Importance of Ethics in Management: Case Studies of IOOF Holdings and Bupa Seaforth

This article discusses the importance of ethics in management through case studies of IOOF Holdings and Bupa Seaforth. It analyzes the unethical practices of these organizations and their impact. The article also explores the theoretical frameworks of ethics, such as Utilitarianism and Deontology, used for assessing these practices.

Running head: MANAGEMENT ETHICS
MANAGEMENT ETHICS
Name of the Student
Name of the University
Author Note

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Introduction
The importance of ethics in management is crucial to understand from the point of view that
all businesses and organizations are to be abided by certain set of guidelines and it is into
only the responsibility of the organization to formulate these standards, it is equally
significant to develop such standards for all the stakeholders of the company. The
importance ensuring which in organization are: building a positive culture within the
organization, boosting consuming confidence, reducing then financial liabilities and
minimizing number of potential lawsuits. This paper will be analysing the same by
undertaking three different case studies.
Case study: IOOF Holdings
One of the giants of financial services seems to be landed in the mud for demonstrating
numerous unethical and unacceptable financial practices. The regulation and assessment of
the organizational practices of IOOF Holdings was conducted by an independent financial
advisor. The assessment depicted the breach in the reporting policies as well as the
application of financial law for the process of conducting business. The financial service
provider was found involving in insider trading, misrepresenting performance data and the
practices of front running. The unacceptable practices of the organization led to the outcome
of doubt and mismanagement regarding the organizational culture and the structural
hierarchy of the financial officials. The financial review of the organization depicted major
issues and errors, which reflects the practice of unethical approaches. The service providers
of financial offerings were exposed through the response of Federal government on the basis
of a commissioned enquiry of parliamentary joint. The service providers operating in
financial sectors were shook by the analysis of the unethical practices of National Australia

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Bank, financial planning division of Commonwealth Bank and Macquarie Private Wealth.
IOOF is now added to the list.
Few of the issues identified during the review are Questor Cash Management Fund error in
the year 2012 and Platinum Asset Management issue in the year 2012. The error in the
Questor Cash Management Fund was due to the practice of over distribution to internal
shareholders or unit holders for linking 6 million dollars. The unethical practices identified in
the case are forgery, unrealistically low bid to the clients, fraud, cover-ups by management,
insider trading, front-running of the staff members and the association of poor services. The
ethical issues also demonstrated the scenario of directing full focus on the bottom line
without considering the profitability of the law, clients and customers. The organization was
found directing the focus on the strategy of vertical integration. The review demonstrated the
issues and unethical practices in the culture of research division.
IOOF is not considered as a small business offering financial offerings as it demonstrates
market cap of around 2.7 billion dollars and around 1.54 billion dollars funds for the
management initiatives. However, the company marked numerous issues and practices which
reflected the unethical side of the business. The unethical practices of the company started
affecting the livelihood of Australian residents as more than 650,000 Australians are
dependent on the offerings and business association of Australia. Another unethical issue
identified in the case study is the dismissal of staff with ethical stands. In IOOF Holdings, if
an employee is found taking a stand, through whistleblowing or simply communicating the
issues, the whistle blowers are fired without a specific crime. For instance, in an incidence,
one of the equity analyst of the organization communicated the unfair practices and the
association of insider trading in the system, for which the employee was sacked in few days
(Lair 2017). The ethical norms was disrupted as the employee was under the case of Fair
Work. Another unethical practices identified in the case study is the misrepresentation of the
numbers of ‘out performance’.

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The unethical practices of the organization, IOOF Holdings can be assessed under the
theoretical frameworks of ethics like Utilitarianism and Deontology. According to the
principles of Utilitarianism, the ethical practices should be focussed on the ability of
predicting the outcome of a specific activity for a base of organizational strategies (Mill
2016). A person performing acts of benefits for most of the associated people without the
consideration of societal constraints and personal feelings. The ethical practices can be
reflected in the actions, which portrays greatest benefits or value for most of the people (Roy
et al. 2018). The organizational practices of IOOF Holdings does not abide by the principles
of Utilitarianism, as the organization do not consider involving strategies which adds value to
most of the people associated with the system. The organization overlooks the benefits or
association of customers and clients. Another evidence can be the major focus on the vertical
integration of financial planning and investment management. IOOF Holdings, being a
financial service provider should not involve in providing financial advice, which are in
support of the organizational profitability rather than the customers/clients.
Another theory, which can present a different view of assessment for IOOF Holdings is
Deontology. The principles of Deontology demonstrates that ethics and morality is associated
with the action/process of an activity rather than the outcome (Holyoak and Powell 2016).
One of the practices of fraud and misrepresentation can present a picture of unethical system.
The organization was involved in compensating an error of accounts by using the money
from superannuation funds rather than the available corporate resources (Ives and Bekessy
2015). The organization does not abide by the principles of Deontology as it avoided the
morality intact with the process of using inaccessible funds.
It is essential to acknowledge the issue of IOOF holding by understanding the nuances of
the theory of virtue ethics and professional roles. It has been observed that this is considered
to be one of the qualities to keep the professional morality and that of professional
responsibilities separate. This is based on the understanding that for the purpose of managing

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the professional roles, it is important to go beyond the professional skills and instil some of
the ethical and personal attributes(Annas 2015). It is further discussed that ethical issues are
of crucial importance to the managing some of the professional roles. In case of the IOOF
holdings, it can be argued that the professional performance is to be substantiated by the
ethical consideration of the person. It is in ethical and unprofessional from the point of the
managers to throw someone who is voicing their concern about the probable threat of the
whistle-blower.
With the presented assessment of the organizational practices of IOOF Holdings on the basis
of ethical theories of Utilitarianism and Deontology. Both the frameworks presents a different
picture of analysing unethical practices, one is concentrated on the outcome and other
focusses on the process of action. IOOF Holdings has been proved for being involved in
unethical practices, which can be demonstrated from both process of action and the outcome.
One of the recommendations for the financial organization is following one of the principles
of Utilitarianism, rule utilitarianism. Rule utilitarianism will ensure benefiting most of the
associated people under the boundaries of fairness and law. This principle of ethics will allow
the company to follow the path of morality and ethics along with the incorporation of fairness
and justice (Engelbrecht, Heine and Mahembe 2017). Considering the ethical solution to
these issues, it is crucial to remember that there is need to undertake ethical correct step for
the employees since they establish an example for the rest of the employees in the company.
It is also important to develop the sense of integrity in every role performed by the individual
within the context of the organization. The sense of integrity along with the sense of honesty
is the key to rightful management of the issue arising in the context of the organization. The
rights and policies of the financial service provider should be restructured by synchronizing
with the interests of clients, customers, employees and stakeholders (Pojman and Fieser
2017). The company should be involved in directing the focus on customer’s and employees’
(most of the people) rather than concentrating solely on profit maximization of the

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organization. The stakeholders should be considered as stockholders as they can add
significant level of values in the organization. Ethical behaviour will also include the
incorporation of informed decision making for the best interest of majority of stakeholders
(Engelbrecht, Heine and Mahembe 2017).
Case- Bupa Seaforth
Bupa Seaforth is known for offering a facility of home care for the elderly residents in
Australia. The home is considered for accommodating around 76 residents with single
ensuite. The organization, Bupa was founded in the year 1947 as non-profit organization.
After over a few decades, Bupa diversified its service offerings by investing in the insurance
sector, by providing health insurance, care homes, travel insurance, hospitals and
occupational health services. The string of negative news started piling up after the report of
criminal and unethical practices in the home care of Bupa. The facilities under Bupa was not
aligned with the structure of policies and rule. The organization was involved in unethical
and immoral activities for a long duration but was remaining unnoticed due to its false
depiction of the service offerings. The home care was found to be reflecting health care risks
with the lack of staff and appropriate medical care system (Engelbrecht, Heine and Mahembe
2017). Home care was designed for contributing majorly in the sector of care and health
services for the elderly. However, the organization completely ignored the maintenance of the
service quality. The organization depicts the theory of service gaps, as it lacks the
coordination between the service delivery policies and service delivery. The organization also
demonstrates the gap between the external communication of the service offerings and the
actual service.
There were various issues and concerns in the system of Bupa Health care. Lack of
communication between the organizational leaders and the staff of the home care, which
leads to the concern of service delivery. The service delivery gap was depicting the

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leadership issues associated with the organization. The service delivery concerns was also
caused due to the reasons like poor staff management plan and inappropriate resource
allocation strategy. The organization experienced a high range of negative reporting from the
families of unsatisfied residents. The unsatisfied residents were becoming prey of the
disorganised system of Bupa. The reason for the negative and unethical consequences can be
the mismanagement of the organizational leaders, which led to the insufficiency of staff
members. The insufficient count of the staff members led to the inconsistent service delivery.
One of the ethical concerns of Bupa is the misrepresentation of the quality of service
offerings. The service offerings that was being communicated to the customers through the
medium of advertisement was completely different from the actual offerings. The facility
failed at accomplishing more than 44 basic standards, which includes clinical care,
medication, staff assistance and the facilities of pain management. Summarizing the
deficiency, Bupa lacked everything it promised the potential residents. It did not comply with
the core service offering of a ‘home care facility’. Moreover, Bupa demonstrated the
unethical practice of avoiding the importance of quality assessment for dealing with the
elderly. For example there was an incident where the daughter of the resident captured an
immoral and unethical situation, where a staff member was beating up an elderly residents
instead of assisting with health care practices (Engelbrecht, Heine and Mahembe 2017).
Another set of incidents depicting the practice of unethical behaviour was the ignorance
towards the set standards. Staff members were not assisting the residents with the basic health
care activities like showering, assistance with walking them from their dining table to their
respective rooms. The behaviour of the staff members were not monitored in accordance with
the set policies and standards. The organization does not practice what they preach.
The unethical practices of Bupa will be discussed based on theoretical framework of ethics
like virtue, utilitarianism and deontology. Virtue is known for considering the factors of
motivation, morale and reputation of individuals for the assessment of unethical behaviour

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(Annas 2015). The case study clearly depicts the lack of moral sense and motivation among
the staff members, who were the point of service delivery of Bupa. Incidents like harassing
the elderly residents and refusing to assist them with basic standards of health care are few of
the examples depicting the unethical behaviour of the staff members (Sison, Beabout and
Ferrero 2017). Another ethical theory, which will contribute towards assessing the unethical
practices was the theory of Utilitarianism (Vaughn 2015). The principle of Utilitarianism
demonstrates the focus of ethical norms towards the outcome of a particular practice. The
focus on the ethical outcome ensures the benefits for most of the associated people through
the ethical results of a process. The case study depicted the facts of unethical practices by
establishing saddening outcome. The results like, not following what was being advertised or
communicated, executing poor service quality or no service assistance at all as well as the
service offerings also lacks the basic standard of medical or health care facilities (Sison,
Beabout and Ferrero 2017). Another theory, which will be used for assessing the
organizational practices of the aged Home care of Bupa is the theory of Deontology. The
principle of Deontology reflects the focus of ethics on the process or action of an activity. It
considers an activity ethical if the process of conducting that activity is strategized ethically
with the sense of right or wrong in accordance with the set standards of a home care facility
(Collins 2017). In the given case about Bupa, it was clearly demonstrated that the
organization did not follow any consistent system and/or assessment procedure for delivery
high quality service as communicated to the clients/families of the elderly residents. The
organization did not even try to change the situation before the suspension of governmental
support for six months. The organization did not arranged sufficient staff strength for
addressing the concerns of the residents. This situation can be explained with the help of the
theory of ethics of care. It is significant to understand the fact that the impact of care and
benevolence to the targeted population as part of the individual virtue. It is the normative
ethical theory that tends to hold the significance of the moral theory centre to the

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consideration of care. According to the ethics of care theory, for the management of the
interpersonal relationship, it is essential to develop the concern for care and benevolence as
the virtue. It is based on the understanding that people who have higher level of dependence
and interdependence on one another or when one individual is affected by the choice of one
authority, it is of more important for the company in charge of the responsibility of proving
care to cater and promote the importance of care in the rightful manner (Annas 2015).
Considering the basic tenets of this theory, it is essential to note that the Bupa Seaforth has
failed in number of regard for the purpose of providing quality health care to the elderly
population. It has also failed in number of other aspects like the managing the issue of
quality for elderly care it is providing. It has been observed that Bupa has failed in number of
regard to the quality offering of care and there have been number of ethical breaches for the
same.
The strategic recommendations for Bupa Seaforth should be directed towards the
improvement of the service quality of the aged home care facility. Firstly, Bupa Seaforth
should restructure its service delivery plan for understanding the gaps. Then the company
should invest efforts and financial aids for the purpose of aligning service delivery with the
policies and regulations of the government (Sison, Beabout and Ferrero 2017). As part of this
recommendation process for the Bupa Seaforth it is essential to develop quality care for the
elderly population since it is essential to maintain their ethical concern for ensuring quality
healthcare. Restructuring the service delivery plan in accordance with the set goals and
objectives of the Australian government will include the initiatives like, allocating sufficient
number of staff for better quality assistance, coordinating organizational objectives with the
factors of motivating staff members as well as incorporating comprehensive and ethical
service standards for the purpose of eliminating resident’s concerns and inconvenience
(Singer 2017).
Case: Retail Food Group

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RFG or Retail Food Group (Australia) Limited is an Australian Franchiser in Queensland.
The company owns a number of brands, Donut King, Brumby’s Bakeries, Michel’s
Patisserie, Pizza Capers, The Coffee Guy, Crust and Gloria Jean’s company. The company is
known for wide spread franchise business that offers the owners with the sales of raw
materials for a specific range of products depending on the kind of store in Australia. The
case of Retail Food Group clearly exhibit the ethical concerns of the organization with the
associated franchise. The Retail Food Group of Australia expand their reach by involving
more than 2500 stores of different food stores, resulting in the market capitalization of 800
million dollars. The case study of Retail Food Group clearly demonstrated the incidences of
potential breached and unethical practices.
One of the ethical issues identified in the Retail Food Group is mistreating the franchisees by
creating pressure of unrealistic objectives and strategies. Retail Food Group stopped
supporting the franchisee owners in terms of their increasing labour cost and sales figures.
Another unethical practice of Retail Food Group can be the directed focus towards
maximizing company profit rather than extending the support for the stakeholders. RFG is
considered to be avoiding the interests and preferences of the consumers as it channel efforts
in cutting the cost of supporting the franchisees for preserving the profit margin as well as the
company avoids the importance of product or service innovation, which can help the
franchisee owners with their sales figures. The Retail Food Group does not monitor the
quality of the food and avoids directing financial resources and efforts on improving the
quality of the food items. The Retail Food Group is involved in every activities, which can
harass the buyers of franchisees. The Group even charge a royalty amount in the occasional
decent figures of sales, which unwillingly obligate the franchisee owners to manipulate the
sales figures for dodging from the impact of royalties. For responding to this situation, the
Retail Food Group involved in the unethical practice of invading the privacy and trust of the
franchisee owners by appointing a mystery shopper for conducting an audit activities. After

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understanding the manipulation of the franchisee owners, the company started demanding for
the payment for franchisee services and from marketing fund. Another unethical practice of
Retail Food Group was structuring unrealistic fee structure without being supporting at the
time of downturn. The price of a franchisee store of Retail Food Group amounts up to
7,00,000 dollars with the association of franchise fee. They also included the charge for
training, which amounts more than 10,000 dollars as well as the additional cost of
administration fees and documentation fee. One of the unethical practices of Retail Food
Group is buying franchisee stores at unreasonable prices and reselling them with huge profit
gaps.
The unethical practices of Retail Group Limited will be assessed with the help of various
ethical theories like Virtue, Deontology and Utilitarianism. Virtue is known for considering
the factors of motivation, morale and reputation of individuals for the assessment of unethical
behaviour (Annas 2015). The company lacks the ability to motivate the franchisee owners
and support them for building positive sales figures. The principle of Utilitarianism depicts
that the ethical practices should be focussed on the ability of predicting the outcome of a
specific activity for a base of organizational strategies (Engelbrecht, Heine and Mahembe
2017). The ethical practices can be reflected in the actions, which portrays greatest benefits or
value for most of the people. The Retail Food Group does not focus on the practice of fair
and ethical outcome as they ignores the need and importance of supporting franchisee owners
for their business growth (Geeta, Pooja and Mishra 2016). They avoid the initiative of
improving the poor condition of decreasing sales through the backing of financial or human
resource capabilities in return of the unreasonable prices of selling a franchisee. Another
theory, which needs to be discussed for understanding the unethical practices of Retail Food
Group is Deontology (Shaw 2016). The principles of Deontology demonstrates that ethics
and morality is associated with the action/process of an activity rather than the outcome. One
of the practices of fraud and misrepresentation can present a picture of unethical system. The

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case demonstrates the practice of Retail Food Group, which involved unreasonable pricing
structures in association with the price of the store. The company was solely dedicated
towards the practice of maximising profitability for the business without considering the
interests and benefits of the franchisee owners and consumers, as they avoids the
incorporation of innovation in the process of product development due to the sole purpose of
expanding the reach in the market even with the comprise of poor quality and depleting sales
figures. However it is equally important for the purpose of understanding the issue to
consider the theory of agency. The agency theory is based on the resolve of relationship
between the business principles and that of their agents. It is also the process of managing the
relationship between the different agencies like the shareholders, company executives and the
agent of the company. The agency theory explains the agents as the prime resource of the
company and also a potential decision maker. Since it is important for the purpose of
understanding the unethical practices by the organization in this context, it has been observed
that the company does not follow the principles of agency theory since it does not view the
different agencies of the organization as their valuable asset and resources. Under this theory,
it is essential to understand the fact that the IOOF did not pay equal amount of consideration
for protecting the interest of the shareholders since it has been engaging in the unethical
practices and insider trading against the basic values of the company and ruining the
organizational culture of the organization. Most importantly, it is crucial for the company and
the people at the managerial role to be taken keeping in mind the ethical standards of the of
organization.
The strategic recommendations for responding to the unethical practices of the Retail Food
Group are restructuring the policies and standards of the business for strategizing the business
activities accordingly. The business activities of the Retail Food Group should be
concentrated on the causing benefits for most of the people, which includes stakeholders, like
shop owners, consumers and raw material suppliers. The motive should not only be

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concentrated on the self-interest but for the benefit of the community for becoming trustable
and respectable business entity (Small, Smidt and Yasseen 2017). The food quality
assessment as well as product development strategy needs to be incorporated on the basis of
food quality laws and regulations.
Conclusion
This paper prepared an analysis of the issue of ethical management within the context of
three case studies namely, the IOOF Holdings, Bupa Seaforth and the Retail Food Group.
This paper made an analysis of each of the individual cases in order to understand the issue
form the theoretical and practical understating of the issue. It can be concluded from the
above discussion that the issue of ethical management is one of the most crucial aspects of
organizational culture and it is equally important to adhere to these rules.

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