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Introduction
This report will highlight the existing ethical issues regarding organizational behavior revolving around the opioid epidemic. To do this, the report will identify the ethical issues in the organization Johnson and Johnson and explain organizational ethical thinking and practice and that prompt ethical decision-making in the company. Subsequently, an analysis of how the company and the ethical issues identified affect society at large. The report will consequently outline five stakeholders in the organization and discuss how they have been affected by the ethical issue identified. Lastly, the report will end with a concise, yet considerate conclusion providing adequate recommendations to the organization to curtail the ethical issue identified.
Ethical issues or issues
Johnson and Johnson have been the exemplar of behavior in light of the prompt actions it undertook during the 1982 Tylenol cyanide poisoning incident, however; in recent years Johnson and Johnson Consumer Goods Business has compromised the company and its image by responding slowly and ineffectively to several continuing problems (Stewart and Paine, 2012). These problems revolve around insufficient quality control within some manufacturing plants and concerns slow, reluctant and ineffective FDA corrective action. This has resulted in broken trust between customers and a damaged reputation of the organization (Trevino and Nelson, 2011). The company is accused of failing to resolve quality assurance issues in a reasonable time frame and of not responding appropriately to the customer and patient feedback arising from product defects. The organization has led to raising serious ethical concerns revolving around honesty, trust respect, and responsibility. All of which the organization is deemed to have violated through malpractice. Recently, the company has been in a negative light due to lawsuits filed against the corporation for pushing opioids to its customers and contributing significantly to the drug epidemic in the United States. The company has been involved in aggressive marketing to encourage the use of the drugs, seriously violating the trust of its customers and showing irresponsible corporate behavior by advertising non-FDA-approved drugs as safe (Chris McGreal, 2019).
Role of business in society
The organization is currently facing serious repercussions in light of the unethical practices it previously employed. A "fake and harmful" advertising scheme that was run by the pharmaceutical company and induced overdose and death of an estimated 6,000 deaths in Oklahoma since 2000, it played a large role in contributing to America's opioid crisis. After which now an Oklahoma court ruled against the drug industry and ordered the organization to pay $572m for fuelling Oklahoma opioid crisis (Guardian, 2019).
The organization has not only played a role in spreading the opioid epidemic in the United States but contributed to normalizing the use of the drug internationally in countries like UK and India. In England, hundreds of thousands of people are dependent on prescription drugs which are becoming a huge concern for healthcare officials. Between the years 2017-2018, the number of people prescribed opioid painkillers was a staggering 5.6 million (Nick Triggle, 2019). Furthermore, after decades of pressure, the Indian Government loses its prescription drug rules presenting an opportunity for giants like Johnson and Johnson to abuse the system by pushing the opioid drugs to consumers in India (Sarah Varney, 2019). Hence, the ethical malpractices have affected the people in different parts of the world and resulted in a considerable increase in the opioid epidemic globally.
Five Stakeholders
A company is an institution profoundly revolving around human factors and its aim is not to just make as much money as possible. Instead, there is a need to add purpose to capitalism, as a business is mainly about intention and value development for customers, and wealth and income follow (Freeman, 2014). The stakeholder theory in essence suggests that an organization is a collection of external and internal stakeholder interests and all stakeholders collectively work towards achieving organizational objectives to further their interests simultaneously (Crane and Matten 2016:59). This protrudes the importance of stakeholders in an organization.
The most significant stakeholders at Johnson and Johnson include patients, the healthcare industry, the FDA, shareholders, Johnsons & Johnsons staff, and the executives of Johnsons & Johnsons and its board of directors. Johnson and Johnson insist that each category of stakeholders contributes more to the overall society (Johnson and Johnson, 2017). Each of these stakeholders plays a significant part in driving the organization forward. The patients are the primary consumers of the organization, bringing a steady revenue to the organization. The healthcare industry is another important factor as it provides the organization with a sector to operate in. The FDA regulates the organization's products to ensure safety and quality for the consumers. The internal structure of the organization consists of employees, executives, shareholders, and its board of directors, each playing a pivotal role in the smooth functioning of the organization. Collectively, all the stakeholders play a key role in the working of the organization, hence it is pertinent to protect the stakeholder’s interests to ensure the organization succeeds further.
However, due to the company’s unethical practices, the stakeholders in the organization have suffered the consequences. The organization's famous ‘Our credo’ oriented business philosophy did not adequately shield other stakeholders from faulty goods along with dubious marketing campaigns (Stewart and Paine, 2012). Furthermore, consumers as stakeholders play a vital role in an organization. Every organization strives to provide its customers with the best services. Consumer rights are based on the principle that the autonomy of the consumer should be upheld, and that manufacturers have a responsibility to regard consumers as ends of themselves, and not simply as a way to end the product. Business interests are thus entitled to equal representation when entering into contracts with other parties in inviolable forms (Crane and Matten 2016:314). In regards to Johnson and Johnson, The patients and the healthcare industry suffered from the irresponsible corporate behavior of the organization as it pushed opioids to its consumers in the form of pain killers without adequate research or approval from the FDA. An estimated 400,000 lives have been affected by the epidemic (Chris McGreal, 2019). The internal shareholders of the organization have also suffered financial losses due to multiple lawsuits by the victims’ families. The organization is ordered to pay $572m for fuelling Oklahoma opioid crisis which will result in huge financial losses for the stakeholders in the organization (Guardian, 2019). This adversely affects the employment status of the workers in the organization, who are the internal stakeholders in the organization, as well as they may lose their jobs in light of the existing crisis the organization faces due to unethical behavior.
Examples of good and bad ethics
The code of ethics is an important aspect of an organization's conduct towards its consumers and suppliers. Codes of ethics and professional guidelines provide frameworks for action that an organization must follow to maintain a good relationship with its stakeholders.
Similar ethical concerns can be seen being portrayed by other organizations in the market. In 2016, Mylan Laboratories raised the price of their EpiPens by nearly 600% in less than a decade in America. The organization faced strong backlash from its consumers but the company did not adjust its price point, instead, the CEO of the organization gave a justification for the high price point by stating that most of the profits are reinvested into research (Andreas, 2017). However, healthcare professionals have pointed out that the drug administered via the EpiPen is the same anti-allergic used for over a decade. In 2017 the organization finalized a $465 million settlement with the U.S. Justice Department (CNBC, 2017).
On the flip side, there are still organizations that have effective strategies in place that take ethical considerations very seriously in their organizational behavior. An example of such an organization is Toms, which is an American brand that produces footwear and other similar products. The organization has strict ethical considerations employed throughout its business and is reflected in its marketing strategy as well (Goworek, 2016). The company has diversified its activities to include clean water programs through its coffee company and funded ventures to improve access to birth kits for expectant mothers in developing countries. The organization's effective ethical strategy in turn protects the interests of the stakeholders involved in the organization and protects the company’s reputation (Goworek, 2016).
Recommendations
Organizations play an important role in society. Organizations are essential components of social and physical parameters which have a significant impact on people's decision-making, the resources they have to support them in those decisions, and the influences at the workplace that may affect their health status. They provide valuable services to customers and simultaneously protect the interests of all the stakeholders involved in the organization. Organizations need to reconsider their strategic planning and incorporate ethical concerns to build trust among their internal and external stakeholders and establish a positive reputation for the organizations in the market. To protect the interests of all stakeholders in an organization, it is vital to employ ethical practices in the organization. Organizations need to reinstate a relationship of trust with its stakeholder. To do so the organization needs to address the issues that are being faced by consumers and maintains a strict quality check over its products to ensure high-quality services. Training programs for employees can be launched within organizations to implement these changes throughout the organizations. Furthermore, organizations can introduce reward schemes to act as a motivation for the internal stakeholders of the organization to encourage them to work productively. The stakeholders in an organization hold a key position due to which to achieve success, all organizations need to protect their interests effectively.
References
Andreas Kanaris Miyashiro., 2017. Mylan’s EpiPen Pricing Scandal [online] https://sevenpillarsinstitute.org/mylans-epipen-pricing-scandal/ (accessed 20 march 2020)
Chris McGreal., 2019. Johnson & Johnson to pay $572m for fueling Oklahoma opioid crisis, judge rules. [online] https://www.theguardian.com/us-news/2019/aug/26/johnson-and-johnson-opioid-crisis-ruling-responsibility-oklahoma-latest (accessed 20 march 2020)
Chris McGreal., 2019. Capitalism gone wrong: how big pharma created America's opioid carnage [online] https://www.theguardian.com/us-news/2019/jul/24/opioids-crisis-big-pharma-drugs-carnage (accessed 20 march 2020)
CNBC., 2017. BIOTECH AND PHARMA: Mylan finalizes $465 million EpiPen settlement with Justice Department [online] https://www.cnbc.com/2017/08/17/mylan-finalizes-465-million-epipen-settlement-with-justice-department.html (accessed 20 march 2020)
Crane, A and Matten , D. (2016) Business Ethics (4th ed) Oxford: Oxford University Press
Freeman, R. (2014) Is Profit the Purpose of Business?Available at https://ideas.darden.virginia.edu/2014/08/is-profit-the-purpose-ofbusiness/last accessed 20/09/18
Goworek, H., Perry, P., Kent, A., Roncha, A. and Radclyffe-Thomas, N., 2016. How TOMS’“one day without shoes” campaign brings stakeholders together and co-creates value for the brand using Instagram as a platform. Journal of Fashion Marketing and Management.
Nick Triggle., 2019. Too many hooked on prescription drugs - health chiefs [online] https://www.bbc.com/news/health-49639914 (accessed 20 march 2020)
Sarah Varney., 2019. Opioid addiction rising in India as US drugmakers push painkillers. [online] https://www.theguardian.com/world/2019/aug/28/india-opioids-addiction-us-drugmakers-push-painkillers (accessed 20 march 2020)
Stewart, K.L. and Paine, W.S., 2012. Johnson & Johnson: An ethical analysis of broken trust. Journal of Academic and Business Ethics, 5(7), pp.1-10.
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Introduction
This part focuses on the two main ethical theories. Firstly, a brief description of both theories is given along with their advantages and disadvantage. Moreover, the application of both theories on Johnson and Johnson is done and at the end, recommendations are given concerning the ethical issues of part A.
Virtue of ethics
The theory of ethics may play an important role in the teaching of business ethics that conforms to a theoretical agenda (Fryer, 2016). One such theory that plays an important role in shaping organizational behavior is the virtue of ethics. In essence, the theory revolves around the notion that virtue ethics is based on individuals rather than on action; it takes into account the moral nature of the individual undertaking a practice, rather than the ethical obligations and consequences of particular activities (Van Hooft., 2014). Many theories of virtue ethics draw their inspiration from Aristotle who said that a good individual is someone with perfect character attributes. Such characteristics derive from innate internal instincts, which need to be nurtured; but they can become permanent once developed (Hursthouse and Crisp, 2013).
Virtue ethics offers an opportunity for managers and corporate leaders to question themselves about the sort of people they become through their decision-making, and how their choices impact the lives of other people involved in the organization. It allows them the ability to consider what kind of work conditions and communities they can create, and how company priorities, strategies, and procedures encourage positive or negative learning in their employees. It provides the managers and leaders a tool in the organization to keep account of their decision-making. This ensures the moral and ethical standards of the organization are being abided. A study conducted by Audi (2012) shows how virtue orientation impacts management behavior and how recognizing these values aids in making smarter choices, both ethically and about company performance. So in the context of organizations, it may be helpful to employ practices that resonate with the theory of virtue ethics to obtain benefits for the organization.
However, there are some disadvantages to this theory when applied in an organization. The theory focuses on the individuals instead of a particular act, thus the outcome of the actions of an individual is uncertain and can increase the degree of risk for an organization (Van Hooft., 2014). Moreover, there is a subjectivity to virtues; this increases the chances of conflicts in an organization between ethical considerations (Athanassoulis, 2013). The theory gives no simple advice on what to do in moral dilemmas.
Utilitarian Ethical Theory
According to Gustafson (2018), there are two views of ethical morality, which are consequentialism and non-consequentialism. In which consequential, the act is not categorized in terms of being good or bad but only the consequence is taken into account. Similarly, non-consequential theory suggests that the action should have to be right or wrong because the outcome is based upon those right or wrong decisions. The utilitarian ethical theory comes under the consequentialism view of ethics.
According to Herschel and Miori (2017), the utilitarian ethical theory is the philosophical moral theory, which focuses on the outcome of a decision. This outcome should be in the best possible interests of the maximum number of stakeholders involved. It explains that the consequence of an action determines morality as more significance is placed on the results and outcomes of the decision taken.
Advantages of Utilitarian theory
It is also usually called as a ‘theory of happiness’ because maximum stakeholders are positively affected by the outcome. One big advantage of the utilitarian theory is that it focuses on the democratic principle in which all the rights of the constituencies directly and indirectly affected are taken into consideration (Lawrence, 2016). The utilitarian theory of ethics is also very easy to be used and understood by people as the rights of all stakeholders are considered when making a decision that makes them feel worthy. Moreover, the intuitive nature of utilitarianism takes into account the circumstances, which are prevailed in the organization and external environment (Mill, 2016). Hence, keeping it in view, a utilitarian person focuses on the fruitful outcome that will indirectly bring positive change to the circumstances.
Disadvantages of Utilitarian theory
Some disadvantage of using a utilitarian view in the organizations is that focusing on all stakeholders’ satisfaction can sometimes restrict decision-makers not to taking even rational actions, which are in the best interests of some but not all of the people affected by it (Helzer et al., 2017). In addition, the outcome of an action is different for different people and not one single decision can be generalized to all the people. As the results of action might be beneficial for some and detrimental for some other stakeholders. The probability of the future has a very diverse range of events, which is another big disadvantage of using the utilitarian theory of ethics (Mellers, Tetlock, and Arkes, 2019). As the future cannot be forecasted exactly because outcomes are unpredictable and cannot be controlled by the organizations.
Application of Utilitarian Ethical Theory on Johnson and Johnson
In the case of Johnson and Johnson, the declaration of the addiction to opioids has badly influenced people in the United States. By keeping in view the utilitarian theory of ethics, if the company had used this theory then the outcome had been quite opposite to the current consequence. The customers come in the main stakeholders of the entity, therefore, their rights should never be compromised in the face of gaining profits or otherwise. As 1.7 million people in the US suffered from pain relievers only because of the unethical attitude and behavior of the company towards customers.
Recommendations
Employees and managers should incorporate ethics at all levels to make the overall organization successful. The decisions taken by the top managers should always be in the best interests of all the employees and other key stakeholders so that consumer good business does not get compromised any further at Johnson and Johnson. Moreover, managers should be very strict in terms of complying with the quality control ethical considerations of Johnson and Johnson, as they are the role models for the subordinates. In addition, managers should be fair in giving rewards and be more respectful to the belief system and values of individuals so that employees in the workplace also get involved in making the organization more ethical. Furthermore, managers should have a proper code of conduct at every level of the organization and have to be integral, transparent, and honest to the stakeholders, as the trust of the customers has been broken on Johnson and Johnson.
References
Gustafson, A., 2018. Consequentialism and non-consequentialism. In The Routledge Companion to Business Ethics (pp. 79-95). Routledge
Herschel, R. and Miori, V.M., 2017. Ethics & big data. Technology in Society, 49, pp.31-36.
Lawrence, J.W., 2016. Happiness Is Political: William Thompson's Utilitarian Argument for Democratic Work. New Politics, 15(4), p.141.
Mellers, B., Tetlock, P. and Arkes, H.R., 2019. Forecasting tournaments, epistemic humility, and attitude depolarization. Cognition, 188, pp.19-26.
Helzer, E.G., Fleeson, W., Furr, R.M., Meindl, P. and Barranti, M., 2017. Once a utilitarian, consistently a utilitarian? Examining principled news in moral judgment via the robustness of individual differences. Journal of personality, 85(4), pp.505-517.
Mill, J.S., 2016. Utilitarianism. In Seven masterpieces of philosophy (pp. 337-383). Routledge.
Introduction
In this essay, leaders and managers are discussed in detail in the light of ethics. I worked in the HR department of Tesco so the ethical behaviours I observed there are also highlighted. Firstly, the relationship between ethical leaders and ethical managers is described. Secondly, the qualities of an ethical leader along with some personal examples are highlighted. After that, strategies for maintaining an ethical business environment are discussed. In the end, a conclusion is drawn.
Relationship between an ethical leader and ethical manager
According to Winston (2018), a leader is typically defined as someone who influences people and gives them vision. By flowing that vision, followers get a direction, which motivates them to accomplish goals. A leader also brings change and tries new innovative methods of working that indirectly engage employees and let them be more creative in their daily tasks too. Leaders can let all individuals get along with each other, who possess different capabilities, calibre, skills etc. By adding in the element of ethics into leadership give rise to ethical decision-making. According to Bedi, Alpaslan and Green (2016), Ethical leadership also helps in making the leadership style more effective by incorporating morals and principles into it. Furthermore, while being under the supervision of an ethical leader, I gained assistance in achieving better outcomes from the follower and it is positively correlated with transformational leadership, which helps in bringing change.
On the other hand, the manager’s focus is more on the process instead of the people (Winston, 2018). A manager tends to follow some core functions to get the work done which are forecasting, planning, organizing, commanding, coordinating and controlling. These steps are also very important to achieve organizational goals but incorporating leadership with this can bring way better outcomes.
Hence, while working in the department of HR at Tesco, ethical leaders and ethical managers tend to respect the belief system, moral values and principles of the followers along with having fairness in the distribution of rewards. I also observed that leaders were more focused on people and moulding their respective behaviours by influencing them. Whereas managers used to focus on carrying out tasks effectively, to achieve the goals of the organisation with less focus on subordinates in a more operational way.
Maintaining integrity and compliance in a un/ethical business environment
Maintenance is the key when an organisation is already following a good set of values in a business work environment. According to Ishak, Haron and Ismail (2019), on the contrary, an unethical environment is a big concern for organisations as it leads to corruption, fraud, and bribery. Hence, while I was working in the HR department the managers who showed biasness and dishonesty were considered to be an abuse of authority, which has very adverse effects on the system of the organisation. To counter this, top management should be responsible and focus on making a set of ethical rules that every individual have had to follow.
I think ethical leaders should be hired as they can motivate and influence employees to work ethically towards achieving goals. According to Beightel (2018), organisations should be very vigilant in hiring leaders because a leader with a destructive leadership style will have susceptible and collusive followers and a conducive environment, from which ethics are absent. Hence, a destructive leader gives rise to the formation of a toxic triangle because such leaders have manipulative and intimidating attitudes and abuse the power they are given.
Hence, in my personal opinion, a set of ethics required in the workplace should be timely communicated to all employees and a reward system should be specified so that individuals are encouraged to comply and show integrity towards the organisation. Moreover, employees, as well as employers, should strictly follow the ethical code of conduct in the workplace so that no collusive behaviour of employees arises.
Qualities of an ethical leader
Ethical leaders maintain integrity, transparency, fairness and honesty. They are also more disciplined and use different techniques for rewarding or punishing their subordinates to influence them (Bedi, Alpaslan and Green, 2016). As a follower in my organisation, I experienced that a leader who was fair in giving rewards and showed transparency helped me work harder. I achieved more than I expected of myself because of the motivation to work I had under strong ethical leadership. It also enabled me to communicate about any problems related to work which prompted me to be more productive and work efficiently due to which I was able to achieve my organisational goals. The fair rewards extended to employees for their good performance helped me stay motivated along with which I received fair compensation for working extra shifts. The organisational environment felt safe and did not discriminate based on gender or race under the leadership of the manager. Due to these reasons I remained in employment with the organisation and worked harder than I expected.
Conclusion
Both managers and leaders are important parts of the organisation but the impact of these key people increases when they also behave ethically. As ethical managers and ethical leaders show respect for their follower’s opinions and beliefs. Apart from ethics, a leader tends to focus more on people whereas a manager focuses on the process for the attainment of the goals of the organisation. Therefore, to maintain an ethical business environment, organisations should hire ethical leaders along with having an effective set of ethical values and make sure that each individual in the workplace follows that.
References
Bedi, A., Alpaslan, C.M. and Green, S., 2016. A meta-analytic review of ethical leadership outcomes and moderators. Journal of Business Ethics, 139(3), pp.517-536.
Beitel, R.S., 2018. How a Conducive Environment and Susceptible Followers Influence Toxic Leadership Behaviours in the Air Force: An Examination of the Toxic Triangle Theory (No. AFIT-ENS-MS-18-M-102). AIR FORCE INSTITUTE OF TECHNOLOGY WRIGHT-PATTERSON AFB OH WRIGHT-PATTERSON AFB United States.
Ishak, N.K., Haron, H. and Ismail, I., 2019. Ethical Leadership, Ethical Climate and Unethical Behaviour in Institutions of Higher Learning. KnE Social Sciences, pp.408-422.
Winston, B.E., 2018. Contrast Leader, Manager, and Administrator. In Biblical Principles of Leading and Managing Employees (pp. 1-5). Palgrave Macmillan, Cham.
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