Unethical Business Practices in a Software Development Company

This case study highlights the unethical business practices of a software development company that disregards business ethics for monetary gains. It analyzes the situation using ethics techniques and the ACS Code of Ethics and provides recommendations for ethical business practices.

CASE STUDY: Software Development
Introduction
This Case Study is about a large Software Development Company, which is not
following business ethics with high morality and integrity for monetary gains. In this
software development organization, all financial transaction regarding the development
and maintenance work is carried out against Budget Codes, comprising a five-digit
number assigned by OSBM (Office of State Budget and Management) to report the
organization’s budget. The budget code identifies the major budget types for reporting.
Maintenance work of this software is fixed and reported in an internal code as it is
insufficient to get an individual attention. Whereas, all development cost is financed by
the customer through the internal financial transaction. However, it is considered a
frequent practice in this software development organization to secretly fund the
maintenance work without the client’s knowledge. It is no doubt that management is
taking undue advantage of the customer’ ignorance regarding the scope of the
development and hence how much he needs to pay for the development work.
Here, we get to see that the management of this software company didn’t seem to
pursue integrity and high morality. Their conscience allowed them to charge extra from
their client by adding the maintenance cost of software in development budget. They
flouted the business integrity and transparency to make more money. Such habit of
maximizing profits at any costs make companies lose clients in the long run. Raising
people's consciousness about business ethics and virtues is more important than
simply protesting against malpractices. Exercising righteous actions is still a theory for
some organization. Business judgments should always be based on values, standards,
and ethics. Business ethics is also about 'consciousness-raising' activity, where
employees are encouraged to follow the virtues and moral in their conduct to carry out
their responsibility towards their clients or customers. (Vallance,1995)

Analysis of the situation using the Ethics Technique
Over the past 25 years or so, intensive investigation on ethics and standards in
business is carried out, by philosophers, social scientists and members of the business
disciplines. Business virtues are more like social virtues like honesty, courage,
temperance, and justice. They should be conducive to the growth of a society and
public in general. (Frederick, 1999)
Here, the Software Company is making profits by sneaking in maintenance expenses
in the budget of development work in an unethical way. The organization itself is
influencing its employees to make money disregarding the higher standard of code of
ethics in business practices that are previously set at the inception of the company.
The regular operations carried out in the organization doesn’t seem to be in tandem
with the policies, an ethical business should follow. Such malpractices to create more
profit destroy the customer trust and challenge both business houses and legislators to
rethink the out-of-date legal and corporate ethical laws. This company needs to pass
on ethical business conducts along it all levels in the hierarchies by practicing them
and not by just preaching. (Malachowski, 2011)
A company should make an informed decision as to what degree they can practically
uphold the concept of ethical practices to make profits in their business. They need to
judge how much ethical practices is feasible in the contemporary market. Moreover,
careful analysis of the preferred ethical approaches in dealing with all its stakeholder is
also a paramount task to run a business smoothly. The company should make a
commitment to those ethical approaches which it believes to be the best.
In the words of Warren Buffett, "Doing the right things doesn't automatically bring
success. But compromising ethics almost always leads to failure". (Das, p 25)
Ethics are a foundation for a long-term growth in a company. Organizations with hog
moral standards never defy these rules for temporary gains, they always based their
conducts on a solid ethical footing. Thus, we can say that great companies reflects

smart business practices and always conforms to the ethical norms and virtues while
carrying out their regular activities to run their business. The organization should
address and consider the concern of its shareholders, employees, clients,
government, financial institutions, associates, and creditors etc. The faith of all these
stakeholders directly affects the reputation of a company. Winning trust for an
organization is possible only when management and staff are discharging their
responsibilities fairly. (Paliwal, 2006)
Some of the ethical concerns, a company, and its management face are pretty
straightforward, where everyone knows clearly what is right or what is wrong. Some
ethical decision-making approaches are easier to follow than others. With few
exceptions, all ethical approaches will lead to the same conclusion: Do not lie, cheat or
steal. However, not all ethical dilemmas a business face can be put in an obvious scale
of morality and integrity, they are complicated and test an organization’s ethical
practices in a best possible manner. (O'Sullivan, Smit, Esposito, 2012)
Analysis of the situation according to ICT Professional using the
ACS Code of Ethics
Large business houses should be organized into layers of management with clear
authority and each employee should have a clear understanding of his/her
responsibilities. They should share the code of ethics of the organization without any
distraction. This case study, where a software company allegedly duping its customer
by taking advantage of his ignorance, can be further evaluated in light of ICT
Professional using the ACS Code of Ethics to protect the interests of customers and
prevent business houses from malpractices.
The ICT can encourage organizations to practice transparency in conducting day-to-
day affairs. Transparency of work ethics can enhance a company’s negotiating power.
Businesses ethics have a strong impact on the functionality of a society. The aim of

every business organizations is to maximize revenue and minimize cost. While
pursuing this goal, some organizations forget to address ethical questions that arise
from time-to-time. A company should be direct and open about its ethical policies.
(Himma, Tavani, 2008)
The development of ICT has hugely impacted the functionality of our society. Even
though this technology has some negative effects, it has benefited the business
houses in numerous ways. An ethical way of working will help to address and minimize
those adverse effects. One should encourage all members of society to access the
benefits of ICT. (Adomi, 2011)
Decisions of a business organization regarding its affairs whether they are ethical
practices or unethical ones never failed to touch the lives of its stakeholders. The
underlying values and direction of big businesses have a huge impact on society. An
organization should always conform to the Code of Ethics. The society wants its
citizens to nurture ethical values and ideas that promote the honor, dignity, and
effectiveness of the ICT Professional. In view of ACS Code of Ethics, the software
company in this case study should have followed these ethical practices: (Australian
Computer Society, 2014:p 5)
 Place the interests of its customer above its own interest in making profits to
gain trust from stakeholders and society.
 Strive to improve the quality of life of those affected by its policies.
 Pursue honesty and transparency while carrying out day-to-day tasks.
 Achieve competency in areas that may affect the lives of its stakeholders.
 Strive to inculcate professionalism in its staff so that always remain positive,
honest, skilled and diligent in dealing with their responsibilities on behalf of the
company.
 Boost the integrity of the staff and management and the respect among each
other.

Code of Conduct
The ACS Code of Ethics explains how it applies to a member's professional life. A
member is required to uphold the essence of the Code of Conduct to settle vague or
combative matters related to business ethics. The list of standards in ACS Code of
Ethics is not necessarily exhaustive definite actions for any professional conduct faced
by a member. The fact that a member practices the code of conduct or does not a
guarantee in itself that he/she is behaving ethically in carrying out his/her
responsibilities.
In this case study, we get to see that the Software Organization has disregarded
almost all the standards set by the ECS Code of Ethics. It deliberately defied the
business ethics that ensures provisions of goods and services matching the
expectation of its clients and employers. To exercise ethical practice and the
organization should start respecting and protecting its client’s financial interests.
Adhering to the relevant standards and work ethics a company can build a lifelong
relationship with its client based on mutual trust and honesty. The company should
provide value for money to the client or customer for the services and products it
supply.
Practicing standards set by ECS Code of Ethics will help the organization in the
following ways: (The University of Western Australia)
 Promote better understanding across various levels
 Improve company standards and trustworthiness
 Ethical practices help in the sustainability of the company
 Encourages moral standards among the employees and it greatly helps in
building the company’s relationship with a client or other stakeholders.
 Offers uniform guidelines in carrying out the business
Business ethics at the workplace imply an alignment between the organization values

and how to achieve them. Business ethics should be set and religiously followed
without any deviations. The organization is accountable for its every conducts towards
the society at large. Failing to meet the requirements of the stakeholder and the
clients, the business of an organization will be greatly affected. If the crucial steps are
not taken at the appropriate time then it can deliberately break down the organization.
Management plays a pivotal role in inculcating workplace conducts and ethics among
employees. Seniors should set an example for their subordinates by conducting the
day-to-day business transaction conforming to the ECS ethical standards. Employees
also develop a feeling of affinity and loyalty towards the management and organization,
if it values its stakeholders' interest too along with its own motives.
The ECS codes of conduct are business ethics that helps us in imparting good morality
and how wicked action for personal gain should be avoided at any cost. Thus, an
organization must uphold these code of ethics as a yardstick for running its business
and not act like the one mentioned in this case study.
The conclusion that brings together the two analyses and presents
overall recommendations
Ethics are a foundation for a long-term growth in a company. Organizations with good
moral standards never defy these rules for temporary gains, they always based their
conducts on a solid ethical footing. Thus, we can say that great companies reflects
smart business practices and always conforms to the ethical norms and virtues while
carrying out their regular activities to run their business. The organization should
address the concerns and interest of its shareholders, suppliers, consumers,
government, staff, partners, creditors, banks, and community etc. The level of trust that
the stakeholders have in the organization affects the reputation of an organization.
Winning trust for an organization is possible only when its management and staff are
working morally while carrying out their responsibilities.

Business code of conducts protects the interest of consumers, clients, employees,
small entrepreneurs, government, shareholders, creditors etc. A businessman should
get proper education and guidance about business ethics as it is the basic framework
for running any business properly. Business ethics are based on moral and social
values and they construct the social, legal, financial, and other principles on which a
business must operate. (American Bar Association, 2009) Honesty, the basis of ethics,
helps us in reaching an agreement, whether that had to do with the hiring and
treatment of employees or dealing with customers or other companies. Unlike the
aforementioned software organization, no business should do cheat or lie to its
stakeholders to stack money or fund their personal expenses from others pocket.
(Cafferky, 2015)
According to Aristotle, as knowledge and ethics are interrelated, a person must
acquire appropriate knowledge and apply it wisely so that it complies to ethical
standards. This includes knowledge about virtues and vices, as well as knowledge
about the specific circumstances under consideration. The wisdom and excellent
ethical judgment always depend on effective knowledge management in every
situation of our life. (Morais da Costa, 2011)
With some exceptions the contemporary business ethics, ECS ethical standards are
often seen in interpersonal, rational or cognitive dimensions. Here, the dilemma of
choosing ethical conducts begins when a person encounters a situation, where the
ethical choice may not bring him instant fame or money but it can put in a virtuous
position where he can trust and confidence of others in a society. The person first tries
to understand the moral standards that can be used to take a decision in a trying
situation by looking deeply through the issues.
Thus we get to see that ECS Code of Ethics is like usual business ethics as both of
them believes in the following guidelines to carry out its daily conducts:

 One should not act as a swindler and trick one’s customer with measures such
as rising price unnaturally, providing inferior quality service or goods, or secretly
funding personal expenses from others finance, like in the case of the software
organization in this study. (Das, p 28)
 One should keep the healthy competitive environment that offers certain
benefits to the consumers or customers.
 One should maintain accuracy in the quality of supplying goods or services to
the consumers or clients.
 One should abstain from malicious business practices such as hoarding,
cheating, selling of low-quality products or services to make profits.
 One should honor the basic rights of the consumers and fair practices to uphold
their interest so that they are also benefited from consuming the products or
services. Moreover, the Code of Ethics discourages indulging in manipulative
behavior with other business associates to influence price, distribution, quality
etc. in an unethical manner. (Das, p 29)
 Every business should remember that the main aim of its sustenance is to keep
their customers content with the service and goods the business is providing.
They should get proper value for their money. Below standard services or goods
should not be sold at high prices. No organization can run profitably for a long
time if entertain malpractices in their business activities. It is always
recommended and safe for the employees to 'play by the rules'. Practicing good
and justified conducts especially in financial matters allow the organization to
gain trust and belongingness which is very crucial for the growth of any
enterprise. Moreover, the communicating within the layers of hierarchies in a
company should be transparent, honest, generous and beneficial for the society
at large. When representing our organization, we must act with professionalism,

loyalty, and sincerity, and conform to the highest ethical standards to earn the
goodwill of our stakeholders. Our conduct should be perceived as genuine and
equitable by the third party. (Das, p 31)
Thus we can see that the ECS Code of Ethics has stated the morality and ethics in
such a simple manner that every business house big or small can understand them
and conform to them in a best possible manner.
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