Business Ethics and Responsible Management Report on Tesco

This report provides a comprehensive analysis of the gender pay gap issue at Tesco, a major UK retailer. It begins with an introduction to business ethics and the specific ethical challenge of gender-based pay disparities within the company. The main body of the report delves into the ethical issue, examining the underpayment of female employees, its influence on Tesco's public image, and the company's role in society. It identifies stakeholders affected by the issue, including customers, employees, and shareholders, and assesses the responsibilities of the business. The report highlights the benefits of ethical choices and the negative impacts of unethical decisions, concluding with recommendations for Tesco to address the pay gap. Furthermore, the report explores relevant ethical theories, including Utilitarianism and Rawls' idea of social justice, to evaluate Tesco's actions and underscore the importance of fairness and equality in the workplace. The analysis draws on case studies and ethical frameworks to provide a well-rounded understanding of the issue, culminating in a conclusion that synthesizes the key findings and reinforces the need for ethical leadership and responsible management.

BUSINESS ETHICS AND
RESPONSIBLE
MANAGEMENT

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Ethical issue for Tesco.................................................................................................................3
Influence on the public image of the company............................................................................3
Role of Business in the society....................................................................................................4
Stakeholders and the impact over them.......................................................................................4
Responsibility of business with example.....................................................................................4
Benefit of Good choice and Negative impacts of Bad choice.....................................................5
Recommendation.........................................................................................................................6
PART 2............................................................................................................................................6
Ethical theories.............................................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business Ethics are standards referred to contemporary organization, principles, norms
and set of values which are governed for actions and behaviours an individual in the business
(Ciulla, 2020). In the project ethical issue that is spoken about is the gender pay gap. In this
project Tesco plc is chosen as the company which shows gender gay pay in the organization.
This project will suggest the company about the role it should play in the society which
ultimately influences the public image of the company. This project also explains the benefit of
making good choices and negative impacts of bad choice for the company. With help of ethical
theories this project explains why it is important for equality in the pay of gender.
MAIN BODY
PART 1
Ethical issue for Tesco
Tesco plc is multinational retailer of groceries based in UK. The ethical issue which this
company had to face was that in 2018 the company was charged by around 25000 female
employees, that the company is underpaying them in comparison to the male employees
(Sharma, 2020). This pay gap between the two gender is gender discrimination by the company.
This phenomenon questions the viability of the company towards the ethical rights. It was found
out by authorities that the company was paying female employees £3 less per hour. This was an
act of discrimination by the company which is help punishable by the Equality Act 2010. The
company says that male employees can work harder than the female employees and as a result
they provided better results as compared to female employees (Sharma, 2020).
Influence on the public image of the company
This unethical practice of underpaying the employee because of gender discrimination is
not good for the public image of the company. The influences of this will be very bad on the
public image of the company. This act of discrimination is the breach of equality act by the
company which make the company guilty in the eyes of law (Luomaranta, and et.al., 2020). This

guilt can cause the company some major issues like loss of customers, losing the trust of
employees and it will hamper the operations of the company. In the eyes of the public this
company will be a company which does discrimination between people.
Role of Business in the society
The role of a business is to produce products and services and deliver it to the customers,
when it comes to the society the role of becomes practising responsibilities which it has towards
the society. The business should be ethical in its tactics and strategies for doing a business.
Company should not for any reason should harm the environment for earning profit. The role of
the business is to understand the responsibility it has towards the customers and also its
employee (Ahamed, Wen and Gupta, 2019). The business should treat everyone with equality
with any sort of discrimination related to Sex, gender, colour and religion etc.
Stakeholders and the impact over them
Stakeholders of a company are those individuals which have some monetary or emotional
interest towards the business. Due to act of underpaying female employees, this is how some
stakeholders of Tesco where affected,
Customers :
The market of Tesco is very competitive, as a result the customers which the Tesco have
developed are by gaining trust of them. Due to this act of discrimination many customers will
lose there trust from the company, specially the female customers. Equality rights are considered
very important in the today's generation and as a result of which the company might lose its
customers (Barić, 2017).
Employees :
This discrimination was towards a group of employees of the company, which means that
group already has issues with the company. These employees will also influence the other
employees for fighting for their rights and thus the employees of this company will stop listening
to the company.
Shareholders :
The potential shareholders of the company will be affect as they will now start doubting
the success of the company thus the capital of the company will decrease. The existing
shareholders will try to get rid of the shares of the company which will decrease the value of the
shares.

Responsibility of business with example
The ethical responsibilities of Tesco plc was to treat all the people related to it activities
equally. The responsibilities of the business in not just towards the customers from which it earns
profit but also towards the employees which is the most important resource for a company. The
ethical responsibilities of a business include the recognition, interpretation of multiple values and
principles according to standards in the given field. Unlike Tesco there are some business which
follow their ethical responsibilities.
Companies like Netflix and Spotify have been seen understanding there social
responsibilities specially towards their employee (Kaufman, 2019). These companies provide
their female employee of upto 52 weeks of paid maternity leave. Whereas, Tesco provides them
only 18 weeks leave. This shows that these companies very well understand there ethical
responsibilities towards their employees.
Benefit of Good choice and Negative impacts of Bad choice
Good choice is the positive decision made by a business toward its responsibilities in
society. These choices made have some benefits for the business which are as follows,
 The employees of the company will feel treated equally and with respect this will develop
trust in the employees towards the company. It will also improve their efficiency and will
ultimately use the resources more effectively (Zheng and et.al., 2017).
 Making good choices regarding the social responsibilities will develop the
professionalism in the business. Professionalism in business will give to company
competitive edge in the market.
 The commitment level of the employees and managers will become stronger is the
company make good choices for the development of the business.
 By making good choices the company becomes successful in improving its public image
in the market and the society which has all sorts of additional benefits including growth
of business.
Bad choices are the poor decisions that a business makes towards it social
responsibilities. These choices have some negative impacts on the business as follows,
 The employees of the company feel mistreated and to not act responsible towards the
business. This results in loss of trust from the employees which reduces there
productivity and also hampers the operations of the business.

 The customers of the company due to the bad choices start feeling betrayed. The
company therefore the loses the trust of the customers, as a result the sales of the
company decrease very significantly.
 Shareholders of the company start to doubt the success of the business. Therefore, the
share values of the business decrease. Result of which is seen on the capital gain of the
company (Zheng and et.al., 2017.
 By making bad choices the company can destroy its public image which is very much
responsible for the goodwill of the company.
Recommendation
Form the above evaluation of topics related to the business ethics certain
recommendation can be made to the company Tesco for handling the situation it is in. This
company has made gender discrimination between the employees. Tesco has been responsible
for underpaying the female employee in comparison to male employees. For coming out of this
situation the company can firstly compensate the victims of the actions of the company.
Secondly the company should change its structure which was the reason for this negligence of
rights (Akrout and Diallo, 2017). Thirdly, for improving the image of the company it should
take certain measures for showing that the company realizes its mistakes. This can be done by
the company by providing additional social benefits to the employees and also participating in
social events related to anti-discrimination. This will improve the public image of the company
and also gain the trust of employees, customers and also the shareholders. These steps will be
properly followed by the company if it makes good choices.
PART 2
Ethical theories
Business ethics in the given case study can be explained with some ethical theories.
Starting with Utilitarianism theory which is also known as the theory of mortality, this theory is
the advection of actions which foster pleasure and happiness and the opposite actions which
causes harm and unhappiness (Choudhury, 2018). Basically speaking that this theory considers
an action good if the result is happiness for a greater part of the society and bad if the result
causes harm to the major part of the society. In this case study Tesco plc a multinational retailer
company is proved guilty for underpaying its female employees. This act of the company
violation of Equality act. The purpose of doing this by the company was that the company

believed that male employees can work harder than the female employee and as a result of which
they provide better results as compared to female employees. The company theoretically correct
but according to Utilitarianism theory it was wrong because the company was think about its
own benefit only. 25000 female employees where underpaid by the company which is already a
large section (Sharma, 2020). These female employees also influenced many other female
employees of other organizations thus it can be said that it was affecting a larger part of the
society. According to the theory bad actions result causes harm to the major part of the society it
is a bad ethical practice. Thus, Tesco is proved wrong according to Utilitarianism theory and
now the company must take measures for rectifying its mistakes in ethical practices.
Another theory that can be utilized for evaluating the case study related to business ethics
is, Rawls idea of social justice. This theory explains fairness as the most egalitarian and very
plausible concept towards the interpretation of concepts of fundamentalism in liberation. This
theory also states that with fairness justice can be understood even better for dominating in the
modern political traditions (Moroni, 2020). Generally speaking this theory says that in a proper
society the concept of justice is the minimum requirement for the development of individuals
which are affected from ignorance, about equality, rights and position. The case study in this
report is about Tesco plc a multinational retailer company is proved guilty for underpaying its
female employees. These actions of the company violated to Equality Act 2010 which had to
have its consequences. The company was found guilty of giving its male employees more
salaries in comparison to the female employees. Result of which 25000 female employees where
deserving a compensation of from the company. It was later realized that the company was
paying the female employees £3 less per hour (Sharma, 2020). The claims of those employees
where to get equal pays without any discrimination. Tesco's purpose of doing this was that the
company believed that male employees can work harder than the female employees and as a
result they provided better results as compared to female employees. This was the reason behind
Tesco decision to provide the female employees less wages than male employees. The company
tried to defend its position by explaining these reason. According to Rawls idea of social justice
the concept of justice is that an individual should not be affected of ignorance due to equality,
rights and position, in this case study the female employees where victims of ignorance of equity
as they where discriminated because of their gender. Thus, Tesco is proved wrong according to

Rawls idea of social justice as it was not providing justice towards the ethical practices of
equality.
These two theories proves that the actions of Tesco in pay gap of its female employees
was not ethical. Despite the reason which the company gave these actions could not have been
considered as good choice by the company.
CONCLUSION
From the above project it can be concluded that Tesco as a company was not practising
business ethics as it discriminated with its female employees and underpaid them because of
their gender. In this project the ethical issue is discussed, about the case study of Tesco company.
This project also explains how this has affected the public image of the company. In this project
role of the business is stated towards the society. The impact of this event on stakeholders are
explained in this project. This project also explains the benefit of making good choices and
negative impacts of bad choice for the company. With help of two theories of ethics having the
same outcome this project explains why Tesco was wrong by underpaying female employees,

REFERENCES
Books and Journals
Ahamed, M.M., Wen, J. and Gupta, N., 2019. Does board composition affect the gender pay
gap?. Economics Letters. 184. p.108624.
Akrout, H. and Diallo, M.F., 2017. Fundamental transformations of trust and its drivers: A multi-
stage approach of business-to-business relationships. Industrial Marketing
Management. 66. pp.159-171.
Barić, A., 2017. Corporate social responsibility and stakeholders: Review of the last decade
(2006-2015). Business Systems Research: International journal of the Society for
Advancing Innovation and Research in Economy. 8(1). pp.133-146.
Choudhury, M.A., 2018. Endogenous Ethics in Evolutionary Learning Model Contra
Utilitarianism: Endogenous Ethics. In Ethics and Decision-Making for Sustainable
Business Practices (pp. 55-72). IGI Global.
Ciulla, J.B., 2020. Business ethics as moral imagination. In The Search for Ethics in Leadership,
Business, and Beyond(pp. 121-129). Springer, Cham.
Kaufman, G., 2019. United States: leave policy, failure and potential. Parental Leave and
Beyond: Recent International Developments, Current Issues and Future
Directions. 147.
Luomaranta, H., and et.al., 2020. The role of multinational and trading enterprises in
employment and the gender pay gap: evidence from Finland. Transnational
Corporations. 27(3). p.203.
Moroni, S., 2020. The just city. Three background issues: Institutional justice and spatial justice,
social justice and distributive justice, concept of justice and conceptions of
justice. Planning Theory. 19(3). pp.251-267.
Zheng, X., and et.al., 2017, May. Location-privacy-aware review publication mechanism for
local business service systems. In IEEE INFOCOM 2017-IEEE Conference on
Computer Communications (pp. 1-9). IEEE.
Online
Sharma, M., 2020. TESCO EMPLOYEES TAKE LEGAL ACTION OVER EQUAL PAY
DISPUTE. [Online]. Available through:
<https://www.hrreview.co.uk/hr-news/employment-law/tesco-employees-take-legal-
action-over-equal-pay-dispute/127792>