Business Ethics: PEO’s Case Study

Subject: Business Ethics
Pages: 2
Words: 652
Reading time:
3 min
Study level: Master

Case 13.3 from Northouse’s Leadership: Theory and Practice (2021) describes a scenario about David Jones, a manager in a large printing company. Jones contacts a professional employer organization (PEO) in preparation to buy or start a new company. Since his quota estimation requests to the PEO were preliminary, the organization provided Jones with generic quotes. However, the human resources quota that it issued was unusually high, which attracted negative attention during a review after David Jones had bought a small company.

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Leadership judgments are innately dependent on the values and morals of the individuals. According to Grigoropoulos (2019), ethics play a large part in everyday decision-making, and this scenario is not an exception. Since the original proposal was deemed unusually high and eventually changed, it seems that the PEO did what was ethical toward Jones. Companies strive to profit, which means that the PEO had to balance lowering the proposed quota for ethical reasons and making money. If I were in the PEO management, I would have chosen to prioritize the client over the salesman, who would potentially lose some of his commission. Since it was the salesman’s mistake or intentionally unethical proposal, it would be ethical for him to bear at least a part of the consequences.

Regardless of whether deontology or teleology are considered the moral guides for judging the PEO’s actions, lowering the quotas after revision is ethical. Deontology implies a universal moral rulebook, while teleology allows for case-by-case judgments (Baumane-Vitolinaa, I., Calsa, I. & Sumiloa, E., 2016). From a deontological point of view, the PEO should have lowered the quotas significantly for David Jones since the original quotas were unreasonable. From the teleological perspective, the quotas should have been reduced due to the potential ramifications for the company’s reputation. The organization had several factors to consider: the gouging concern, the possible accusations of discrimination, and the salesmen’s morale. The fact that the PEO’s revised proposal contained prices that were still higher than otherwise expected suggests the ethical decision was made from a teleological perspective.

Based on the PEO’s decision to lower the quota estimates for David, but still to above the industry average, I would not judge the organization to be ethical or just towards the community. It seems that the company’s main concern was its reputation rather than the ethical considerations of gouging the customer. Although the PEO changed the contract after the client had already signed the original one, the organization was the more knowledgeable party. The PEO must provide these services, such as HR expertise, to companies that hire them (SHRM, 2019). Hence, it had the ethical obligation to inform the client of their initial mistake.

From the perspective of David, as the less knowledgeable party, I would view the company’s actions as ethical. Since I would not be able to assess the quotas myself correctly, I would understand that additional costs would be unavoidable. As a part of the management, I would be forced to make balancing decisions where there would be no absolute winners. However, with a responsibility to my employees, I would consider this decision to be relatively ethical. As a salesperson, I would be disappointed in the decision but understandable the ramifications I must face and hence consider this decision ethical. As a member of the printing community, I would feel the decision to be righteous as the prices were decreased. However, the initially unreasonable cost would make me question the integrity of the PEO.

Although I do not have any professional experiences that would help me with this scenario, I could imagine being split between the different factors while making a moral decision. We make millions of ethical choices every day, sometimes without realizing it (Hedge, 2021). An example would be choosing between lying to someone to help yourself and staying truthful regardless of repercussions for ourselves. As innately selfish beings, humans will always choose themselves and their kin first.

Reference List

Northouse, P. G. (2021) Leadership: Theory and Practice. 9th edn. Los Angeles: SAGE.

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Grigoropoulos, J. E. (2019) ‘The Role of Ethics in 21st Century Organizations’, International Journal of Progressive Education, 15(2), pp. 167–175.

Baumane-Vitolinaa, I., Calsa, I. and Sumiloa, E. (2016). ‘Is Ethics Rational? Teleological, Deontological and Virtue Ethics Theories Reconciled in the Context of Traditional Economic Decision Making’, Procedia Economics and Finance, 39, pp. 108-114.

SHRM (2019) What is a PEO? What are its advantages and disadvantages? Web.

Hedge, S. (2021). What Is An Ethical Dilemma? Web.