Westminster International University in Tashkent

Individual Coursework
Module Title: Contemporary Business Issues Module Code: 2UZB613 Module Lecturer: Rowan Wagner/Daniel Stevens Student ID: 00000476

27 October 2008

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How you play the game is often more important than winning (George et al, 2002, p.273)

Introduction
In contemporary business world it is no longer safe for companies to rely on financial performance as a sole criterion in decision making. Business firms are expected not only to be economically profitable, but also to adhere to societys ethical standards in order to establish positive image of the company and maintain long-term relationship with the customer. However, achieving a balance between profit maximization and ethical behaviour is a solid challenge for most organizations because ethical rules are concerned with emotional perceptions of right and wrong, which vary from one person to another. This paper is focused on how the ethical dilemma faced by NMO company is analyzed and in what way it will affect employees and work environment as a whole. Part A provides arguments for and against hiring Sid based on such philosophical approaches as utilitarianism and rights. Part B deals with how ethical concepts apply in a parallel scenario in a business in Uzbekistan.

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Part A
1. Utilitarianism: Comparing Costs and Benefit Utilitarianism holds that: An action is right from ethical point of view, if and only if, the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act the agent could have performed in its place (Velasquez, 1998, p.80). Table Utilitarianism Given the practical and rationalized nature of utilitarian reasoning, Sid has a low chance of promotion. The company is likely to incur lower health care costs if the other good-looking candidate is hired. According to a recent study of Duke University Medical Center, obese employees had seven times higher medical costs than their fit counterparts, averaging $51,019 per 100 employees, and 13 times more lost days of work, for an average of 183.63 days lost per 100 employees (Schweitzer, 2007). All these economic losses are at odds with utilitarian goals of high profits, productivity and efficiency. This is why NMO will prefer hiring fit employees with fewer health risks. Another argument against Sid is that his presentation and looks will be a part of the image of the business. Even though a research of Michigan State University found that obese people in general are not less conscientious, less extraverted, less agreeable or less emotionally stable than thin individuals, society still has a low opinion of overweight people, perceiving them as lazy, dirty, ugly, incompetent, disorganized, not worth trust and having a weak will (Chernov, 2003). Moreover, a study of the effect of the salesperson's appearance on a store's image showed that stores with obese sales associates were thought of as not so successful and effective as other stores (Chernov, 2003). Therefore, if Sid is promoted, there is a risk that the well-being of all other employees of the firm will decrease because the image of the company as a whole will be damaged. Such consequences may result in having fewer clients and lower levels of sales. On the other hand, once employees are provided with opportunities to develop their skills and receive greater job responsibilities, they believe that the promotion system is fair and their manager represents their best interests (Noe et al, 2003, p. 31). Thus, Sids promotion might increase his job satisfaction and commitment to the company which would be essential instrumental goods leading to higher productivity and efficiency. Finally, if Sid is not hired simply due to producing little good for the greatest number of people, the firms staff are likely to question the fairness of such decision. Employees may become convinced 1. Definition of

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that in spite of their professionalism and contribution to the companys success, their interests can be easily sacrificed for the sake of the majority. People will feel unprotected and may assume that the management is simply using them. As a result, such negative perceptions may lead to poor organizational culture, low employee morale and high turnover. 2. Rights: Protecting Entitlements The given ethical reasoning holds that human rights are based on moral norms and principles that specify that all human beings are permitted or empowered to do something or are entitled to have something done for them (Velasquez, 1998, p.87). Table 2. Definition of Rights An emphasis on fundamental liberties and moral rights means that, as any other human being, Sid should be provided with equality in the pursuit of his interests. He is an individual who is entitled to work no matter what the moral requirements of society are. But for NMO using human rights as a basis for decision making is quite problematic because no guidance is given on how to balance conflicting rights (Frederick et al, 1988, p. 60). The companys management would have a hard time deciding whose moral right to hold a job, Sids or the second candidates, should be limited in the favor of the other. Taking into account the growing concern in the US for equal employment opportunities, the issue may become even more complicated due to the fact that Sid is a white male, whereas the other specialist is a woman. Therefore, NMO should be selective and hire people on the basis of their qualifications rather than human liberties. The job of consultants involves public contact, but does not require strenuous physical activity, like in the case of firemen, and peoples looks are not the key priority for the business, like in the fashion industry. This is why personal appearance of the applicants should be considered in terms of their clothing, grooming and professional presentation rather than body size or shape (Klein, 2003). Thus, Sid should get a promotion as long as his qualifications exceed or are equal to those of the other candidate bearing in mind the companys preference in hiring existing employees over new ones if they are equally qualified. Such selection policy would conform to ethical values of treating everyone with respect, in a fair manner, and in a way that promotes their well-being (George et al, 2002, p.533). Unfortunately, hiring decisions are not always based on ones professional characteristics. The problem is that moral standards are hard to define and for many companies obeying the law is the only determinant of ethicality of their actions. Many anti-discrimination laws do not cover obesity and fail to

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specify it is an offence to discriminate against someone based on their physical appearance (Lam, 2007). The Americans with Disabilities Act provides a protected disability only to morbidly obese people whose body-mass index (BMI), a ratio of weight and height, is 40 or above, while a BMI under 25 is healthy (Klein, 2007). Furthermore, weight-based discrimination is still not illegal in forty-nine US States, except for Michigan where weight and height are included as protected categories in anti-size discrimination laws (Council on Size and Weight Discrimination, 2008). Similar formal bans on weight discrimination were adapted only in Washington, DC, Santa Cruz and San Francisco (Teaching Tolerance, 2008). In other words, although weight-based discrimination is ethically wrong, it is still not prohibited by the law in most US States and therefore may be widely practiced by businesses.

Part B
If I were Sids boss in a parallel scenario in a business in Uzbekistan I would hire him under a 90day probation period in accordance with Articles 84 and 85 of the Labor Code of Uzbekistan (1996). I believe that ethics should be broader than mere economic profit and law. Looking at ethical behavior from the rationalizing perspective is an oversimplification of a complex set of elements that impact business performance. People do not work just for money. They are also motivated by non-financial factors like attention, praise, recognition, responsibility or relationship with co-workers. According to ethics of care, it is important to be partial towards someone with whom we have valuable relationships by means of responding to their values and desires (Wikipedia, 2008). Thus, if Sid is hired, his needs in achievement, learning new things and reaching full potential will be satisfied. He will be motivated to work hard since the new job will be enjoyable for him. Moreover, by hiring Sid I would reward him for his 10-year contribution to the firms success. He will see that the company values his talent and cares about him. Besides, given Sids experience and expertise, to retain and motivate him is important for NMO taking into account so called brain drains caused by labor migration of the most dynamic and talented part of the Uzbek population to foreign countries (Muhtarova, 2008, p.14) (see Appendix for details on labor migration of Uzbek people). However, as a manager I need to make sure that the business remains profitable. I would not consider possible higher costs of Sids health insurance and medical claims as an argument against hiring him. Human resources are of utmost importance in gaining and sustaining a competitive advantage. Employees require constant investment, no matter whether it is associated with their training, development, benefits, compensation or other work-related aspects. The rationale is that the return on

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such investment will be in the form of higher profits, improved performance and overall commitment of employees. But the difficulty in Sids situation is that I am not sure whether he will succeed in impressing the specialists at major benefits consultancies in Uzbekistan and generate sufficient income for the company. The Labor Code of Uzbekistan does not cover obesity (Article 6, 1996). Moreover, using personal appearance, age, gender and even ethnic background as selection criteria in hiring decisions is quite common for most Uzbek employers. For example, applicants for the position of a restaurant server may be required to be females, 18-25 years old, good-looking and with European appearance. It is hard to determine whether Uzbek society has the same stereotypes towards obese people as Americans do. There is a considerable research gap in terms of impact of obesity on local employment practices, the number of obese people in Uzbekistan and societys attitudes towards them. For these reasons, I would introduce a 90-day probation period. If Sid will succeed in consultant relations and his performance will be average or above average, he will stay with the new job. Otherwise, I will assign him to another department. It is important to note that a 90-day probation period will be introduced for all new hires, not just Sid, so that everyone is treated in the same way. I believe that the decision will be ethical since Sid will be hired on the basis of his qualifications and his performance will be evaluated by means of objective quantifiable measures, i.e. the number of RFPs received from the companies. At the same time hiring Sid and other employees under a 90-day probation period would ensure a better personality-job fit and higher job satisfaction.

Conclusion
Ethical decisions are not easy to make. They involve a lot of controversy and their outcomes are hard to predict. There is usually no 100 percent ethically correct or incorrect action because companies have to make choice based on their long-term goals, business environment, organizational culture and availability of resources. Business ethics is broader than mere economic profit and law. Firms should treat their employees and customers with respect, care about them, serve their interests and adhere to their ethical values and norms. Only in this case companies will be rewarded with employee commitment and customer loyalty, which are central in gaining competitive advantage and achieving overall organizational success.

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Appendix Labor Migration in Uzbekistan1

Currently 1-1.5 million Uzbek citizens, i.e. 12-18% of able-bodied population of Uzbekistan, are involved in labor migration. The main targets for Uzbek migrants are Russia (70%) and Kazakhstan (13%). Such tendency is caused by a growing difference in incomes of the population between the countries, visa-free entrance, high labor demand, common systems of transportation and communications as well as similar mentality of people. A smaller percentage of Uzbek inhabitants emigrate to Israel, Germany and the USA. Labor migration has a lot of winning points for Uzbekistan. First of all, it helps to reduce the pressure on a labor market and deal with the problem of oversupply of human resources. Second, consumption and savings of the population increase due to significant foreign currency incomes (remittances). The inflow of remittances reaches 7-10% of the GDP and is a new factor of economic growth. Third, knowledge about new markets, practices and technologies are acquired for further economic development. Finally, migration creates good ground for cooperation among countries. At the same time one of the negative aspects of labor migration is brain drains. Not only low qualified citizens, but also the most educated and talented part of the Uzbek population leaves the country. Besides, although migration promotes urbanization in new areas and provides flow of the rural population to cities, the process is complicated by bureaucratic regulations imposed by local authorities. For example, people from regions need to have a Tashkent propiska, i.e. a document certifying their residence, in order to be allowed to work in Tashkent. Apparently further improvement of the system is required.

Source: MUHTAROVA, R.,(2008). Influence of migration and remittances on Uzbekistan. Caucasus & Central Asia Review. Budapest: UNDP.

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BIBLIOGRAPHY CHERNOV, A., (2003). Weight Discrimination: The Effects of Obesity on Employment and Promotion. [online]. Available from: <http://www.uhh.hawaii.edu/academics/hohonu/writing.php?id=111> [Accessed 18 October 2008]. COUNCIL ON SIZE AND WEIGHT DISCRIMINATION, (2008). Weight Discrimination Laws, Rulings, Attorneys Laws. [online]. Available from; <http://www.cswd.org/docs/legalaction.html>[Accessed 24 October 2008]. FREDERICK, W.C., DAVIS, K. AND POST, J.E., (1988). Business and Society. Corporate Strategy, Public Policy, Ethics. 6th ed. New York: McGraw-Hill. GEORGE, J.M. AND JONES, G.R., (2002). Understanding and Managing Organizational Behavior. 3rd ed. New Jersey: Pearson Education. KLEIN, K.E., (2007). Hiring Obese Employees. [online]. Available from: <http://www.businessweek.com/smallbiz/content/may2007/sb20070502_353092.htm>[Accessed 18 October 2008]. LABOUR CODE OF UZBEKISTAN, (1996). Chapters 1, 6. LAM, M., (2007). Obese People Denied Jobs . [online]. Available from: <http://www.news.com.au/dailytelegraph/story/0,22049,22775760-5001021,00.html>[Accessed 18 October 2008]. MUHTAROVA, R.,(2008). Influence of migration and remittances on Uzbekistan. Caucasus & Central Asia Review. Budapest: UNDP. NOE, R.A., HOLLENBECK, J.R., GERHART, B. AND WRIGHT, P.M., (2003). Human Resource Management: Gaining a Competitive Advantage. 4th ed. New York: McGraw-Hill.

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SCHWEITZER, T., (2007). Obese Employees Cost Companies More. [online]. Available from: <http://www.foxnews.com/printer_friendly_story/0,3566,274978,00.html> [Accessed 18 October 2008]. TEACHING TOLERANCE, (2008). Tolerance in the News. [online]. Available from: <http://www.tolerance.org/news/article_print.jsp?id=505>[Accessed 24 October 2008]. VELASQUEZ, M.G., (1998). Business Ethics: Concepts and Cases. 4th ed. New Jersey: Prentice Hall. WIKIPEDIA, (2008). Ethics of Care. [online]. Available from: <http://en.wikipedia.org/wiki/Ethics_of_care>[Accessed 26 October 2008].

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