Business Ethics and Organizational Culture

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A sales representative for a health club is part of an organizational environment that pushes employees to upsell health packages to customers. The organization's culture involves promoting health while at the same time pressuring employees to consistently sell the highest-priced health package because increasing profit margins is truly the bottom line. Thus, with the assumption that promoting health is a societal good, selling overpriced sales packages to customers becomes seemingly ethically sound. Given this background, some unethical behavior that commonly occurs in the health club organization is doing whatever is necessary to make a sale and ignoring customers who would otherwise need health packages but cannot afford them because that behavior does not benefit the salesperson or the company.

Applying the utilitarian ethical theory to this organization scheme reveals several issues related to business ethics. Utilitarian philosophy as defined by Bentham is about maximizing the utility or happiness of the greatest number of people. As such, this philosophy has lead to many economic and political choices focused on maximizing economic growth (Renouard, 2011, p. 86). When applied to a business setting, especially in relation to sales, it becomes easy to justify most behavior. Utilitarian thought insists that maximizing economic value may lead to increasing inequalities between people and between groups, emphasizing material wealth over economic value creation and thus neglecting other aspects of personal well-being as well as social well-being (Renouard, 2011, p. 85). Using a health club's compensation scheme, utilitarian theory may not necessarily criticize the increase in salary based on commission for its sales representatives as long as profit growth, on the whole, is ensured. Furthermore, since health is involved, an argument can be made that selling packages no matter the cost increases the health and well-being of the customer despite the unnecessary, and perhaps unethical, increase in price.

Naturally, sales culture and its incentive systems affect unethical behaviors. The more a salesperson sells, the more they make, and the greater the risk for unethical behavior. As stated before, this model has a high risk for unethical behavior because “rewarding unethical decisions because they have good outcomes is a recipe for disaster” (Bazerman and Tanbrunzel, 2011, pp. 60) as well as for long-term company goals. However, there is one major recommendation that can help to shift the health club's company culture in order to increase ethical behavior as well as the utilitarian social value. Health club companies can "prorate" healthcare packages and scale the price to the proportionate amount customers can pay based on their income. Rather than simply selling largely overpriced packages to the few customers that can afford it, or cause sales employees to engage in behavior that has conflicting ideas about what is morally right, the company can reach a range of people in an ethical way.

References

Bazerman, M. H. & Tenbrunsel, A. E. (2011). Ethical breakdowns. Harvard Business Review, 89, 58-65.

Renouard, Cecile. (2011). Corporate social responsibility, utilitarianism, and the capabilities approach. Journal of Business Ethics, 98, 85–97.