Approaches to Ethical Decision Making (Essay Sample)

Cathay Pacific
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Cathay Pacific
Corporate social responsibility has been a controversial topic in the past, but there is a great future for the concept. According to Carroll (2015), the modern era concept expands in applications, adoptions, and support by organizations and businesses alike. Corporates must consider the stakeholders' theory as their needs are as important as those of the shareholders. One way of achieving sustainable corporate social responsibility is setting standards of ethical behaviour in an organization. The following text is going to analyse the ethical issue by Cathay Pacific, where information of more than 9.5 million people was leaked, and the officials took long to report the leak even after discovering the same. The first section will elaborate on the issue as the company failed in consumer protection, one of the prevalence of codes of ethics. Section two observes the main stakeholders- customers, employees, stakeholders, the public, and board members. Section three will analyse the alternatives based on Babson Framework for ethical decisions making-alternatives realized, including compensating the victims and assuring them future safety, creating a whistle-blowers culture, and enhancing the IT department's security to regain customers' trust by assuring future security. Section four observing their consequences and concludes with an evaluation which observes compensating the victims and assuring them of future safety as the final jurisdiction of this text since it has the most benefits to all the stakeholders in the Cathay Pacific Data Breach.
Cathay Pacific Data Breach
Cathay Pacific observed what is known to be the largest data heist in aviation history. According to Ong (2020), the Hong Kong-based airline disclosed that they discovered the breach during one of the routine security processes. Data stolen included name, birth dates, addresses, phone numbers, expired credit card numbers, identity card numbers, nationalities, passports, among others personal information. However, there was a puzzle to be solved as only 430 credit card numbers, none complete and expired, were gathered. Cathay leaders said they had not received of any complaints of the leaked data being misused.
Hong Kong’s Privacy Commissioner unambiguously faulted Cathay on two law contraventions, taking eight months to disclose the issue and the low regard to data privacy. While in law, the breach of duty is a crime itself, the organization, on the other hand, did owe its customers duty of care as per Carroll’s four-part model of CSR. Carroll (2015) observes that an organization owes the following responsibilities based on corporate social responsibilities: economic responsibilities, legal responsibilities, ethical responsibilities, and discretionary responsibilities. In economic responsibilities, an organization is required to provide for society by producing goods or services that are needed by the society at a profit. Legal responsibilities are where the society asks for the organization to fulfill the economic mission but still consider the law. Ethical responsibilities entail society's expectations for the company to maintain moral obligation, that is, the acts necessary to maintain the license given to operate. The last part is the philanthropic responsibilities, where the society expects the organization to contribute to acts that are lead to societal good.
Thus, based on corporate social responsibility, Cathay's breach of data and choosing to keep quiet before disclosing of the issue is an ethical issue. Cathay's failure to put extra measures to protect their consumer’s private information is business negligence, which can impose enormous harm to the victims. As straightforward as this statement is, the employees and the management choose not to disclose the information after they discovered of the malpractices. This translates to a situation where, yes, the company has discovered the problem but will it bring more harm to the organization if they put it in public? For the eight-month dilemma, they had not disclosed the problem is the general ethical issues in this case.
Stakeholders
Moon (2007) observes that, the modern corporation is responsible not only to the shareholders but also to the stakeholders; in this case, Cathay's breach of data involves both the stakeholders and the shareholders. For the stakeholders involved, the consumers, the board members, employees, shareholders, and the general public. According to Freeman & Phillips (2002), a stakeholder is any individual or group that is affected or who can affect the achievement of a firm’s objectives, and in this case, the above have either been affected or helped to escalate the ethical issue.
The consumers
Cathay airlines owed their customers duty of care as for the consumers their interest is quality and value for the service they purchase. In this case, they purchased the service of flying with Cathay, and in return, they expected high-quality service back, including protection of their private information, and this is where Cathay Pacific fails. Business leaders should balance the competing interest of the stakeholders and those of the shareholders to enable for long-term survival compared to maximizing the interests of one group like Cathay Pacific did for the shareholders and jeopardized the other stakeholders with the consumers being most affected.
The Board Members
On notify the board members, the best action was for the members to announce to the public immediately so that the victims could protect themselves from further breach, for example, by changing their passwords and reporting of possible identity theft in advance. As a duty of care, board members were responsible for making the announcement immediately, but they fail at the same putting the consumer at risk and the other shareholders in a predicament. The corporation has the obligation not to violate the rights of others, and hence the organization is responsible for the effects of its actions on others. Acting as the company, the board members failed in this obligation by not protecting the consumer information and by not taking the necessary steps required early enough, suggesting they do not have the interest of the stakeholders at heart as based on the organizations' statement.
Employees
Cathay employees, for example, those at the IT department, are blamed for the 2018 incident. According to observers, the restricting that occurred at the IT department led to a loophole which enabled hackers to get the private data. An organization with an ethical culture entails that everybody at the firm observes the same ethical obligation. One of the obligations is to safeguard the consumers' information. Thus, they are affected. Secondly, employees at this section might kept quiet as they observe the risk of coming out to be greater than holding the secret. For example, in the future other firms may not want to employ an employee from the IT department -Cathey airlines.
The shareholder.
According to the theory of the firm or the traditional view, the shareholders are paramount, and their interests are precedence over others. Although this view has been refuted in the modern-day CSR definition, these are among the stakeholders who are impacted in case of an ethical issue. In the Cathey issue, the shareholders were almost affected immediately after the announcement of the leaked data. Shares of the airline took a 6.5 percent dip after the announcement in the Hong Kong trading. The organization's management has a mandate to make profits for the shareholders, and if their actions lead to loss, then they fail in that responsibility -the economic responsibility.
Alternatives
Deontological Ethics (Duty)
Duty-based ethics entails what individuals do and is not based on the consequences of their actions- that is, do the right thing, do not do wrong things, avoiding the things as they are wrong, and do it because it is the right thing to do. Deontological concepts observe that some actions are wrong or right because of the kinds of thing they are, and individuals have an obligation to act as so whether bad or good consequences are produced (Alexander & Moore, 2007). In this concept, the board members may use it as an escape from the delayed announcement if they were doing it with the intention of saving the shareholder from losses for the issue. Board members have a duty to do the right thing even if it is to produce a bad result; if holding information saved the shareholders money, then they were within their capacity according to duty-based ethics. Thus, they should reach out to all the victims and compensate them as this will go a long way to diffuse the problem and boost the organization's share price.
Duty-based ethics may also apply to the employees if they held information to save the company from a tainted public image which would eventually lead to the dipping of their share value leading to losses for the shareholders. However, based on this definition, they ought to risk their job, family unity, and reputation for making something wrong known even when it is part of the firm them employee them; in this case, Cathay employers should be whistle-blowers based on the duty-based ethics.
Based on the above respect, the shareholders and the public affected by incidence have almost the exact expectations from the organization, that is, profits that come from the company’s performance at the capital markets due to its clean public image. While for the public, they expect the company working at their society to ensure their s...