful venture for small business owners who are willing to take the time to incorporate ethical principles with care and patience.

Most ethical companies reinforce that ethics should take precedence over profits. They consciously think decisions through and are focused on the long term benefits. Unethical companies are typically focused on short term gains. They are typically followers. They are lacking innovation (White, 2014). Many of the ethical issues in profit maximization center on customers. Profit maximization dictates that you attract customers and create sales. However, ethics demands honesty and sometimes being honest in the short-run could make you miss sales.

There is a long list of potential intangible benefits available to firms that act ethically-including better commitment, ease of business improvements resulting from increased levels of trusts between businesses and stakeholders, avoidance of opportunistic behavior between owners and managers, employees’ moral satisfaction leading them to reduce their salary demands and strong moral identity attracting higher quality recruits.

Companies behaving unethically often lead to bad publicity and would fail to appeal to potentially high level customers at the same time higher quality staff. This will ultimately increase costs the company incurs.

According to Stolyarov II (2006), the goals of a life properly lived have two folds: survival and flourishing. Survival is the goal of sustaining one’s biological existence and prevents one’s downward slide toward poverty, ruination and death.Flourishing on the other hand is the extension of one’s control over external reality which is the ability to harness ever more elements in the service of one’s life. Simply stated, flourishing is your desire for growth and improvement while survival is existence.

In the process of living, every man will gain benefits from the external reality at the same time will be incurring certain expenses. If he breaks-even, then he has accomplished the goal of survival. Surviving results to no gain or a loss, but how long are we going to sustain this? As time goes by, without improving, the resources you have will gradually deplete. He is no worse than yesterday but at the same time he is no better off. In order to accomplish the goal of flourishing, he must have gains or profit. He must be able to utilize what he have in such a way that he would be better off tomorrow than yesterday and today. Flourishing is improving and we all seek improvement.

It shall be kept in mind that making profits is the only way to flourish. We could just not live to merely survive. We could not simply live, just for the sake of being alive. In life profits could come in different forms, they could be intellectual, physiological, technical, material social and monetary. Monetary profits has always been an issue in ethics. It has always raised moral dilemmas and conflicts. In the context of business, profits are said to be unethical if it is excessive or are obtained via unjustifiable means. When we say excessive, we are referring to profiteering, which involves making profits in times of scarcity.

Companies which ignore profit, or which do not pay attention to it, collapses (d’ Estaing, 2001). Businesses are establish with the purpose to earn it. It shall be emphasized that flourishing is one of the two goals in life, and businesses are no different from it. You cannot just establish a business just for the sake of existing. Consumer’s needs are always changing and a business needs to be better tomorrow than today to cope with it. Failure to do so may lead to a company’s collapse.

The problems with profits is not the profit itself. The problems is whether the outcomes justify the means. How were you able to obtain it? It is the process that should be questioned or the means that shall be criticized and not the profit itself. To have profit and to strive to flourish are inherent in all humans. The drive to be better than yesterday is innate. Harper (2001) said that what is ethical and unethical often depends on what part of the world you came from and your cultural or religious backgrounds, rather than universal.

The most sustainable companies seem to have a strong set of core values and an entrenched clearly defined purpose beyond profit. They understand why they exist, which takes precedence over how theyexist and drives what they sell to exists. They understand the importance of long-term thinking and the benefit of taking a broader view of what holds value to their business (Landolt, 2006). In other words, they are not blinded by short-term gains. They tend to think things through and plan every move in order for them to achieve it. Long term sustainability is not possible without being ethical. There may be short term gains for being unethical but sooner or later, the market will catch up. Build a long term relationship where customers know and feel that they are being taken cared of and that profit is not your only goal. With these, you would paradoxically be making profit.

In the biblical system of ethics, profit is godly if it is obtained in God’s way, and this means that not making profit may also be a in against God, one’s neighbor and oneself (Naselli, 2011). Profit maximization is a must for any business to survive and flourish in a competitive market. The problem lies with what you do to ensure profit. The way you do it shall be the one questioned for ethics.

Adam Smith established by rational valuation that profit making was an inherent part of human conduct as it worked itself out in the social environment of human culture. If human flourishing is moral, if improvement of individuals is moral, then so is the pursuit of profit. Profit, by definition, cannot be destructive in one’s life. Under laissez-faire capitalism everyman has sovereignty to decide the value he will assign to each type of profit. The ways he will pursue it and the exchanges he will make with other consenting individuals in order to flourish.

Ultimately, business always have the responsibility of profiting. Before we can expect businesses to be ethical, we need to accept the profiteering agenda underpinning all businesses and understand that ethical businesses can be a profit making strategy on its own terms (Ong, 2014). Thus if becoming ethical were so strategically beneficial, all businesses would have practiced it. So the strategic case for ethical business alone is insufficient. We need to have the right mix of strategy and morality.

In my opinion, Profit in itself is NEVER unethical nor is beyond the bounds of morality. All businesses are established to seek it. There cannot be a business whose ultimate goal is not profit. We all seek profit, we all need to flourish, to grow, to improve. The question on morality shall not be on profit and profit alone. What shall be questioned as to fairness and ethics, shall be the means, process the ways we have undertaken to earn it. 

References:

D’Estaing, O. (2001). The Ethics of Profit. Retrieved from: http://bahai-library.com/destaing_ethics_profit

Feloni, R. (2016). Is there such thing as “too much” Profit? Retrieved from: https://amp.businessinsider.com/there-is-such-thing-as-too-much-profit-heres-why-2016

Frank, R. H. (2004) What Price the Moral High Ground? Ethical Dilemmas in Competitive Environments. Princeton University Press

Harper, J. (2001). Business Ethics-A Contradiction of Terms?. The World of English. Retrieved from: www.woe.edu.plcontract/business-ethics-contradiction-terms

Joyner, B. E. & Payne, D. (2002) Evolution and Implementation: A Study of Values, Business Ethics and Corporate Social Responsibility. Journal of Business Ethics

Kokemuller, N. (n.d.) Ethical Issues in Maximizing Profit. Retrieved from: www.yourbusiness.azcentral.com/ethical-issues-maximizing-profit-25711.html

Miksen, C. (n.d.) Ethical Issues in Maximizing Profit. Retrieved from: www.smallbusiness.chron.com/ethical-issues-maximizing-profit-34328.html

Mujtaba, B. (2005). Understanding Ethics and Morality in Business. Smart Business. Retrieved from: www.sbionline.com/article/understanding-ethics-and-morality-in-business-there-are-distinct-differences-between-ethics-and-morality

Naselli, A. (2011). Are Profits Moral. Retrieved from: http://andynaselli.com/author/any-naselli

Salahi, A. (2006). Definition of Excessive Profit. Arab News. Retrieved from: www.arabnews.com/node/282026

Stolyarov II, G. (2006). Profit is Moral. Retrieved from; www.quebecoislibre.org/06/060813-2.htm

Weiss, A. (2013). The Purpose of Business. Retrieved from: www.contrarianconsulting.com/the-purpose-of-a-business

Nepotism in the workplace is a moral issue

Myka Renzie A. Siababa

Introduction

In an organization, fairness is the most basic theme in running a business and treating its employees. This is to implement professionalism and effective management in their respective workplace. However some businesses do not consider the word “Fairness” in some ways and it may affect the behavior of the employees on how they treat each other, how they work with other co-workers and on how they perform their responsibility as an employee in the organization.

One of the practices in the organization that can cause unfair treatment of employees is nepotism. Having nepotism is not new phenomenon in the business industry and politics, this unfair practice by a powerful person of giving jobs and other favors to relatives may hurt the company or mistreated the employees. Such management behavior or practice is already considered as immoral because they give undue advantage to someone who does not necessarily merit this treatment. But, if they practiced it properly nepotism can be a true asset in an organization. According to a One Business Week story they noted that family-run businesses can have lower employee turnover rates as specific managerial values are passed down from generation to generation. Some businesses encourage hiring qualified relatives and spouses, with idea that good people tend to associate with good people.
In this article it will identify what is nepotism, determine the possible advantages and disadvantages of nepotism in the workplace and explain if nepotism in the workplace is a moral issue.

WHAT is NEPOTISM?

Wheatley (2016) defines Nepotism as the practice of those with power (perhaps your boss or manager), showing favoritism towards friends or family; usually by way of giving them a job or benefits. According to her originally, nepotism meant favoritism of family members, but today it has a much broader meaning.She said that In the workplace this could mean favoring members of staff because they’re friends, relatives or they just really like their personality; as a result they’re offered better opportunities. 

Abun, (2014) defines nepotism in two ways : the relative nepotism and the friend nepotism. According to him relative nepotism as a common practice everywhere to hire, save, prioritize and promote the relative first before anyone else while the friend nepotism is a management behavior that is giving special attention to friends. He considered it “inner circle of influence” to the management and they are the priority of the management. He defined Connection nepotism as a practice to give a special treatment to persons who have connection with the management, be it political connection, sports activity/hobby connection, and many others. He said it may seem to be unimportant but often time such connection influences management for special treatment. In Contribution nepotism he refers to the practice in which management gives a special treatment to persons who have contributed something to the achievement of the management while this practice may not be totally bad but it should always consider the total whole. He determined that the performance of the management is a contribution of all people working for the organization because all works are interrelated and thus evaluation to the level of contribution must be done to determine how much each one has contributed to the organization.The origin of the term “nepotism” came from Catholic bishops who would bequeath wealth, property, and priesthood to their “nephews?” The nephews were usually their illegitimate offspring, and it served as a way for church clergy to both own property and to retain power in their families by (Bellow, A. 2003) and (Jones, R.G. Ed., 2012).

If you say nepotism it gives negative response in other employees and in the organization because of favoring and hiring relatives and friends. It usually manifests itself in the form of negative practices like undeserved promotions to the relatives or close friends who are employed and workers getting jobs that are not qualified in the position.Nepotism in the workplace can decrease motivations to the hard-working employees who are professionally performed their respective jobs well but they didn’t benefited on the way they give effort. In this matter the relationship with the person (relative or friend) who receive merit without any hard work and the hardworking employees may create barrier between them due to unequal treatment in the management which may involve difficult conversation and it may lead to conflict with their works.

Today, nepotism refer to the hiring or promotion of a family member (including in-laws), and it smacks of favoritism. Indeed, the hiring of relatives in some companies is forbidden by company policy more on the government services. Umali (2015) identified the nepotism in the Philippines government as A general knowledge on the laws and rules governing nepotism is very critical to all Philippine government officials, as it is an inherent trait of Filipinos to take care of their kamag-anak first, like in the appointment or designation of officials or employees in the government service. Section 59, Book V of the Administrative Code of 1987 provided the parameters on the rule of nepotism. Thus, it states that:  “All appointments in the national, provincial, city and municipal governments or any branch or instrumentality thereof, including government-owned or controlled corporations, made in favor of a relative of the appointing or recommending authority or the chief of the bureau or office, or of the persons exercising immediate supervision over him, are hereby prohibited.” In family business, nepotism is not that harmful in the organization the reason is they can help each other to make their business successful and they can manage it well. So, the big question is whether nepotism in business is a good or a bad thing? Here are the advantages and disadvantages of nepotism in a workplace.

Advantages of Nepotism in the Workplace
 ·         In hiring friends or relative in an organization can create a friendly and pleasant working environment. Friends and family may bring many useful skills to your business.
 ·         You already know the capabilities of your relatives and close friends. This will let you assign just the right tasks to each person, based on their individual strengths and weaknesses. However, only hire friends or relatives that you are sure are qualified for the position. So that it cannot lead problems in the workplace. 
·         Friends and family may already be familiar with your company and how it works. You wouldn't need to spend as much time training new employees with the aims of your company. 
·         Hiring your children can also bring special advantages. Your company will have another capable employee, while your family will be earning extra money. There may also be tax advantages to hiring your children.
 ·         Family members and close friends enter a business agreement with you already possessing a strong commitment to you as an individual, and, most likely, to your company. Because of this, they may be more willing to work longer hours (such as evenings or weekends) when necessary.
 ·         Family members are usually very dedicated resulting in lower turnover. There is a higher level of commitment since relatives want to see the company succeed. Loyalty, morale and trust are also high. 
·         In treating employees between relatives and ordinary employees you should treat them fairly to avoid complication with other employees. Also, to implement professionalism in workplace and to perform their respective jobs well.Promote an employee solely based on how qualified he is to perform the job, not because of a personal relationship. Otherwise, his promotion will appear unfair to other employees who are more qualified to perform the job. 

Disadvantages of Nepotism in the Workplace
 ·         It may also negatively affect your business if you didn’t use it right. Hiring friends and family may allow for familial disputes and interactions to negatively affect the way your business runs. 
 ·         A friend or family member may take advantage of their status, knowing that it is more difficult to fire someone who is close to you. 
·         Other employees may feel jealous when you hire a friend or family member, thinking it is favoritism. This may especially be the case when a family member or friend is given a promotion over a non-relative/friend.   
·         Personal family problems or disagreements between friends may be brought to the workplace. This may make it uncomfortable for other employees and difficult for work to get done. 
 ·         Problems in the work place may be brought home to the family. They may also influence your relationship with your friends. It may be more difficult to create a necessary change in the workplace when it might negatively affect your friend or relative that works for you. 
 ·         Mistreating your employees by favoring your relatives, undeserved promotions and benefits it lead to problem to the workplace, the employees who work well to their jobs may disappoint and  they discourage to perform their jobs complete. 

Nepotism is a harmful practice in the organization or workplace if it used and interpret it in negative way.However, these may avoid in few possible solutions: 
·         Only hire friends or relatives that you are sure are qualified for the position. 
·         Hire friends or family on a 3-month trial basis. Then, if you like they way they work hire them on a permanent basis. 
·         Make it very clear to friends and family that they will be treated the same as any other employee. Meaning that they could be fired just the same as other employees. 
·         Have a written contract with each friend or relative that explains their duties and responsibilities to the company, as well as their compensation. Having a written contract in place can ease tension and make their job less personal and more professional. 

Nepotism in the workplace, Is it a Moral Issue? 
Nepotism is often left out of ethics codes because it does not seem all that unethical. Another reason for leaving nepotism out is that it is so common, especially in the local government officials. When nepotism rules do appear, they often provide for grandfathering in current nepotism, and for waivers, even if waivers are not available for other ethics code violations.In the business organization and political industry some people may say it is really unethical and unfair practices. They identify nepotism as immoral issue in the organization because of the negative practices like for instance, they prioritized on hiring their relatives and friends, even sometimes they’re not qualified or capable for the position and this is automatically well-defined as discrimination.

More on the political or government services, this practice is prohibited in the government officials to avoid ethics issues such as conflict of interest, misuse of office, preferential treatment, and patronage.It damages public trusts by making government look like a family business run, not for the community, but for the families in power and it causes negative in the society and community. It may cause corruption because of the power that they hold. Other people who want to apply the position in the local government may feel anxious because of nepotism practices. Nepotism is not acceptable within the local government organization because it goes far beyond hiring applicant and it remains a problem every time raises, more on promotions occur. This may be risky to the employees or applicants who don’t have any relation to the persons who has power in the local government.  In the government, nepotism is already considered as negative practices because some bad issues about government officials in the country connected to nepotism. Like for instance the issue about Illegal Drugs in the Philippines until now lots of high government officials are declared as part of the said issues in our country and most of them are family ties and has a high position in local government. Another issue that connects to nepotism and one the biggest issue that Philippines are facing right now is Corruption. Having nepotism also exacerbates problems because they have the power to pin

However not all the time nepotism is giving negative effect in our life or within the workplace, sometimes it take positive that can cause successful and helpful. In business industry nepotism is not new in the organization, they hired relatives and friends to manage the business. As it stated in the advantage of nepotism having relatives or friends in the workplace is not that bad depend on how you treat them. Treating employees should be equally and fair even if you have connected to that employee. The management should be fair enough to make it professionally work together and to make the employees more effective with their responsibilities. The right thing to do is select a task to each person, based on their individual strengths and weaknesses. However, you need to hire friends or relatives that you are sure are qualified for the position. So that it cannot lead problems in the workplace. Having family members in the organization has a higher level of commitment since relatives want to see the company succeed. Loyalty, morale and trust are also high because they know how to value their work and cherished the positions that they have.

The question, is nepotism a moral issue? Yes, because it may affect the behavior of other employees, the satisfaction of their works, it can cause unprofessionalism, and it can also decrease motivation with the hard working employees. But always remember nepotism is not that bad or immoral, it depends on how to used or handle this kind of practices. 

Conclusion 
Nepotism itself is automatically defined as immoral, negative and unethical. This kind of practices at work can be very frustrating more on the local government services and officials. It is important that the organization in the government should avoid the practices of nepotism. Based on my research conducted, nepotism could be very detrimental to the local government and could also tarnish the reputation of the organizations. Also, the other companies that used nepotism can also ruined their reputation in the business industry and it can cause unhealthy relationship with the employees if they used it in negative ways. Having nepotism can be good or bad depends on how you handle this practices. If you used it well by treating your relative or friends and other employees equally and fair then nepotism will be good and it can result good relationship and successful business. 

References 
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