Identifying the Ethical Issue in Perth Exploration

Identify the different stakeholders who will be affected by the decision to be made, the different decisions possible regardless of the ethical stance and then outline the decision that you consider the most appropriate and why.

Ethical conduct in current business scenario is considered as the most critical. Importance of the consideration of business ethics and ethical conduct in business operation has risen up the last few decades. The situation has arrived due to the increasingly exposed environment the business organisation needs to maintain in the current market scenario (Ferrell & Fraedrich, 2015). This in turn is related to the customer value proposition and business transparency. The companies are now obliged to maintain transparency in their operations and needs to address the environmental safety. Ethics in a business helps in governing the operations and decisions undertaken following the principles set accordingly in alignment to the social responsibilities. The law addresses some of the ethics, whereas, some of them are followed according to the individual policies set by the business. This essay will identify ethical issue in Perth Exploration and both identify and recommend solution following the selected ethical theory.

Perth Exploration is a mineral exploration company that is currently facing issue with their living away from home allowance policy. According to this policy, the geologists hired by the company are provided some extra allowance for exploring the rural areas under study. This is to compensate the expenditure required for staying away from home. As mentioned, the allowance is debited in their account prior to their departure. However, a misconception is created around this allowance and some are considering this allowance as a part of their basic salary and planning their trip accordingly to save the extra amount (Shaw et al, 2016). This is causing a level of disturbance to the other stakeholders of the company.

Primarily, the allowance is provided to the geologists be not a part of the main salary paid to them. This is only to support their venture to the remote areas. This is causing unrest among the other employees of the company based on equality as they are being neglected from the additional benefits the geologists are enjoying (Weiss, 2014). Moreover, the company is the biggest stakeholder that is directly being affected due to the ethical dilemma. This is causing them some extra amount that can be reduced, which in turn help them in increasing the profit margin. Moreover, the employees in a business are considered as the integral part of the business and their focus should be towards well being of the company. The extra amount saved from the trip is ethically and legally a part of the organisation’s fund and should be returned to the company, failure of which is an act of theft according to the (ato.gov.au, 2018).

Normative Theories of Ethics and Selected Ethical Theory for Solving the Situation

Moreover, according to the Australian Taxation Office (ato.gov.au, 2018), the guideline of living away from home policy of Australia seeks for tax submission on the allowance provided to the employees with the complete detail of the expenditure carried out. Hence, it is necessary for the employer to have detailed record of the expenditure that has been carried out in the field for receiving tax compensation form the Australian government. However, this act of the employees have significant impact on the financial well being of the company in the long run as this cause a significant financial damage to the organisation.

The normative theories of ethics help the organisations in identifying the appropriate actions that should be conducted, instead of what is being practice (Honneth, 2014). The theories that falls under the normative theories of ethics are consequential and non-consequential. The non-consequential theory that will best explain the situation in hand and has the potential to solve the situation identifies the good in terms of the intrinsic value of the action, even if the outcomes are undesirable (Crane & Matten, 2016). Use of the non-consequential theory helps determining the best decision that needs to be taken defending the morality. Justice theory is an effective non-consequential theory, which see through the benefits and burdens of an action (Vaughn, 2015). This also helps in assessing the fairness of the distribution of the benefits and the burdens to various stakeholders. This helps in obtaining balance in the organisation. On the other hand, greater good of the maximum stakeholders over the overall good is possible to identify along with the equality within the organisation (Crawshaw et al, 2013).

The act of the geologist appointed regarding the live away from home allowance upsets the greater section of the stakeholders and benefits only a small segment of the organisation. This can be considered as a burden the company and its other stakeholders are carrying from the benefits of only a small segment of the stakeholders. Moreover, the employees holding back the excess money is a burden to the company and result the company spending excess money on the expeditions (De Roeck et al, 2014). However, this satisfies the desires of the geologists and helps the company in retailing them for longer period. From the ethical theory of justice on the other hand, it is unfair to provide such opportunity to a particular section of the organisation to enjoy such benefits that ultimately result into the degradation of the organisational well-being. They are the only beneficiaries that enjoys such advantage, limiting the opportunities for the others in the situational improvement. Moreover, this also restricts the company from receiving tax compensation from the Australian government as they fail to justify the expenditure due to the failure of presenting exact details of the expenditure (Braithwaite, 2017). This amount can turn into a significant figure in the end that might put the organisation into financial crisis.

Applying Ethical Theory of Justice

Hence, the decision of continuing the practice is ethically unfair according to the justice theory of ethics as it can be considered as an unconfirmed risk the company is taking. The suspecting the ethical actions will dissatisfy the geologists is completely based on assumption. Moreover, neglecting the matter of satisfaction of the geologists still leaves with the fact that the company is bearing extra burden that is degrading the financial condition. This leads to the direction of rejecting the practice and taking necessary steps to establish ethics in within the business that will be beneficial for the organisation.

The theory of justice in ethics identifies the benefits and burdens of the stakeholder of involved in a course of action related to the organisation. It sees through the fairness of the action and the impact of the action causing to the related stakeholders. As mentioned earlier, action of the geologist related to the live away from home allowance is considered as unethical form the viewpoint of the ethical justice theory. Several modification in the company’s ethics policy needs to stated and communicated to the employees for regaining the ethical environment. Entertaining the geologists in this case can be considered as similar level of unethical act as this holds back the greater good for the company. However, the satisfaction of the geologists also needs to be considered, as the company needs to retain the employee in the longer run. Hence, it is possible to choose between a numbers of significant modifications they can make.

The first modification that can possibly be implemented following the justice theory is the implementation of the ethical training. This will communicate the ethical boundaries that are necessary for all the employees to follow regardless of their position held in the organisation. This will help in distributing equal benefits and burdens for all the employees involved with the company.  Moreover, it will also communicate the difference between the basic pay structure and the allowance provided to them for conducting the company related work (Taylor, 2013). This will surely clear the confusion aroused between the employees related to their basic salary.

Another modification that can have potential effect on the ethical situation of the current business is the material allowance provided to employees living away from home (Mayer, van Daalen & Bots, 2013). The company can themselves arrange the accommodation to the geologists in their destination instead of paying the lump sum in their banking account. This will be beneficial for both clearing the confusion related to the allowance and control the issue.

Recommended Solution for Ethical Issue in Perth Exploration

The final action that can be recommended for controlling the unethical situation is the record keeping. The company can ask for the details of the money spent in the destination for receiving tax compensation.

Either of the decisions can bring the desired change in the organisation. However, the second recommendation made can be considered as the best in this particular situation as it has the potential to satisfy the interest of the related stakeholders.

Conclusion    

Conclusion can be drawn form the above discussion that the geologist in Perth Exploration is conducting unethical behaviour that is harming both company’s resources and the work environment, which will ultimately cause serious damage to the company. However, the company is satisfied with the work delivered by these particular employees and seeks to retain them by any means. However, this can also be considered as unethical behaviour as it discriminates the workforce of the company. The ethical theory of justice identifies it as unethical as it benefits the particular section of the organisation and has negative impact on the organisation for the upcoming future. However, this can be solved with the recommended modification in the practice of the organisation.

References

ato.gov.au. (2018).  Accommodation expenses when travelling for work. Retrieved 15 January 2018, from https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Accommodation-expenses-when-travelling-for-work/

ato.gov.au. (2018).  Living away from home allowance fringe benefits. Retrieved 15 January 2018, from https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-benefits/Living-away-from-home-allowance-fringe-benefits/

Braithwaite, V. (Ed.). (2017). Taxing democracy: Understanding tax avoidance and evasion. Routledge.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Crawshaw, J. R., Cropanzano, R., Bell, C. M., & Nadisic, T. (2013). Organizational justice: New insights from behavioural ethics. Human Relations, 66(7), 885-904.

De Roeck, K., Marique, G., Stinglhamber, F., & Swaen, V. (2014). Understanding employees’ responses to corporate social responsibility: mediating roles of overall justice and organisational identification. The International Journal of Human Resource Management, 25(1), 91-112.

Ferrell, O. C., & Fraedrich, J. (201s5). Business ethics: Ethical decision making & cases. Nelson Education.

Honneth, A. (2014). Disrespect: the normative foundations of critical theory. John Wiley & Sons.

Mayer, I. S., van Daalen, C. E., & Bots, P. W. (2013). Perspectives on policy analysis: A framework for understanding and design. In Public Policy Analysis (pp. 41-64). Springer US.

Shaw, W. H. et al, (2016) “Moral Issues in Business”, 3rd Asia-Pacific Ed. Cengage, South Melbourne, Victoria.

Taylor, A. (2013). Ethics training for accountants: does it add up?. Meditari Accountancy Research, 21(2), 161-177.

Vaughn, L. (2015). Doing ethics: Moral reasoning and contemporary issues. WW Norton & Company.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers