Ethical Issues in Coca-Cola Company

Subject: Business Ethics
Pages: 8
Words: 1836
Reading time:
9 min
Study level: PhD

Introduction

Ethics refers to a set of norms that influence the actions of individuals, teams, management staff, and customers among other stakeholders in an organisational setting. The fundamental aspects of ethics revolve around rights, responsibilities, and duties. Ethics is currently applied to management to ensure a positive attitude and participation towards the organisation’s success. The proper implementation of compensation plans to top management and performance of proactive responsibility issues in an organisation creates a state of cooperation thereby promoting teamwork. Another advantage is the respect gained by the management because objectivity is upheld. Ethical issues concerning compensation always put HR managers under pressure to issue more incentives to the top management. The justification for such actions becomes a dilemma amongst the managers and other stakeholders in the organisation. There is a tendency of favouring the interests of the top managers as compared to other employees. On the part of the responsibility, most companies have no interest in correcting the unethical behaviour since the compensation is legal. This essay provides an insight into the ethics issues in contemporary strategic human resource management by examining the compensation of different employee classes in the Coca-Cola Company.

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Explaining compensation and lack of social responsibility using the Utilitarian Approach

The current strategic human resource management implements the utilitarianism approach to making ethically recommended decisions that affect a selected group of people. The framework enables the management to weigh the different consequences that exist between good and bad actions such as fair treatments, compensations, or demoted from the current work position (Blackorby, Bossert, & Donaldson 2002). An ethically recommended activity always results in greater benefits for equal treatment of employees and motivational methods; hence, a moral decision is chosen (Collett 2010).

To effectively analyse compensation and lack of social responsibility using the utilitarian approach, an examination of the courses of such acts must be conducted to derive the desired results concerning the affected persons (Blackorby, Bossert, & Donaldson 2002). Next, a further examination of the benefits or harms that are incurred is carried out. Later, action is then chosen to derive a positive result with limited losses or harms (Collett 2010). Equity from the social relation perspective is viewed as the administration of justice, equality, collaboration, cooperation, and respect for people (French 2001).

From the management’s perspective, an act of compensation to the top management irrespective of its performance is legally right though it is an immoral practice done as other employees who perform better get fewer payments (Blackorby, Bossert, & Donaldson 2002). The discernment is applied under utilitarianism whereby the benefits of the company in terms of top management are considered first at the expense of the low employees (Braveman & Gruskin 2003).

The Theory of Equity

This theory implies that people always react depending on the outcomes of their actions. For instance, if the outcome is positive, they tend to invest more in previous actions. A state of equity results when a balance is realised between rewards and investments that are initially placed as compared to those of others in the same environment (Day & Schoenrade 2000). If the result is less than the person in comparison, inequity is realised (French 2001).

Compensation to employees in most organizations is done based on performance while top management is compensated without regard to such factors (Booysen 2007). The human resource manager understands equity in the compensation of all staff based on performance by compensating the top management with hefty salaries and benefits without examining their performance. This practice is seen as legal although it is unethical (Healy 2007; Booysen 2007; Tomei 2003).

Explanation of Compensation and Lack of Social Responsibility using the Kantian Deontology Approach to Ethics

Kant used the non-consequentialist (duty-based) approach known as deontological ethics to explain compensation and privacy in organisations. In the theory, Kant stated that doing the right action is based on a good intention of performing the act (Manners 2008). This postulation led to the conclusion that individuals are ethically obligated to do what is required of them by the organisation (Bowen 2004). The ethical obligations were perceived as universal and equal to all people (Bowen 2004; Gibson 2000). For example, practicing fair and equal compensation based on performance and upholding employee privacy in the Coca-Cola Company can be deemed a ‘universal law’ in the workplace (Research Assistant 2015).

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Explanation of compensation and lack of social responsibility using the Rawlsian ethics of Social Justice

According to Rawls, ethics issues are based on justice (Marens 2007). The proponent of the model postulates that people should design institutions even-handedly (Langhelle 2000; Ruger 2004). Although such conditions do not exist in the pure society, Rawls advocates for the minimisation of such inequalities by using at least two principles. At the outset, the liberty principle advances that all people should have equal basic rights (Marens 2007).

In the context of the workplace, a moral manager or employee will dissociate from those who are treated unfairly by offering them lower compensations as well as acting responsibly to ensure that all staff is compensated concerning their performance (Langhelle 2000). Such people tend to perceive such acts as unjust in the workplace (Term 2006).

The above principles hold that ethics can be applied in strategic human resource management to address issues that pertain to unfair compensations and lack of social responsibility through good policies on social responsibility and compensations in the organisation (Derek 2004).

Explanation of compensation and lack of social responsibility using the Rights Approach

The approach postulates that ethics should successfully protect various moral rights of the victims of unethical actions (Garavan & McGuire 2010). It emphasizes human dignity besides embracing Kant’s golden rule, which states that individuals treat their colleagues as they wish to be treated (Garavan & McGuire 2010; Trevino & Nelson 2010). The application of the approach to the context of compensation and lack of social responsibility entails promoting equal rights, opportunities, and prohibition of unethical practices in the organisation in an attempt to make individuals experience a common situation (Koonmee et al. 2010).

Executive Retirement Compensation at the Coca-Cola Company

There is currently an ethical dilemma that faces the Coca-Cola Company concerning the multinational cooperation where an issue of equity in compensation and retirement benefits of the top management is higher when compared to the other staff and employees at the lower level. This practice is done without consideration of the performance of the top management (Research Assistant, 2015).

Explanation using the Utilitarianism Ethics

One of the needs arising from the company’s perspective to compensation criterion is the retention of more experienced personnel (Arvidsson 2010). The company can be disrupted in case of higher turnover by top executives thus the enterprise will lose experienced staff (Schumann 2001).

For the determination of general happiness, the company has to consider the pains and happiness of employees such as the loss of morale due to low compensation and deterioration of health due to stress (Gagnon & Cornelius 2000). The job stress in employees emerged from the state of unfairness on lack of social responsibility of the company to cater for their welfare such as the retirement compensations and benefits which are low but they perform the bulk of work. This situation outweighs their happiness and pleasure (Gagnon & Cornelius 2000).

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The company objected to the utilitarianism ethics of examining superior happiness to everybody. The management only considered the happiness of top management through compensation without basing it on the performance while employees’ benefits are given concerning their performances (Gagnon & Cornelius 2000). It is required that the company should give special benefits to all staff based on their performance. This situation can be measured rather than basing it on the obligation laws.

Explanation using the Rawlsian Ethics of Social Justice

Rawls advocates for equal rights to liberties that include freedom of speech, rights to fair treatment, and non-discrimination (Hahn 2009). There is a violation of the principle of social justice and liberty since the Coca-Cola Company unfairly compensated lower-ranked employees as compared to the top management who had hefty retirement compensations (Hahn 2009).

The Coca-Cola Company has acted unjustly by only bending the rules on compensations to top management while ignoring the lower staff (Hahn 2009). The trust between the top management and the rest of the staff is thus diminished as a result. There is also an infringement of employees’ rights due to favours in the top rank management (Hahn 2009). The company should strengthen the codes of ethics on compensations to all staff based on performance to all staff.

Explanation using Kant’s deontological approach

Using the principle of universality to the context, the approach condemns the act of unfair compensation and lack of social responsibility by the Coca-Cola Company. Companies such as Coca-Cola will phase increased employee turnover due to their concerns being neglected (Christie, Groarke, & Sweet 2008). The benefits in terms of retirements are not also provided fairly to everybody. This situation can lead to a deterioration in efficiency and overall productivity (Ersdal & Aven 2008). Due to the unfair compensation and lack of responsibility to address the issues, the employees in the company will be less motivated since they will not benefit as the top management do while they tirelessly work to ensure improved productivity (Greene et al. 2008; Ersdal & Aven 2008). A critical evaluation of the company’s action is that it circumvented the legal dilemma since it structured various funding plans based on the general terms and neglected their social responsibilities to correct such unethical measures. Therefore, the organisation should have the moral obligation to refrain from the legal maneuvers of evading laws besides applying the rule of law to everybody including the top management.

Explanation using the Rights Approach

The Coca-Cola Company acted against the ethics of rights by exhibiting the violation of employee rights. According to the Research Assistant (2015), the employees at the lower level are given compensation concerning their performance while the same is not applied to the top management. The company has no interest to address such an issue in time. The company treats the top management with more superiority than the lower staff (Garavan & McGuire 2010). The Coca-Cola Company’s management against all odds went ahead to compensate the top management without considering their performance. This practice was unethical even if it was as per the stipulated regulations in the entity (Christie, Groarke, & Sweet 2008; Lindgreen & Swaen 2010). The company’s top management must be committed to the codes of ethics besides applying penalties to various personnel who violate the rights codes of ethics.

Conclusion

The essay has identified compensation and lack of social responsibility as some of the ethical issues in strategic human management in contemporary organisations. It has further elaborated the two concerns using four theoretical frameworks and a case scenario of the Coca-Cola Company. The essay has found out that the Coca-Cola Company uses the legal obligations to compensate its top employment while another staff is compensated based on performance. Although such acts are legally accepted in the organization, they are deemed immoral.

References

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