The Answer to Jed’s Dilemma, Essay Example

Abstract

Jed Richardson, director of Compliance for Geletex Telecommunications has to face a peculiar dilemma where excess commission is being paid to the sales staff in order to promote the sales of landline and cellular connections in Peru. Jed needs to ascertain whether the amount is actually a healthy incentive paid in order to maximize the business activity within a foreign environment, or is it being misutilized for unethical practices in attracting the customers. If it is the latter case, then it might not be a sustainable practice in the future as the customer base may get used to being offered additional incentives in order to get a connection. In such a scenario, this practice needs to be curbed in accordance with the existing ethics guidelines and framework of the company. If the practice is a management intervention aimed at launching the business in that country, it may be considered a perfectly ethical decision.

Keywords: Business Ethics, FCPA, Cultural differences, Globalization

Jed’s Dilemma

Cultural practices and customs in different parts of the world are so diverse that it takes a lifetime to understand them properly. An absolute negative aspect in one culture, such as giving gifts to government officials in order to promote business, may be perfectly alright in another cultural environment. The integration of various cultures and ethnicities due to business expansion and relocation worldwide has placed enormous stress on organizations due to gaps in understanding each other, which can lead to wastage of time as well as erroneous communication and comprehension. Cultural relativism has been identified as an issue in the expansion of business globally and has vital repercussions on the success or failure of an organization operating in a foreign country (Ayton-Shenker, 1995). Expanding business internationally is rife with novel problems which keep cropping up on a regular basis and have to be comprehended and tackled in an appropriate and timely manner. Ethical issues, as one understands by the standards of one’s own country may not hold true in another country. Pros and cons have to be weighed before setting up an enterprise in another country in a proactive manner, as retracting later can be impossible as well as financially compromising.

Jed is confronted with exactly a similar situation where he has to respond wisely to the situation at hand regarding the excess commission being paid to the sales staff in order to facilitate the frequency of sales in Peru. This action may not be appropriate according to the code of ethics in place within the United States, but considering the difficulties encountered in an undeveloped country, where the stress on sales staff will naturally be more due to lack of modes of communication and transport as well as the difficulties of geographical terrain and social environment they are operating in. The excess commission may therefore be absolutely necessary in order to fulfill the primary object of the organization in a foreign land i.e. the sales of telecommunication services in the form of landline and cellular connections. Attracting customers for novel services always needs to have an incentive for the salespersons as well as end user as each ne has to be convinced about the utility and appropriateness of one’s purchase. A minor raise in costs in order to promote this activity in a new and diverse cultural environment can therefore be considered a wise organizational maneuver, rather than as an unethical practice.

The US FCPA guidelines prohibit any payment to foreign government officials in order to secure business in a foreign country directly or indirectly in the form of gifts or monetary transactions (www.justice.gov). However, despite this regulation in force, past record show that almost 400 US multinationals had indulged in such activities in the mid 1970s to establish their businesses in foreign countries (www.justice.gov). Criminal and civil enforcement actions are liable to be undertaken for such malpractices, as promulgated in the FCPA. Similar guidelines exist for foreign companies operating within the United States. In this particular scenario, as the excess payments have been made to the sales personnel and not any government agency, this can be considered to be an absolutely valid management practice in order to attract more customers by providing a healthy incentive to the customer as well as encouraging the sales staff. It is therefore a perfectly ethical practice not violating any of the FCPA norms.

Normative ethical practice literature suggests that the decision making process involves reliance on the consequences pertinent to taking that particular decision, when one is faced with ethical dilemmas (Napal, 2006). The decision must be taken keeping in view the two extreme criteria i.e. maximum utility or the least harm, whichever is more pertinent with that particular decision.

Jed should therefore outweigh the pros and cons of the situation confronted by him in Peru, where paying extra amount to the sales staff serves to satisfy the criteria of maximum utility, as sales of connections is the primary business activity, which forms the core component of Geletex Telecommunications. It is therefore, not an unethical practice and should be continued for the time being until the company acquires a position and status within that country which allow it to follow its basic business principles.

References

Ayton-Shenker, D. (1995, March). The Challenge of human rights and cultural diversity. Retrieved from http://www.un.org/rights/dpi1627e.htm

Lay-Person’s Guide to FCPA , Online article accessed Nov. 22, 2009 at: http://www.justice.gov/criminal/fraud/docs/dojdocb.html

Napal, G. (2006). An Assessment of the ethical dimensions of corruption. Electronic Journal of Business Ethics and Organization Studies, 11(1), Retrieved from http://ejbo.jyu.fi/