SM 0381
Applied Business Ethics Part A – Ethical Dilemma Essay
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Part A – Ethical Dilemma Essay
Applied Business Ethics (SM 0381)
Ethical Dilemma Essay
Salesmanship is principally involved in my career and unavoidably ethical dilemmas ensue. Amongst the countless ethical dilemmas encountered, the most confounding occurrence was during my stint as a broker with a financial brokerage firm. I was appointed to a team with a direct manager who was also one of the firm’s top brokers and assigned a sales target of $90,000 within my initial 3 months of tenure as a form of quid pro quo for the fees relating to mentoring and licensing requirements. Being an amateur who lacked experience and credibility in financial brokering was challenging as many clients preferred experienced brokers, concurring with Goetz, Tombs & Hampton (2005). Furthermore, with the financial industry’s rapid growth in the recent years (LIA Singapore, 2015) has led firms to continually hire brokers in frequent spurts, translating into higher levels of competition for a client’s share of wallet from both within the firm and external rivals. With the aforesaid dynamics, I was cognizant that I could be potentially compromised ethically for I had contractual duties to fulfil or risked having to compensate the firm. However, I reinforced my decision to join the profession with three intrinsic values to uphold ab initio: 1) to equitably recommend portfolios, 2) thrive in a finance-related profession, and of course 3) to be wellrewarded monetarily, illustrating ethics of virtue as defined by Beauchamp & Childress as “as a trait of character that is socially valued, and a moral virtue is a trait that is morally valued” (p. 63). Despite being able to pitch portfolios that I deem fit for clients; as a novice I was under the manager ’s tutelage and was to consult and attain his approval before pitching. Even for experienced brokers within the team whom decide to deviate from his ‘preferred’ choice of portfolios, written explanations and justifications had to be provided. Given his proven results and influence in the firm, we paid heed and highly valued his guidance on the assumption that fundamental integrity was intact per the firm’s vision. Till this point, my career transition into the finance industry appeared to be in alignment with my personal goals and values. As I gradually comprehended the intricacies of financial products with ample knowledge to broker autonomously, I soon realised that his direction were many times unjustifiable given the parameters as there were more suitable options (and often more economical) that could have been pitched. It was also noticeably biased towards certain institutions which coincidentally offered fringe benefits or higher commissions. As I tried to seek internal discussion channels on this issue which were virtually impossible, I observed that my fellow brokers practising similar fashions and concurring with McDevitt, Giapponi, & Tromley (2007) for if the manager or an authority figure ‘approves’ of such practices, the members of the team will condone so and follow suit. This P a g e 1|4
Part A – Ethical Dilemma Essay
Applied Business Ethics (SM 0381)
evoked ethical sensitivity as a f inancial practitioner (Jackling, Cooper, Leung & Dellaportas, 2007) – especially when clients entrusted us to act in good faith in managing their finances, resulting in
an ethical dilemma of an acceptance in recommending skewed portfolios for maximum benefits or upholding ‘client-first’ objectivity. Seeking neutral opinions, I spoke anonymously with external veterans and comprehended that such practices were common within the industry albeit unethical. I was cautioned that my claims against the team’s brokering practices and its legitimacy were debatable despite it infringing professional codes of conduct. There were also potential legal implications on myself should I choose to whistle blow as I was the acting broker whose signature was on the brokered contracts, in addition to risking employment termination and contractual liabilities. Without firm evidence and agreeing with Jubb (1999), I mulled over whistleblowing intentions and ceased probing as I felt that I would be perceived as disrespectful to doubt a mentor ’s ethics. I was also seeking to advance to a managerial position and needed his positive reference to progress as well as build rapport with other brokers for they appear to approve such practices under his leadership, forming such an organisational and culture norm. At the same time, I was aware that the managers receive a cut from broker ’s transacted contracts as a form of managerial incentive. Alongside industry practice of a commission-based remuneration structure, capitalising on attractive reward influences coincided with Kerr (1975) stating that “most workers seek information concerning what activities are rewarded, and then seek to do (or at least pretend to do) those things, often to the virtual exclusion of activities not rewarded. The extent to which this occurs of course will depend on the perceived attractiveness of the rewards offered” (p. 7). Between personal values, contextual factors and stakeholders which served as affecting sources of ethical behaviour (James Jr, 2000), moral intensity surfaced. Moral intensity characterises the level of issue-related moral imperative in a situation (Jones, 1991). I identify more with Barnett’s (2001) definition of magnitude of consequences: “the degree of harm an individual believes will result from a given action”. It differs slightly but consistent with Jones (1991), focusing on the severity of negative consequences for it was either sacrificing my personal beliefs or career with negligible positive outcomes either way. In my scenario, the arising negative consequences varied from implicating legal issues with hindered career opportunities as the most severe while the losing of trust and business of a client as the least severe (malpractice upon discoverey). In terms of proximity, the majority of my clients were personal friends whom I had known for many years and could be considered as high social proximity (Jones, 1991) and therefore, a strong moral intensity in revealing the truth whereas it is categorised as physical proximity for the manager who could make an impact on my career, be it for better or worse. With social consensus, there was a P a g e 2|4
Part A – Ethical Dilemma Essay
Applied Business Ethics (SM 0381)
strong degree of agreement which existed and agreed by fellow brokers, the manager and even external parties that such practices were perceived as the norm, decreasing moral intensity. The final dimension that I would apply to describe moral intensity is concentration of effect. Should I choose to whistle blow, it would adversely affect the firm’s reputation and undoubtedly affect many parties in the process, ranging from the manager and the firm’s management, as well as the team members and myself, thereby increasing moral intensity. There are various approaches and solutions in regards to the dilemma. Through consequentialist theories, I can adopt an egoistic approach by promoting my long term interests such as career, remuneration, reputation as an employee, future employability etc. as the moral thing to do (Longenecker, McKinney & Moore, 1989) while maintaining silent about the advisory misconduct in practice and putting aside the interests of the client; achieving my prima facie objective (monetary) of joining the profession. Although this solution emphasises my personal interests, it also attracts a minimal probability of putting me in a threatening position should there be a whistleblowing case (other than myself) in the future, implicating myself in the process. With a utilitarian approach (Lahdesmaki, 2005) which upholds an act by means of producing the greatest net benefits or the lowest net costs for the majority; I would shelve my personal interest and whistle blow on the malpractice while communicating the truth to clients. This would on one hand be able to preserve my professional reputation and maintain my friendships with the clients whom are my personal friends to begin with. Using non-consequentialist theories, deontological ethics or ethics of duty approach is based on concepts of duty and rights that can be demonstrated by reason alone and independent of experience (Micewski & Troy, 2007). However, owing due to the unique situation which I had unknowingly breached the ‘experience’, I propose to extend the usage of approach at post dilemma discovery by insisting to the firm’s management in recommending the most suitable portfolios instead of those per the manager ’s advice, going against the manager ’s direction and risking personal career progress. As brokers, we had a principal duty to provide proper advice to clients thereby ‘exhibiting’ a form of ethics of duty. In view of the circumstances and personal values, it is my opinion that either way on whistleblowing attracts possible repercussions of differing severity. I place value on personal integrity and the trusting relationships built between my friends and/or clients with me over other topics and am predisposed to bring this matter to the attention of the relevant regulatory bodies while resigning from the firm to limit my personal, moral, ethical and legal liabilities in achieving fairness for current and future clients with an altruistic stand on shedding light on such practices. P a g e 3|4
Part A – Ethical Dilemma Essay
Applied Business Ethics (SM 0381)
References
Barnett, T. (2001). Dimensions of moral intensity and ethical decision making: An empirical study. Journal of Applied Social Psychology, 31(5), 1038-1057. Beauchamp, T. L., & Childress, J. F. (2001). Principles of biomedical ethics. Oxford university press. Goetz, J. W., Tombs, J. W., & Hampton, V. L. (2005). Easing college students' transition into the financial planning profession. FINANCIAL SERVICES REVIEW-GREENWICH-, 14(3), 231. Jackling, B., Cooper, B. J., Leung, P., & Dellaportas, S. (2007). Professional accounting bodies' perceptions of ethical issues, causes of ethical failure and ethics education. Managerial Auditing Journal, 22(9), 928-944. James Jr, H. S. (2000). Reinforcing ethical decision making through organizational structure. Journal of Business Ethics, 28(1), 43-58. Jones, T. M. (1991). Ethical decision making by individuals in organizations: An issuecontingent model. Academy of management review, 16(2), 366-395. Jubb, P. B. (1999). Whistleblowing: A restrictive definition and interpretation. Journal of Business Ethics, 21(1), 77-94. Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management journal, 18(4), 769-783. Lahdesmaki, M. (2005). When ethics matters –interpreting the ethical discourse of small naturebased entrepreneurs. Journal of Business Ethics, 61(1), 55-68. Life insurance industry achieves robust performance in 2014. (2015, February 6). Retrieved July 25, 2015, from http://www.lia.org.sg/node/4082 Longenecker, J. G., McKinney, J. A., & Moore, C. W. (1989). Egoism and independence: Entrepreneurial ethics. Organizational Dynamics, 16(3), 64-72 McDevitt, R., Giapponi, C., & Tromley, C. (2007). A model of ethical decision making: The integration of process and content. Journal of Business Ethics, 73(2), 219-229. Micewski, E. R., & Troy, C. (2007). Business ethics –deontologically revisited. Journal of Business Ethics, 72(1), 17-25.
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