Paper Example on Ethical Decision-Making: Kant and Utilitarianism Perspectives

Introduction

Companies and their leaders often strive to make legal and ethical decisions that do not harm some of the stakeholders. They have a financial responsibility to various parties, such as employees, shareholders, and the public (Renouard, 2011). However, it is challenging to determine which action will benefit all individuals and groups. The management can rely on the moral philosophies of Kant and Utilitarianism to assess their choices and make ethical choice. Based on these theories, the essay discusses the ethical concerns that emerge in two scenarios where organizations prioritize their needs at the expense of others.

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Ethical Issues

The ethical issue in USAA’s action is that the organization did not consider the plight of its members and proceeded to credit the account deficits with the stimulus money. Due to the adverse effects of the pandemic on the economy, many families have lost their livelihoods. They expected to receive the stimulus money, which would help to meet their daily needs while waiting for the economy to unfreeze. While intercepting the money and using it to settle deficits is legal, it is an unethical act that prioritizes the organization instead of the members in need. Thus, some members could suffer for a long due to a lack of access to the money.

The ethical issue in Shake Shack’s case is that the large company took advantage of its business model and structure to benefit from loans designated for small businesses. The essence of the Paycheck Protection Program (PPP) is to ensure small businesses continue to pay employees and bills. It is legal but unethical for Shake Shack to apply for the $10 million loan since it takes away an opportunity for other befitting enterprises to benefit. With a market capitalization of $2.06 billion, the corporation can afford to pay its workers without the PPP loan and leaving other small entities exposed to adverse market conditions.

Stakeholders Implications

The stakeholders involved in the USAA organization are the management and the members whom the entity serves. The members rely on the organization for insurance and financial services while the administration oversees the investment of members’ assets. The primary clients of USAA are current and former members of the military and their families. It is an organization that strives to improve the welfare of these families by providing members access to essential financial services. Whereas USAA is a member-owned organization, the management retains the right to make financial decisions.

The potential implication of the administration’s actions is that members will lose faith and confidence in the organization. The team received stimulus and diverted them to existing account deficits without informing the members. It is an action that shows that USAA does not value or prioritize the well-being of its customers. For instance, if a member who did not obtain the stimulus money loses their house due to debts, the decision can taint USAA’s excellent reputation. Besides, the company’s actions can make it challenging for the management to attract new clients as it will be hard to convince them that USAA pursues the people’s best interests.

The stakeholders involved in Shake Shack’s actions are the shareholders and the CEO. Shake Shack is a publicly traded company listed on the New York Stock Exchange. The shareholders have expectations that the company and its CEO must meet. PPP’s provisions allow for restaurants with less than 500 employees per location to apply for a government loan. Since the CEO and the shareholders are aware of the terms of the loan, the business decision made by the CEO was to apply for it. Thus, the major stakeholders involved in Shake Shack’s actions are the CEO and the shareholders.

The potential implication of Shake Shack’s deeds is the loss of public trust in the CEO. The fiscal performance of the company is a public record, and people know that the CEO received $2.3 million as compensation in 2013. Applying for the PPP loan reveals the greed at the corporate level that could tarnish the company’s brand and image, leading to a loss of clients. When such a large firm benefits at the expense of small and medium-sized entities, it loses the average citizen’s support. As a result of the actions, the CEO may face criticism that could affect shareholders’ earnings from the stock market.

Kantian Viewpoint

Kantian ethics proposes that an action is moral if it is objective and rational. It is a philosophical approach that values rationality and respect for the goals of other human beings (Kantian Ethics, n.d.). Kant argued that human beings have equal worth and deserve equal respect (Singer, 1993). Therefore, one’s actions should not merely use people as a means of achieving individual goals. Based on this argument, Kant would view the activities of USAA as unethical since the decision to withhold money from people who need it is irrational. Hence, USAA’s actions imply that the organization perceives its members as a means of staying in business.

Kant emphasizes the role of goodwill in guiding an individual’s behavior and decisions. A good-hearted person develops a sense of moral worth and duty to treat everyone respectfully. In Shake Shack’s case, Kant would view the company and the CEO as unethical since the organization does not consider the plight of others. The establishment lacks moral goodness since it prioritizes the pursuit of a desirable object, the PPP loan, at the expense of others who need it more urgently. Therefore, according to Kant, Shake Shack, and its leader lack the commitment to make morally worthy decisions.

Utilitarianism Viewpoint

Utilitarianism operates on the premise that actions are right or wrong, depending on the outcomes. It is a philosophy that identifies an ethical choice or deed as one that results in the greatest good for the largest number of people (The University of Texas at Austin, n.d.). A utilitarian would view the actions of USAA as wrong since the organization prevents many needy people from accessing money designated to help them. There is no guarantee crediting the account deficits will generate more profits for the members in the current state of the economy. Consequently, the company’s actions leave the members without a source of income. Thus, a utilitarian would argue that the decision was unethical as it does not generate significant benefits for most members.

Utilitarianism evaluates choices based on the good or bad effects that arise. By failing to apply for the $10 million PPP loan, Shake Shack could have allowed several small businesses to continue operations and pay their employees. Such an action would have resulted in the greater good for many people instead of one organization that already has the capital to sustain its workers. A utilitarian would perceive Shake Shack and its CEO as an unethical, greedy outfit that lacks moral goodness. Shake Shack’s actions caused many small businesses to miss loans that would have helped several employees.

Recommended Actions

An ethical action that USAA should take to remedy the situation is allowing the members to access at least half of the stimulus money issued by the government. The organization should allow single tax filers to withdraw $600 while married couples receive $1200. It is an action that will help repair the image of the USAA since it does not deprive the members of their money. Giving them half of the stimulus checks and communicating that the need to retain the other half is fair and ethical. Besides, USAA should consider the needs of its members, especially during this pandemic that has led to the massive loss of livelihoods.

Shake Shack has vast financial resources and does not need the $10 million PPP loan as urgently as several other small businesses. The ethical action that the company can take since it has already received the money is supporting other small businesses. The CEO can initiate a sponsorship program under its Corporate Social Responsibility (CSR) division that targets small enterprises that are struggling to pay employees, rent, and utilities. It is an action that will benefit many businesses and individuals and help Shake Shack avoid criticism that could harm its stock performance. Hence, the CEO can safeguard the interests of the shareholders while helping businesses that deserve it.

Conclusion

Organizations have to make tough decisions to ensure that the needs of the different parties are met. Determining whether to prioritize the needs of the organization, its members, and the public is challenging. It is an ethical dilemma that reveals the moral goodness of companies and their leaders. Firms can opt to use Kantian or utilitarian moral philosophies to determine whether their decisions are proper. However, companies should avoid using people as a means of achieving personal objectives; instead, they should treat everyone equally and respectfully. Therefore, corporations should not evaluate their choices on legal grounds since some actions contravene Kantian and utilitarian ethics.

References

Kantian ethics. (n.d.). CSUS. Retrieved 7 September 2020, from https://www.csus.edu/indiv/g/gaskilld/ethics/kantian%20ethics.htmSinger, P. (1993). A companion to ethics. Wiley.

Renouard, C. (2011). Corporate social responsibility, utilitarianism, and the capabilities approach. Journal of Business Ethics, 98(1), 85-97. https://doi.org/10.1007/s10551-010-0536-8The University of Texas at Austin. (n.d.). Utilitarianism. https://ethicsunwrapped.utexas.edu/glossary/utilitarianism