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Answered Same Day May 21, 2020

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Soumi answered on May 25 2020
138 Votes
BUSINESS ETHICS ISSUE
Table of Contents
Introduction    3
Summarizing the Arguments of the Article    3
Major Ethical Issues in the Article    4
Appropriateness of the Ethical Decisions made with Justification    4
Ethical Decision-Making Processes as per the Seven Moral Philosophies    5
Conclusion    6
References    7
Appendix    9
Introduction
Business ethics is an indispensable area of business that inculcate the sense of responsibility amongst the members of the organization. Business activities are liable to be conducted ethically and all the business organizations are expected that they would maintain their ethical standards, while performing their organizational operations, so that they can succeed as a legally operating firm in the market. The selected news article, related to business ethics by Mooney and Megaw (2018) from the Financial Times, is on the business ethics issue created by Lloyds Banking Group when they paid £6.2mn as total salary to their chief executive, Mr. Horta-Osorio. This business ethics issue will be analyzed here in the essay, by identifying the arguments presented in the article related to business ethics, identifying the key issues that require analyzing if ethical decisions have been made or not and the seven moral philosophies supporting the ethical decision-making process.
Summarizing the Arguments of the Article
The article by Mooney and Megaw (2018) is on the issue emerged at the Lloyds Banking Group, when the salary of the their chief executive, Mr. Horta-Osorio was increased by 11% resulting in an amount of £6.2mn, against which all the other shareholders of this financial services firm protested severely. This can be considered as an ethical issue because it was found that the amount that Mr. Horta-Osorio received as his total salary was 100 times the average amount of salary every employees receives at the Lloyds Bank (Mooney and Megaw, 2018). Therefore, it can be argued to be an unethical act conducted on the part of the management, as this was creating a bias towards Mr. Horta-Osorio and being unjust with the other shareholders of the company.
As mentioned by Williams and Horodnic (2017), shareholders are those individuals, who have their shares invested into the company and would gain the profits earned from the company in accordance with the shared that they hold with the company. However, in case of the salary increment in Lloyds Banking Group, the amount that the chief executive had invested in the company might be quite less comparatively than the amount received back by the other shareholders of the company. Thus, this might imply that the shareholders, in spite of having paid a certain amount of money into buying the shares of the company, are not being paid evenly in terms of the return on investment that they should have got otherwise.
As a result, as argued by Cortis and Eastman (2015), the question of bias towards a certain shareholder and lack of attention towards the employees would arise in the company, thus, furthering questioning the capability of the management in aligning their payments of salary with respect to the performance illustrated by a certain individual in the company.
Major Ethical Issues in the Article
The issues identified from the article relate to concerns of ineffective corporate governance, leadership, employee motivation and corporate social responsibility within the organization. Firstly, the issue of ineffective corporate governance arises because Lloyds Banking Group has paid its chief executive an amount as his salary that is comparatively more than the amount it pays to its other shareholders. Hence, as viewed by Allen (2017), if the shareholders are paid unevenly the company, then all their shareholders’ individual profit percentage will decrease. As a result, they would be considering that despite their investments in the shares of the bank, their value is not realized to the extent, it is being done for the chief executive. Hence, according to the concept of corporate governance, as mentioned by McCahery, Sautner and Starks (2016), this is a very ineffective step taken from their end. It might also lead to causing distrust among the investors that can further, lead to decrease the market value of the company.
Secondly, the issue of failing corporate social responsibility would also arise from this situation, which is because the corporate social responsibilities of an organization is usually governed by the maintenance of balance between the 3 Ps of the society. These are People,...
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