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 Business Ethics and Leadership Management

Introduction

Businesses today have an obligation and role to play in culture and society. Ethics are

applicable in most society dimensions, including business. Ethics entail the moral doctrine that

governs an individual or an entity's code of conduct. In this report, we will review the ethical

nature of the British gas company case. Using the case mentioned above, we will analyze the

ethical issues of the case, the role of business in society, and example case studies of good and

bad ethics. Ethical issues in the British gas case have affected multiple stakeholders differently.

This will address how these stakeholders have been affected by the decision of British Gases to

use the 'fire and rehire' method to restructure its business. Ethical issues in business range from

encouraging business conduct based on trust and integrity to deal with complex problems such as

empathetic decision making, accommodation of diversity, environmental care, and compliance

with rules and regulations.

The British Gas company decided to use the 'fire and rehire' model as the primary mode

of restructuring its business raises ethical concerns (Rosenblatt, 2021). The move would result in

the dismissal of numerous engineers. The company has been changing terms and conditions of

employment, which resulted in huge disputes and multiple strikes by employees. Terminating a

worker's contract and demanding them sign new contracts demanding more working hours and

no additional payment is a huge ethical concern. Besides that, the workers would not acquire

higher pay rates due to working on weekends. This is because businesses have a corporate social

responsibility to ensure employees are satisfied and happy with the job. Fulfilling this CSR

leaves the employees happy and leads to improved productivity. The company argues that using

the 'fire and rehire' strategy was the appropriate strategy to prevent the company from a financial
crisis following the company's loss of market share and a decline in market share. Centric, the

parent company, argued that the contract adjustment was in the best interest of offering their

customers what they want while protecting its future. The company is in defense of its decision,

while the employees who did not sign the contract and were dismissed as a result perceive it as

unfair dismissal.

Stakeholders Involved

The decision to use the 'fire and rehire' strategy to restructure the business by British Gas

affected several parties. These included the company, employees, Investors, the society and the

GBM trade union.

Company

British Gas Company gave the engineers an ultimatum to sign the new contracts or face

employment dismissal (Rosenblatt, 2021). In the face of possible unemployment for not signing

the new contract, most engineers had to sign the contract unwillingly. Even though some

engineers signed the new contract, it will affect their motivation and perception of the company

since they will be working long hours with no additional pay. The issue the company is facing

might cost it public reputation as their actions seem to be selfish and do not gyjconsider people’s

welfare. The company could also face employee rebellion, although the management forced 98%

of them to sign the contract (the Guardian, 2017).

Employees
 The lives of employers who failed to sign the contract and were dismissed were affected

since it was their source of income—following strikes from engineers.

Trade Union

The trade union had to advocate for their rights and defend their interest claiming the

dismissal to be unfair. The company's managerial team faces possible charges for unethical

issues of unfair dismissal.

Society

The society is affected by the fact that the company dismisses numerous employees. This

increases the social problem of unemployment to the British society. The jobs are also a source

of livelihood for families of the laid of engineers.

Investors

The ‘fire and rehire’ strategy is in favor of investors interest. The profitability of the

company is expected to increase since its operational costs will decrease if the employees size

are downsized.

Role of Business in Society

Awareness of a wider social goal in making decisions in business can result in numerous

social and economic benefits to society. Society today has social expectations from businesses.

Unlike legal responsibility that demands observing state laws and regulations, social

responsibility involves a business', voluntarily helping solve the social problems in a society,

such as unemployment—the primary objective of any business is to make profits. However, the

business has a responsibility to pursue the greater good of society while making profits. Since the
organization makes up the consumer group, businesses are obligated to meet their changing

needs and expectations. In addition, the company's resources should assist society in addressing

the social issue affecting their community. Businesses also have a moral obligation to make

socially responsible decisions (Terziev, 2019). The decision by Britain Gas to use 'fire and rehire'

as a way of restructuring their business seems like an act of socially irresponsible. Although it is

not illegal for the business to do so, the decision is not in the best interest of society since it

results in the loss of jobs for some engineers. Society might perceive it this way regardless of the

company's justification since there are multiple ways to improve customer services and increase

business profits without the need for firing employees and forcing them to sign unfavorable

contracts.

Cases of Good and Bad Ethics

The repercussions of decisions made by a business define whether they are ethical goo or

bad. One example of an ethically good business decision is Volkswagen's strategy to reduce its

workforce without layoffs. The company embraces the no-layoffs policy even when there is a

need to reduce the workforce. The company is shifting to the manufacture of electric cars, which

are less complex and require fewer workers. Although the company's strategic plan is to reduce

workforce to 7,000 workers, improve productivity, and potentially save 5.9 billion euros

annually, they do not plan on laying off current staff. Instead, the company plans on offering

early retirement to staff, especially those in administrative positions, instead of replacing them

(Taylor, 2019). Layoffs, according to research, are often bad for business as they are for society.

No layoff policy is a good way to keep workers motivated. According to research, often, when a

company layoff employee, company loyalty and job satisfaction level significantly decline

(Great Work Life, n.d.).

from ethical quandaries and corporate ethics controversies. In 2019, Google faced a fine from the

European Union, following claims that the company exploited its market dominance by forcing

AdSense users to sign agreements stating that they would not tolerate advertising from

competitor browsers. Google has denied the allegations. Here's a good illustration of business

ethics in action: customers want businesses to be fair in handling them and their competitors.

Particularly when a corporation has a dominant position in the market, the ethical standards that

must be adhered to must be more stringent. The European Union has penalized Google a sum of

$9.3 billion for violating the antitrust policy ranging from domination in the mobile

market sector and manipulating search engine results.

Recommendations

From a manager's experience, the decision to 'fire and rehire 'as means of changing

working terms conditions of workers and layoff is unhealthy for the business and unempathetic.

There are multiple ways of increasing business profitability, such as business process

reengineering, which eliminates unnecessary costs and resources, resulting in lower production

costs. In addition, since the company plans to increase employees' working hours, restructuring

the company's operational structure and payment schemes is a convenient way to address the

situation. The primary goal of a business is profitability, but it doesn't always have to be at

employees' expense. The business has a moral obligation to make empathetic and adopt

utilitarian goals.

Ethical Theories Relevant to the British Gas Case Study

Introduction to Ethical Theories

making decisions when ethics are in play. As individuals seek guidance and solutions to the

problem, ethical theories provide viewpoints that they can utilize to make the best decisions.

There are multiple ethical theories in professional ethics, but they all have a set of common

goals, i.e., beneficence, justice, least harm, and respect for autonomy (Singh, 2018). Normative

theories tend to dictate the morally appropriate manner of acting. An ethical theory is supposed

to guide an individual through an ethical dilemma and help them make the most appropriate

decision based on the guidelines within the theory. Normative theories can be categorized into

egoism, utilitarianism, ethics of duties and rights, and justice. Egoism theory is a normative

ethical stance that maintains that moral individuals should be driven by self-interest when

making moral decisions. The theory is among the most debated and impactful ethical theories

today in the business field (Nave, 2019). The utilitarianism theory primarily focuses on the

outcome of the decision to differentiate right and wrong choices. On its own, the theory is a form

of consequentialism. According to utilitarianism, the most ethical choice is the one that creates

the largest amount of good for the greatest number of people (Scarre, 2020). Immanuel Kant is

credited with introducing the ethics of duty theory, which is also known as the 'categorical

imperative.' Consistency, human dignity, and universality are the three principles of the theory.

According to the theory, a good act has the potential to be applied as a universal law. Self-

serving motives are not generalizable and, as a result, should be avoided at all costs. According

to the ethical theory of rights and justice, the rights created by a societal structure are

safeguarded and promoted by the state and considered a top priority in decision making. A

significant portion of the population supports them since they are based on established rights,

which the people regard as morally valid and correct.

Britain Gas company case study raises an ethical question. However, based on normative

ethical theories, the case study is just an ethical dilemma. Utilitarianism and egoism are the two

ethical theories applicable and self-evident to the British Gas company case study. Egoism

theory is portrayed by the fact that the company plan is purely focused on the interests of the

company, only claiming its profits had lowered and its market cap downsized. The company

terminated the contracts of all engineers' contracts and adjusted the terms of their contract like

increasing working hours while the employee was expected to receive the same salary as they

previously used to. The company, just the egoism theory mentions, considers their action morally

right since the decision made by the company management is intended to benefit the company

both in the short term and long term through lowering operational costs (Rosenblatt, 2021).

However, you would not consider the company's decision ethical despite it being legal as per

English law.

British Gas defies the utilitarianism theory. The utilitarianism theory recognizes an action

as morally appropriate if the outcomes do the largest good to the largest number of individuals

affected by the action. The decision of the British Gases does not serve the greatest amount of

good to most people since it only serves the best interest of the company only.

Pros and Cons of Egoism and Utilitarianism

The utilitarian principle teaches us several positive traits and lessons as a society. On is

enlightening decision-makers that harming other people is inappropriate. Applying the

utilitarianism theory helps us focus on happiness as a society. The theory's other major benefits

include its easy implementation, focusing more on humanity, and creating the highest good.
Some of the problems associated with utilitarianism theory include that it depends on happiness

to dictate ethics and morality. The theory can be unpredictable since predicting the human future

is impossible. Utilitarianism theory has the problem of being dependent on people making

consistent choices (Miller, 2019).

Some of the major benefits of pursuing egoism theory include providing more opportunities for

self-betterment.; it encourages more self-awareness and enables individuals to set up self-care

routines. A society based on egoism theory only usually has higher productivity. However,

egoism theory encourages a lack of empathy in society. Other problems associated with the

theory include: it results in a self-centered society, could create chaos in workplace relations, and

eliminates objectivity concept from society.

Recommendations

The company does disregard employee rights. They should reconsider making a decision

that does not involve terminating their contracts, laying off workers who fail to renew contracts,

yet the terms of their working have changed. Utilitarianism theory would result in better a

decision that would have benefited the company and minimized its negative impact on the

employees. Organizations have a corporate social responsibility to decide that pursue the greater

good of society as they pursue profitability.

Ethical Leadership Management

Ethical leadership entails reflecting normatively moral conduct via individual actions and

interpersonal relations and the support of a similar persona through reinforcement, two-way

communication, and decision-making. Individuals who practice ethical leadership follow a set of

principles and values that are widely accepted as providing a strong foundation for the general
good. Respect, integrity, fairness, trust, openness, and honesty are just a few of the

characteristics. Organizational ethics would describe leadership in terms of how people ought to

or should act in the context of how they should behave in a business. This comprises hypotheses

regarding the criteria that should be used to determine ethical judgments and personality

attributes. Providing guidance that allows the company to fulfill its purpose and vision and

accomplish its stated objectives is critical and fundamental to the business's success (Tenuto,

2018). Organizational reputation management, both in the external world and in comparison, to

rivals, is considered a critical aspect in the stewardship of an organization's reputation (Aghighi,

2019). Ethical health is determined by the standards set by and the example set by the top

executive. According to research, top management is charged with two primary responsibilities:

ensuring that ethical judgments are taken and creating an organizational atmosphere in which

moral follower behavior is promoted (Saha, 2020).

Ethical culture may be characterized as a combination of experiences, ideas, and

anticipations of employers and staff regarding how the company promotes individuals to act

ethically or unethically. Unethical organizational culture is achieved when top managers abandon

their duty of defining ethical standards and supporting them by creating relevant organizational

policies. Corporate culture has an impact on the moral stance of workers and stakeholders in the

organization. Companies that strive to cultivate a culture of ethics encourage their employees to

speak and behave with integrity and honesty in all situations (Eisenstein, 2019). Customers are

drawn to the goods and services of companies that have high ethical standards to uphold.

Ways of Maintaining Integrity and Compliance in Ethical and Unethical Business

Environments
 In ethics, integrity is the truthfulness and honestly or accuracy of an individual's actions.

In the context of corporate ethics, compliance typically defines a company's or an

entrepreneur's adherence to applicable laws and regulations, i.e., according to the norms

established by the government. Leadership has the greatest effect on ethical behavior in a

company (Den, 2015). They are responsible for establishing the conventions and rules of ethics

that govern workers' behavior in their respective organizations. Leaders can perform three major

ethical activities: interpreting, perceiving, and creating reality. They are responsible for enforcing

ethical organizational culture by leading through example since people tend to watch and follow

similar conduct to that of their seniors. Organizations embrace integrity management procedures

such as dedication to fair employment practices excellent customer service. When it comes to

public opinion and brand awareness, here is where it all starts. Product integrity is critical for

those who buy items and services. Embracing these values and doctrines can help uphold an

ethical business environment (ECI, 2018).

There are ways also to minimize and control unethical behaviors within the business

environment. Ethical risk management can be a tough task since you cannot predetermine their

thoughts and actions as a manager. However, minimizing unethical behavior is achievable if

certain measures are implemented. Conducting ethical training help enforce the sense of 'right'

and 'wrong'. Therefore, performing training prior to commencement of the employment. As a

manager you can setup an infrastructure for reporting unethical practices (Webb, n.d.). You can

also utilize an organizational hierarchy to dismiss unethical tasks.

Reflection

The research demonstrates how important ethics are in today's culture. By directing

people's conduct, ethics makes a community more peaceful, pleasant, and enjoyable to live in.
Since the sights of the law are often not present, ethics acts as a self-governing mechanism to

keep personal self and the benefit of society in balance. Businesses have ethical cultures and

philosophies that are founded on ethical theories. These theories have doctrines that they

embrace. For instance, the utilitarianism principle is based on achieving the greater good for the

greatest amount of time. Each theory has its limitations and benefits as well. The case study of

British gas portrays how the problems associated with particular normative theories can have

major faults that are justifiable. The British Gas case study is a true reflection of egoism in

action. Leadership management also is based on ethics. Different management theories as well

embrace different ethical theories and doctrines. Businesses can encourage and enforce ethical

and unethical business environments depending on their leadership styles. Ethical leaders

contribute significantly to upholding ethical values within an organization. Reflecting on the real

influence of ethics and power in our society makes me realize how important ethics are.

Effective leadership has been associated with certain ethical traits such as credibility, honesty,

and trustworthiness. Therefore, organizations must identify strategies to maintain an ethical,

cultural environment and minimize ethical risks.

Conclusion

Our introductory part highlighted how ethics are a vital part of any society. Business

ethics are voluntary obligations that an organization has to the problems within its society.

Businesses are obligated to embrace and fulfill their corporate social responsibility by making

ethical decisions that do not harm society. Ethical theories are a resourceful framework for

helping employees and managers make decisions where ethical dilemmas exist. The three main

theories of normative ethics are egoism, utilitarianism, rights and justice, and ethics of duty.

Each ethical theory lays a particular framework for a code of ethics that applies to their
approach. The case study of British gas is a question of ethics. There is an ethical dilemma in the

company's actions that conflicts with the interest of employees. The company's actions are

legally appropriate and claim to be in the company's best interest despite them being

inconsiderate of the employee's rights. Ethical leadership is an effective tool for retaining and

promoting ethical organizational culture. By understanding these theories, we can understand

what theories should be applicable in decision-making in society and the ethical dilemma that

may emerge from it.

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