Being a CEO of a public company, Gino thought he could use his position to influence the CSR to fund a research aimed at healing his daughter. He was expected to act in the best interest of the company, but he failed. The current project under CSR was in line with the objectives of the company. This is because the company increased sales of bicycles to kids who were obese, improving their health.
Gino’s proposal had no direct links with the profitability of the company. Instead, the company was likely to spend more money in establishing the research facility and financing the research. He also asserted that the employees would not benefit from pay rises. Such a move would have serious implications on the employees’ morale. This would in turn reduce the productivity of the company.
Gino could have used his influence to bring on board other companies to support the project. This is given the health problem affected children from across the country. This would relieve the burden expected by the workers by making them contribute voluntarily. The CEO thus should not impose a new CSR strategy against the interest of the workers and shareholders of the company. Consultations need to be conducted widely.
The self-interest and the caring nature of Gino are pushing him to use his authority to divert the corporate profits to fighting the childhood disease, which is not a legitimate corporate social responsibility for DM Bicycle Co.
Carolyn should try her best to advise the CEO on the implications of taking such a move. Gino may be guided by his conscience when making such a decision. He may be thinking that the path he has taken for the company is the best, but the situations at the workplace may be far complex. This being an ethical issue, Gino should have made a decision that would have appeared reasonable to the company’s top organ and to the workers.
The principle of universal obligation requires people in positions of authority to desist from making decisions that serve their self-interests. Rawls (1971) argues that decisions should produce the good for most people. This line of thought is connected with philosopher Immanuel Kant (Rawls, 1971). It requires Gino to make a decision that would benefit most people. According to Gino, children affected by the disease needed a solution and he wanted to utilize the company’s good performance to finance the research. The action can be considered universally moral under this principle. However, it fails to consider the pleas of the workers.
Utilitarianism is another principle that Gino should have applied. This is the most common ethical theory, and it states that business decisions should produce the greatest good for the greatest number of individuals (Gupta, 2010). The ‘good’ in Gino’s decision can be assessed under this theory by considering the net benefits accrued by all parties affected by the choice. This means that all stakeholders affected, including the employees, should be given equitable consideration. The CEO can then make a decision as long as it benefits more persons. This means that sufficiently great benefits justified on act utilitarian grounds. However, the act of utilitarianism often gives wrong ethical decisions when evaluating individual answers. In this case, the plea of workers for a decent pay is not included.
Gino may utilize the rule of utilitarianism that attempts to analyze effects of the decision on maximizing the overall utility. The focus is on the rules that made Gino make a decision. In this instance, if Gino goes ahead to implement the decision against a backdrop of revolting workers, he risks to experience the reduced production. It seems that his decision will work against the will of all stakeholders except the CEO.
The utilitarian approach has a strong appeal due to its cost-benefit character to the managers. The profit sharing is a sensitive issue and the CEO should weigh all the pros and cons of changing the CSR strategy of the company. The CEO should realize that the decision cannot benefit everyone. In this case, he is the only one cornered and should consider the benefit of the workers. This is a win-lose situation, and Gino is the loser. The business stands to gain nothing from the decision as compared to the current CSR that aims at increased sales.
Gino should, therefore, accept utilitarian thinking. Utilitarianism can work out complex situations like what is happening at DM Bicycle Company. This will allow for critical analysis of the short term and long term effects of the decision. The analysis will consider both financial and non-financial effects. The shareholders will also be considered. Since the overall goal is to corporate profitability, the top management of the company will thus make a conclusive decision that will reflect the overall greater benefit to the stakeholders.
Carolyn and other managers who have noticed the implications of the decision should face the CEO and explain to him that the company stands to lose. They should advise him to device a new strategy that will help solve the problem instead of burdening the workers. He may use his influence to lure other companies to work on the project.