Compensation_V._Ethical_Models

Compensation Versus Ethical Models Background When analyzing the executive compensation the way it should be justified, many aspects must be established. First, as Plato suggested for an ideal society these individuals were not receiving four times the number of their lowliest employee. With their high amounts of compensation that was received, it can now be understood as to why many of these companies drove our economy into what it has become today. Although I do not agree with the moral decision that agreed upon by the government with the bailout plan for these companies, it will be discussed different thought processes that could have taken place to recompense the leaders of these businesses. Milton Friedman Ethnical Analysis The hypothesis that is discussed to us from Milton Friedman is that a corporate executive is supposed to run their business with the mind set being an employee of the company. They are not to take any advantages of the people that they may be doing business. “Freidman argues it is wrong for managers to use corporate resources to deal with problems in a society at large” (Halbert & Ingulli, 2012). This shows that these executive must have an understanding that they must be law abiding, and completely responsible to all corporate policies and procedures. When dealing with the compensation part under this ethical thought process, it would be best to apply it in a way in which all executives would be compensated through job performance. This would enable the executive for the company to increase the revenue, which would show complete satisfaction to the stakeholders of the business. Therefore, the person would be completing their function within the company at maximum capacity of their ability. Utilitarianism Ethics Using utilitarianism as an ethical basis for making decisions on compensation, the decision maker are compelled to specify the costs and benefits for various alternatives; and, such specification clarifies the argument and promotes rational discussion. “According to the principle of utilitarianism, the right way to behave in a given situation is to choose the alternative that is likely to produce the greatest overall good” (Halbert & Ingulli, 2012). With such wording written, an individual can make a statement that to ascertain an executive’s compensation salary it would be best to see how profitable they are for the business. When this analysis were to be managed, the stakeholders would want to see both the short-term and the long-term benefits of the decision they would be making. If they were truly beneficial with the work that would be accomplished by the prospectus candidate, then they would receive a high salary than those that less proficient. Deontology Ethics When looking to use the deontology model of ethics for compensation then we need to ask the question if everyone in the world behaved the same way' “In contrast to utilitarian concern with consequences, and with maximizing social welfare, deontological ethics is marked by steadfastness to universal principles – for example, respect for life, fairness, telling the truth, keeping promises, - no matter the consequences” (Halbert & Ingulli, 2012). Unfortunately, this is not the case in today’s business world. Not all employees get paid the same amount of money for the same amount of work done in the office. With the design being used in compensation aspect every individual should get paid the same amount of money. There seems to be no ethical justification for this process to be used for compensation of executives. Virtue Ethics The use of the virtue ethics model gives us the basis of compensation of an individual’s character. This shifts focus from what a person should do to who the person is. “Virtue ethics, on the other hand, directs our attention to what human beings are capable of being on how the can cultivate the habits of good character that will naturally lead them to their fullest potential” (Halbert & Ingulli, 2012). If this were to be used with the compensation model for executive, then you have a potential problem for those that have character flaws. There can always be more that one right answer that can cause a moral dilemma when facing a business decision, and if the executive make the wrong choice should they be punished. Ethic of Care Using the model of ethic of care for making compensation decisions, we first have to look at the connections between the people making them. If the executive is related to or has a past history with the person, this may lead to positive or negative feedback. “While most men had an individualistic focus on abstract rights and justice, women tended to focus on caring, on supporting on human interconnectedness” (Halbert & Ingulli, 2012). If this is the case, then the men that are in the executive status will be receiving a higher pay scale that the women. This makes it difficult to understand that if men are more focused on themselves, work and justice; then their compensation would be at a greater scale. If women are more caring, supportive and related the individual personnel; then they may receive a lower pay. As we now know it today in business, women are essentially seeing the same payscale as men. Conclusion The thought process that Milton Freidman uses seems to be the best option when figuring out a compensation process for executives. With this design, the executive must be compensated through job performance. There would be some disadvantages to using the utilitarian method for the compensation method due to the counting, measuring, comparing, and quantifying is very difficult. To figure out the cost to benefit ratio all of this would have to be figure out to get the understanding if the end justifies the means. The disadvantage that can be seen with the deontological process for compensation is there is no agreement about the scope and range of ethics based rights. There will be multiple problems in applying theory to real-life situations thinking that everyone in the workplace should get the same pay because everyone lives and behaves the same way. There would be some concerns with virtue ethics for us to consider since moral character of individuals and how different personality traits can contribute to, or obstruct, a happy and meaningful personal life. Lastly, when dealing with the care of ethic model for compensation methods you would have to consider the gender of the executive. It has been noted that a male seems to be more driven in the field by his work, and the female has more of a nurturing basis. Both of these attributes can be beneficial when dealing with employees and closing deals in business. So, this process could be used in a compensation factor for executives for the performance shown to increase revenues. References Halbert, T., & Ingulli, E. (2012). Law & ethics in the business environment. (7th ed.). Mason, OH: South-Western.