In our last Analysis of Business problem class, the issue of ethics was discussed in the context of decision making. What does a decision maker need to bother about making ethical decisions? What exactly is the perception of people to ethics? Ethical decision-making refers to the process of evaluating and choosing among alternatives in a manner consistent with ethical principles. In making ethical decisions, it is necessary to perceive and eliminate unethical options and select the best ethical alternative. The case of “Gravity payments” was analysed and this will be discussed in the context of ethics and stakeholder engagement in this blog.
In the Gravity payment case, we studied the case relating to a young chief executive officer and founder of Gravity payments Dan Price, who unilaterally increased every employees’ wage at Gravity payment, a company he co-founded with his elder brother Lucas Price, to US$70,000 following a 2010 study conducted at Princeton university by economist, Angus Deaton and psychologist, Daniel Kahneman, a Nobel laureate. According to the study, those who made less than $75,000 were likely to experience emotional pain and job dissatisfaction. However, even if people made more than $75,000, they did not feel any greater level of happiness. In essence, the study suggested that emotional well-being increased with economic compensation, but only up to the amount of about $75,000.
The reactions following the announcement were mixed, while some employees felt that it was a noble idea especially when the objective was to bridge the income gap, others felt that they have been betrayed. For those that supported him, they felt that they can now afford the basics of life, as a result the number of applications received just after the announcement increased to about 5,000 in one day. The number of clients also increased from 200 per month to about 350 just immediately after the announcement. The company and its CEO became a front-page media story and they trended even on social media and Dan was applauded for his socialist idea.
Meanwhile, some employees who are already receiving the minimum amount before the announcement felt cheated as they feel that they were no more being adequately compensated for their skills and experience. Some even felt that their wages were being disclosed publicly and they were therefore exposed to all form of issues as a result of that. As a result, staff had to leave the organisation. Some competitors also felt that the company were not playing fairly, since their employees were also demanding a pay rise as a result of the announcement and the managers were feeling that their employees were already seeing them as being stingy for not been able to implement the same pay structure as that of gravity payment.
Also, Lucas had to sue his brother for not considering his interest as a minority shareholder in the company when the decision was taken and this affected the family relationship. His argument was that the company might not be able to sustain the increase in wages in the long run. The company currently plan to use part of the profit to pay the increased wages. The case actually shows how a decision that people praised as the right thing to do suddenly turn to the one that negatively impacted the business. Therefore, the issue of ethics is not static, it actually depends on the perspective at a particular point in time. What is ethical at a point in time may not at another point in the same circumstance. Therefore, there is need for business decision maker to also feel the impulse of the stakeholder when making decisions that affect them.
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