Ethics in Business Final Paper: Padded Expense Report Analysis Paper Example

Ethical dilemmas arise in every organization, and the different circumstances of the employee may have varying effects on how the situation is dealt with. To gain a better perspective of how these dilemmas are dealt with, I interviewed three full-time employees from 3 different companies. Abe a delivery person for a Brazilian Steak House, Chris, a server at a Kosher restaurant, and Cam, a bartender for a Portuguese fine dining restaurant, their responses seemed to align with continuing to create fraudulent expense reports for the firm, as suggested by Taylor. To further analyze the responses, I will look at the category of normative theory that best coincides with the responses given, as well as the cognitive moral development displayed in the employee's responses. While the employees all work in the restaurant industry, some aspects of their environment were quite differentiated and may have led to variations in their responses. In the end, I will use the knowledge gained in the course merged with my moral philosophies to create the best possible recommendation for the issue.

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The employees had similar responses, but some of their moral philosophies differentiated their reasoning. Abe and Chris seemed to approach the situation attempting to create "the greatest good for the greatest number of people." also known as the utilitarian approach (Ferrell, 143). In their responses to the questions, they also displayed traits that aligned best with stage 2 and stage 3 of Kohlberg's model of moral cognitive development. The second stage is one of "individual instrumental purpose and exchange." Followers of this stage subscribe to the theory of reciprocity and fairness. While rules do play a part at times, the main goal is that the parties involved get what they deserve (Ferrell 152). Stage 3 is defined by "mutual interpersonal expectations, relationships, and conformity," which throws the interests of other people into the decision-making mix.

Similarly, to stage 2, this stage relies on fairness to create solutions, but step 3 is more selfless in the fact that it looks for what is best for others (Ferrell 153). Cam's response leaned more towards egoism. This moral philosophy defines right or acceptable behavior in terms of its consequences for the individual (Ferrell 142).

Beginning my analysis with Abe, he responded by siding with Taylor's decision to continue with the status quo. Abe explained that he has "Bills to pay" and that he'd be "paying the company's bills on top of that." Looking at the big picture, we can assume that the 20% left on the company's behalf would have a much smaller impact than if the employee had to take the monetary hit. Abe sees that by padding the expense account, the company doesn't even realize the financial burden it may be taking. At the same time, he will instantly feel the hit from the tip that the company refuses to take responsibility for. Utilitarian theory is applied, as Abe decides on creating the greater good for the employees. The employees being the greater number of people. More specifically, Abe would be an act utilitarian. Act utilitarianists believe company rules "serve only as general guidelines" (Ferrell 143). Abe has some level of respect for rules, but only if the rules serve the greatest good to the greatest amount of people. This theory recognizes that some regulations may be flawed, and ethical solutions may consider the bending of rules. Abe would identify with stage 2 of Kohlberg's model, as he also looks out for himself and the unfairness of him paying the company bills. But there is a glimpse of stage 3 as he mentions that reporting the padding may lead to consequences for Taylor, Alex's colleague.

The second interviewer had more internal conflict in his approach to the correct solution. Ultimately Chris decided Alex should report padded expenses like the rest of the company employees. Another interviewee that submits to a utilitarian approach to the ethical dilemma. As working-class individuals, my interviewees seemed to neglect big firm profits over the needs of the working-class man. A population greater than the upper echelon of CEOs would be hurt by not padding the expenses. Chris fell into the second stage of the cognitive development model, as well as stage 3. Chris also emphasized the fact that "Tips are people's livelihoods." By not padding the expense, some employees may not even leave a tip due to animosity or the financial toll, and this can leave service workers who earned those tips in disarray. Chris, like Abe, would be a hybrid of stage 2 and 3. He believes in fairness for oneself and others. As an employee in the service industry, his experiences have impacted his values and decision making in ethical dilemmas. He knows the pain of not receiving that tip. Chris is conflicted between reporting it anonymously and just going with the flow. Ultimately, he decides against the deontological approach of reporting the expense fraud to HR. The deontological approach would disregard maximizing utility in favor of doing the correct thing (Ferrell 144). Chris thinks Alex should keep quiet.

And finally, Cam also argued for Alex to pad the report, stating that "tips are a part of the service" and should be included in the expense report. Still, the main motive for taking this route is that not doing so would negatively impact Alex. Cam claims that the company should be responsible for ALL company expenses. Referring to the information given in the scenario, Cam is against whistleblowing due to the repercussions of Alex losing his job and tarnishing his reputation. Egoistic philosophy is clear as Cam seizes to mention the impact on anyone; still, Alex. Stage 2 of Kohlberg's model is reflected due to Cam wanting what is fair for Alex. Reciprocity once again rules.

While there are similarities in the work environments of the employees interviewed since they all work in the restaurant industry, there is a distinct difference in Chris's workplace. Although Chris stated that they were not obligated to read the rules, there was a packet handed to him when he was hired. It seems like there is some code of ethics distributed, although no one reads the packet. This may be a reason why Chris was the closest to leaning towards the ethical solution of reporting the fraud. The ethical culture in his workplace may have impacted him. Culture, values/norms, and code of ethics have an underlying effect on employee behavior. These three factors greatly influence compliance in a company (Ferrell 88). Abe and Cam base their ethical decision making solely on their morals and the culture implemented by the top managers. This creates an environment more prone to ethical mal-practice. Abe explained that the manager was suspected of stealing tips from the employees and that no one trusted each other. This builds an environment where the employees are more likely to retaliate. They are frightened of the consequences of whistleblowing since some were fired for doing so. From setting a bad example to a lack of transparency with reporting suspicions, a very poor ethical culture is formed. Abe has grown reliant on using his values to make decisions. This is why he chose Alex to continue with the status quo. This goes to show how creating a proper code of conduct and setting good examples can influence a firm's employees. Cam is in a similar position where the manager sets an awful example, and her ethical decision making is based on personal beliefs. The manager is constantly guilty of pouring cheap liquor in top-shelf bottles, and when Cam reported it to the high up boss, the complaint was ignored. From this culture, you can see why she would take an egoistic approach to the scenario at hand. Their organizational cultures are purely reliant on employee values to sustain any morality, and this is only stable as long as the right employees are hired. In the restaurant industry, where employees are constantly changing, this is very dangerous. Ethical dilemmas can end up costing the company money, as well as costing the company its reputation among the local customers.

Recommendations

The responses of the three employees give working in different companies show there is a big problem in the filing of tips by employees. To help perform the duties of the company without incurring personal expenses, a company should provide tips to its employees (The Department of the Treasury 2). However, this should be done according to the guidelines of the organization, and employees should adhere to such guidelines. It is moral, ethical, and standard business etiquette for employees to file reasonable tips and stop taking advantage of the company (The Department of the Treasury 4). Based on the varying responses of the employees, I would provide the following recommendations for all the firms, in general, to deal with the issue of tips for all employees:

First, to deter the employees from reporting unrealistic tips, an organization can specify the amount of money that one employee can spend on a tip and for what purposes for the specified tip (The Department of the Treasury 5). For example, a firm can specifically state that it is going to reimburse workers for tipping baggage handlers, waiters, and taxi drivers, but still, it will not reimburse for any other tips like those employees spend to pay a hotel housekeeper, and so on.

Secondly, an organization can also have specific tip guidelines. Employees can be asked to justify how they intend to spend the tips that they have provided. Also, employees who provide tips that exceed the company's tip guidelines can have their tips turned down by the accounts department and asked to revise them or justify the additional tip (The Department of the Treasury 7). Therefore, organizations should ask their employees to explain whenever they submit a tip that is unusually large or exceeds the company's set tip guidelines. This step reduces the case of employees acting unethically and tipping unrealistic tips.

Lastly, firms should ask the employees to document all their tips in a signed receipt for the tip expense reporting purposes (The Department of the Treasury 9). Signed receipts from restaurants, tax drivers, and any other service the employee use will provide the exact amount that the employee was charged and can be done for all documentable tips, still others which cannot be documented; an organization should train their employees to be honest and transparent, and report the exact cash tips that were paid for services such as parking attendants, baggage handlers, and many others. An organization may take stringent measures on employees reporting unrealistic cash tips so that other employees can learn a lesson.

Work cited

The Department of the Treasury. "Reporting Tip Income for use in preparing 2019 Returns." Publication 531 (2019): 1-11. https://www.irs.gov/pub/irs-pdf/p531.pdf