Exploring Ethical Decision Making in Business

This assignment delves into the realm of business ethics, specifically analyzing how cultural values and utilitarian orientation shape ethical decision-making processes. It compares the perspectives of U.S. and Puerto Rican professionals, highlighting potential differences and similarities in their approaches to ethical dilemmas. The analysis draws upon various scholarly articles exploring these themes, providing a comprehensive understanding of the complex interplay between culture, ethics, and business practice.

Running head: DECISION-MAKING AND ETHICAL LEADERSHIP
Business: Ethics Leadership and Decision Making
Name
Institution

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Tables of Contents
Introduction......................................................................................................................................3
Brief overview of the Wells Fargo Company..................................................................................4
Unethical dealings facing the company...........................................................................................4
Theoretical perspectives of business ethics and decision-making...................................................6
Utilitarian theory perspective of Business ethics.............................................................................6
Criticism of the theory.....................................................................................................................7
Personal evaluation of the theory and the unethical behaviors of the Wells Fargo Employees......8
The stakeholder theory perspective of business ethics and decision-making..................................9
Criticisms of the stakeholder theory..............................................................................................10
Personal evaluation of the theory in relation to Wells Fargo Unethical behavior.........................11
Conclusion and recommendations.................................................................................................12
References......................................................................................................................................14

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Introduction
Business ethics have always played a vital role in the growth and development of most
business organizations by positively contributing to increased productivity by ensuring that
business practices and operations are conducted by the organizational standards with the aim of
meeting the organizational, individual and stakeholder’s expectations are met. Ethical standards
or factors are therefore important in decision making especially when an unethical behavior
occurs affecting the reputation of the organization as well as the stakeholders of the company
(Burrell, 2017). Unethical dealing or behavior is acting outside of what an individual or
organization considers being morally right or proper. Workplace ethics are important as they
ensure that there is transparency in business dealings and builds investor or customer trust with
an organization. However, an organizational ethical culture is shaped by effective leadership.
Organizational leadership has however been faced with ethical dilemmas in which they find
themselves in a situation to choose between two options neither of which resolves the situation in
an ethically acceptable manner (Arnold, 2016).
Various theoretical concepts or models have been developed to help in understanding the
basis of ethical decision-making and leadership in many organizations who may be facing or
accused of unethical dealings or experiencing ethical dilemmas. These theories include utilitarian
theory, stakeholder approaches theory, the interrogative social contracts theory, the justice
approach theory among others. This essay will therefore provide the theoretical framework of the
unethical dealings of the Wells Fargo Company in which her employees were found to have
created fake accounts in the name of their real customers. The creation of such accounts was
found to be an unethical behavior or dealing and resulted to damaged reputation of the company

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as well as loss of customers’ confidence and trust with the company (Fryer, 2016). The study
will also examine the application of the theoretical concepts, in this case, the utilitarian theory
and the stakeholder theory in understanding the company unethical dealings and how they could
be solved as well as why ethical behavior is important for the future growth and development of
the company.
Brief overview of the Wells Fargo Company
Wells Fargo and Company is an international bank in America that works as a financial
services holding company. It is the 10th largest bank in the world and has its headquarters in San
Francisco in the US. It was formed by William Fargo and Henry Wells and has total assets of $ 1
930.12B. The company has been operating on three different segments including community and
wholesale banking, wealth, and investment banking. It also offers retail, commercial services,
and corporate banking to its customers through the internet and other distribution channels to
individuals and other distribution, businesses and institutions in over 50 states in the US as well
as in other countries (Cavico & Mujtaba, 2017).
Unethical dealings facing the company
The company has been faced with great ethical issues of concern since 2011 however
through relevant investigations in the year2015 and 2016 it was found that the company
employees were creating fake accounts in the name of real customers. According to the
investigation by the Federal regulators, it was found that the company employees had secretly
created millions of unauthorized bank and credit card accounts without the knowledge of their
customers. This effect led to the accounts earning the banks unwarranted fees and allowed Wells

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Fargo employees to boost their salary figures and an opportunity to make more money (Francés-
Gómez et al., 2015).
Another reason for opening or creating the multiple accounts as investigated by the
director or management of the consumer service financial protection Bureau found that the
employees created these accounts to hit their sales targets and receive bonuses. This shoddy
behavior led to the firing of 5300 employees form the company who were held responsible for
the unethical behavior (Neesham & Gu, 2015). From the investigation by the regulators, it was
found that the employees had moved funds from existing customer accounts that ended up
making the customers be charged with insufficient funds and overdrafts due to the insufficiency
of funds in their original accounts. It was also found that the financial institution had submitted
an application for 565 443 credit accounts without their customer's consent or knowledge was
14, 000 of these accounts were found to have incurred over $ 400000 in fees, including annual
fees, interest charges and overdrafts (Kaptein, 2017).
These charges were to be paid to the respective customers by the Bank in which the
management of the company recognized its mistakes and committed itself to taking full
responsibility irresponsibility of its workers that calls for a need to make a change to its sales
practices as well as its internal oversight. Such unethical behavior by the employees as well as
lack of oversight and internal control by the company, therefore, resulted in lack or reduction of
customer’s confidence and trust and many customers have been advised to look for other banks
to invest or make their deposits to. Such behavior has led to an increased burden of costs to the
bank in paying for the charges and the overdrafts in the customers’ accounts as well as the
burden of rebuilding its destroyed reputation. Organizations are required to act responsibly by

DECISION-MAKING AND ETHICAL LEADERSHIP 6
practicing in ethical standards that ensure they achieve social corporate responsibility (Preuss et
al., 2016).
Theoretical perspectives of business ethics and decision-making
Different theoretical concepts and school of thoughts have been developed to help
different organizations make decisions and act appropriately in event of unethical behaviors in
their organizations. The theoretical concepts and frameworks provide different insights and
understanding of evaluating different behaviors in an organization to help minimize the
occurrence of unethical behaviors with appropriate internal control mechanisms (Doh et al.,
2016). Some of these theoretical frameworks include the utilitarian theory, the stakeholder theory
and integrative social contract theory among others. However, this study will focus on the
understanding of utilitarian theory as well as the stakeholder's approach theory in understanding
the business ethics surrounding the situation faced by Wells Fargo and company in
understanding her employee’s unethical behavior.
Utilitarian theory perspective of Business ethics
The theory was developed and proposed by Jeremy Bethany and John Stuart Mills to help
in understanding normative ethics that define the morality of individual or organizational actions.
The theory is based on the principle that an individual or organization moral action is one that
maximizes utility or happiness for the greatest number of people and the fact that actions are
right or moral in proportion as they tend to promote happiness or well-being for the greater good
of all (Rath, 2016). It is believed that any ethical theory, moral standards are separable into good
and bad. The utilitarian theory argues that the good morals are defined as the existence of
pleasure and absence of pain that is described as a utility. In this case, the utility is used to refer

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to any action that maximizes total benefit while reducing negative consequences of the largest
number of people that simply means that something or a behavior is good if it does better than
harm for many people (Cavico & Mujtaba, 2017).
This theory is one of the best-known and most influential moral theories and its main idea
is that whether actions are morally right or wrong depends on their effects. And therefore the
utilitarian’s believe that the purpose of morality is to make life better by increasing the amount of
ethical behavior for most business organizations and the corporate world at large (Yazdani &
Murad, 2015). The utilitarian reasoning can applicable for many purposes. One of the purposes
includes moral reasoning by employees in the organization and for any rational decision-making.
This theory, therefore, can be used in understanding the unethical behavior facing the Wells
Fargo company and arising from her employees. Since the theory advocates for ethical behavior
to be practiced for the greater good of all other people and not only for an individual gain it can
be concluded that the employees of Wells Fargo Company did not mind about the company
reputation and its social corporate responsibility to its stakeholders and more so to the company
customers.
Criticism of the theory
However the theory despite its importance in understanding business ethics it has been
criticized by different scholars for a number of reasons in which according to them the theory
does not meet their threshold of understanding business behavior. One of the critics of the theory
has been that the theory has been criticized to be distasteful suggesting that the theory does not
provide enough support for individual rights (Bhasa, 2017). The argument, in this case, is that it
overemphasizes of moral actions that promote the greater good of all without taking into account

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the individual rights. If this critic were to hold true in our case it would mean that, the employees
were right to create fake accounts so that they may hit their target. The creation of such accounts
is not the case as it is a business ethics to conduct business operations having in mind the effect it
will bring to all the stakeholders in the company that is what this theory was promoting and
therefore this critic can be said to be irrelevant in making organizational decisions.
The theory has also been criticized of impossibility meaning that the theory is not
applicable in which the people criticizing the application of the theory based their idea on the
fact that it is impossible to measure happiness or utility o consumers or customers. However, in
our case, it is possible to measure the utility of the bank's customers based on their exhibited
behavior towards the bank (Ayios et al., 2014). If the organization does not meet the demands
and expectations of their customers then the customers will look for other banks, when the bank
employees act in any unethical manner the productivity of the company is reduced as well as the
confidence of the people with the bank that can be measured. Lastly, the theory has been
positively criticized for insufficiency of the scope for not using some important source of
information to explain happiness or satisfaction. The theory can integrate other sources of
information in relation to the social corporate responsibility of business practices for the theory
to become even more relevant in the future (Fok et al., 2016).
Personal evaluation of the theory and the unethical behaviors of the Wells Fargo
Employees
The theory of utilitarian on my personal perspective plays an important role in
understanding the basis of acting morally under the principle that a good or moral action should
be of maximum benefit to the greater population other than just an individual. This means that an

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individual before committing any unethical behavior he or she should look at the impact that
action will have on other people before looking to the common good he or she would receive
from such an act. In this case, therefore, the employees of Wells could have thought of the
impact of their behavior to the customers and to the organizations at large before thinking of
their personal motives that later did cost them their jobs and put the company into a financial
crisis. The self-interests and motives of hitting their sales targets as well as increasing their
income made them overlook the greater good of the company and its customers. The theory is
therefore relevant and can be used by the organization to teach the employees about the
importance of putting the interests of the customers first and conducting their business activities
in an ethical manner.
The stakeholder theory perspective of business ethics and decision-making
This theory was developed or proposed by Freeman in a bid to explain the concepts of
business ethics in an organization. The theory suggests, therefore, that the purpose of a business
is always to create as much value as possible for stakeholders and therefore for the business to
succeed and become sustainable in future the business executives must keep the interests of the
customers and all other stakeholders in the business aligned and going in the same direction. The
theory, therefore, argues that every business creates or destroys customer values as well as that
of the communities, suppliers, financiers, and employees.
The general idea about the theory is that it tries to answer what an organization should be
and how it shall be conceptualized. The theory or concept it should be thought of as a grouping
of stakeholders and the purpose of the organization is said that it should be aimed at managing
the stakeholder’s needs, interests, and recipients. The business stakeholders, in this case, include

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customers, local communities, employees, shareholders, as well as distributors. The theory,
therefore, builds a framework responsive to the concerns of the managers who are being
confronted with unprecedented levels of environmental change. The company decisions in many
ways affect the stakeholders and therefore the company through the managers has to build
specific ethics principles whereas decisions made out of consideration of their impacts are
usually ought to be. Therefore, the theory is important in the analysis of the behavior of Wells
Fargo company employees and provides a vital role for the management of the company to
respond appropriately to enhance the company internal control mechanisms as well as the
decision-making processes of the company.
Criticisms of the stakeholder theory
The theory has however been criticized by a number of people for a number of reasons in
which most critics just like Teppo feels that the theory is not sufficient and therefore offers an
unrealistic view of how organizations operate (Lankoski et al., 2016). In his view, an
organization is said to be a shell that can be written upon freely by various groups surrounding
the company that lay a claim to the company. Therefore, the functions of the company do not
revolve around meeting the interests of their stakeholders but operate in a broader perspective in
which it has to achieve certain goals and objectives.
The theory has also been criticized that it does not sufficiently explain why a stakeholder
is as it broad. It suggests that the company stakeholder community should include everyone who
is affected by an organization. However, the argument the critics are of the view that the theory
should distinguish between non stakeholders influencers in the company and the true influencers
as the concept of stakeholdership is a concept which is more than just a union o influence and

DECISION-MAKING AND ETHICAL LEADERSHIP 11
impact (Bridoux et al., 2016). Lastly, the theory has also been criticized as lacking an explicit
specification of the relationship between stakeholders and economic reasoning. This is because
the theory in one hand has achieved a certain degree of acceptance in the company strategic
management functions but on the other hand, there is substantial economic resistance to the
shareholders (Schneider et al., 2017). However, the criticisms do not affect the relevance of the
theory in defining the organizational responsibility towards shareholders as it the case Wells
Fargo Company that has a great responsibility towards the stakeholder community.
Personal evaluation of the theory in relation to Wells Fargo Unethical behavior
This theory, therefore, provides a basis of understanding of the responsibility and the
role-played by the company management team and especially by the manager in meeting the
demands of the company stakeholders. In other words, managers have a greater responsibility
towards the stakeholders of the company other than just in the economic value of the company
and will do anything, in this case, to meet and protect the interests of the stakeholders. For
instance, in the case of our company in which the employees created fake accounts using the real
names of customers. The company reputation and image was destroyed and the company had to
take full responsibility to ensure that it owns its mistakes as a company for lack of internal
control mechanisms to deal with such issues and committed itself in compensation of the loss
incurred by their customers who form part of their stakeholders. Despite the mistakes arising
from stakeholders, the company had to deal with them separately after owning to their mistakes
as a company.

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Conclusion and recommendations
Business ethics in any organized form a very important role in enhancing the growth and
development of the company as well as helping the company to become socially and corporately
responsible. Every organization has an established ethics and code of conducts that have been
developed to guide the company operations according to the established standards and ensuring
that they minimize the chances of unethical behavior from the employees or any other which
may affect the growth and development of the company (Kristen, 2015). A good leadership is
very important as it helps in promotion of an effective organizational ethical culture. The
managers must take into consideration ethical factors as they may influence the management and
the company leadership to make sound decisions to protect organizations from unethical
behavior. Unethical behavior can have negative impacts and implications to the growth of a
company from destroying the reputation of the company, loss of confidence with the company
by stakeholders from both prospective and potential customers as well as to the community in
which the company serves (Ketokivi & Mahoney, 2016). It is therefore important for Wells and
Fargo Company to work on its ethics and code of conduct in order to improve the performance
of the company and restore the company lost glory and reputation.
Due to this matter, it is therefore recommended that the company should adopt a policy
measure that takes into account the ethical behavior of the employees and defines their
responsibility toward the company stakeholders and especially towards the customers
(Grandy&Sliwa, 2017). It is also recommended that the company should also develop an internal
control measure that takes into account the monitoring and evaluation of the activities and
operations of every employee in the organization. Such a measure will ensure these unethical
behaviors are established and determined early enough before they put the company into great

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financial crisis as well as help company develop effective measures for those found culprits of
unethical behavior in the company.

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