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Extensive teaching note based on interviews with Theranos whistleblower Tyler Shultz. The teaching note can be used to explore issues around whistleblowing, leadership, the blocks to ethical behavior inside organizations, and board governance.

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Case Studies

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A case study of ethical issue at Gucci in Shenzhen, China

• Published: 09 October 2012
• Volume 2 , pages 173–183, ( 2013 )

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• Li Wang 1 &
• Robin Stanley Snell 2  

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Introduction

Gucci is a multinational company with over 270 directly operated stores worldwide, serving customers of elite goods, and generating billions of dollars revenue per year. It has an iconic, even noble, luxury brand image in the Greater China region, where its revenue increased by 35.6% in the first half of year 2011. Gucci has expressed its intention to accelerate the process of opening stores on the Chinese mainland. Recently, however, the company came under fire after five former employees from its flagship store in Shenzhen revealed information online about inhumane working conditions and labor mistreatment in the company. This paper focuses on events that took place in a Gucci flagship store located in Shenzhen, China.

This paper has two main research objectives. The first is to analyze why labor abuses (as exemplified in the Gucci case) are allowed to occur and persist in foreign-invested firms that are located in the People’s Republic of China (PRC). The second is to develop a multi-stakeholder approach to preventing further abuses of this kind. The next section provides a description of the case, focusing on the ethically problematic labor management practices and arrangements and noting some legal violations. We shall then present three propositions regarding why some foreign firms operating in the PRC and host local governments ignore and/or tolerate labor abuses of this kind. We follow this with a section in which we apply two different approaches, traditional Confucian ethics on the one hand and modern labor rights theory on the other, to provide a robust ethical basis for stakeholders to argue from, while taking action to persuade others that such malpractices are ethically unacceptable. Next, after identifying four stakeholders for the Gucci case, we suggest how each of them may play a role in discontinuing and/or preventing future labor abuses. We conclude with some further theoretical and managerial implications.

Case description

The employees’ complaints.

On 8 October 2011, an open letter—<A Public Letter to the Top Management of Gucci from Former Employees who resigned collectively> was spread on the Internet. This letter was written by five former employees of the Gucci Shenzhen Flagship Store. In the letter, they alleged that employees caught an occupational disease, that there was one miscarriage attributable to excessive working hours and that there was no compensation for these hardships. Moreover, they stated that there were excessive restrictions on employees’ behavior, including the need to obtain permission before getting a drink or a snack, and strict limitations on toilet time. They stated that, while the restrictions were applied strictly to all frontline employees, including one who was pregnant, they were not applied to the managers. The letter also claimed that the employees had to pay compensation for any product that was stolen or went missing, even though these luxury products had already been insured. They also criticized Gucci’s goods exchange policies which appeared to be arbitrary and dependent on the manager’s mood. All in all, they accused Gucci of lacking systematic and humane management and complained that their rights and dignity were being violated.

Once revealed online, this report aroused widespread discussion among Internet users. Further information emerged, suggesting that the case also involved falsification of records about working hours, and the imposition of forced, unpaid overtime work. Gucci implemented a system of working one full day, followed by a day off. Officially, 1 day’s work was about 10 h. But the workers complained that, on their working days, they were required to clock off at a certain time to establish a false electronic record, and then continue their work, counting goods until two or three o’clock in the morning without compensation.

Some netizens labeled Gucci as a “sweatshop.” Many opined that the labor management practices of some multinational companies and brand owners failed to match their international status. Several days later, the Gucci headquarters in China issued a statement, saying that “Gucci does not and will not endorse or tolerate the alleged malpractices.” Gucci also stated that that the company had conducted thorough investigations and had implemented a series of measures, including the replacement of the store manager and assistant store manager. Meanwhile, the Human Resources Bureau within the Legal Department of Shenzhen’s Luohu District said they would further investigate the case. On 26 October 2011, Gucci and the former employees eventually arrived at a settlement in conjunction with Shenzhen Federation of Trade Unions.

How Gucci used the labor dispatch system

Dispatch is a labor management model which separates recruitment from employment. Relationships under the dispatch system are portrayed in Fig.  1 . The employee leasing companies have labor contracts with the workers, and they send workers to other companies in which these workers actually work. The labor contract relationship exists between the employee leasing companies and the dispatched workers, but the actual working relationship is between the workers and the companies in which they work.

Relationships under the dispatch system

In this form of employment, the company which actually “use” these workers is only responsible for paying wages, while other aspects, including social security and dismissal compensation are passed on to the employee leasing company. The labor dispatch arrangement serves to reduce the user companies’ costs and contractual responsibilities for the employee. They can incur lower training costs and are not required to make social security arrangements. Because of these features, this employment model is widely used in China. The Gucci stores in Shenzhen actually adopted an even more complex dispatch system, involving at least three employee leasing companies that were located in Shanghai.

Legal considerations

One legal consideration is that, although the labor dispatch system has been officially adopted as way of arranging temporary employment only, Gucci used the system to employ people for durations of more than 2 years. Another is that many of the Gucci store employees are female and that pregnant employees legally enjoy special labor protection. According to the “Labor Contract Law,” female workers during their pregnancy should not participate in the state’s third-grade physical intensive work. Such work is deemed not suitable for female workers; for female workers who are more than 7 months pregnant, there should be no overtime work, and they should not be required to join night shifts. Furthermore, it is a legal requirement that sufficient rest periods should be arranged for such employees.

Why do labor abuses happen in China?

Underpinning the legal considerations, the basic ethical issue in this case is the violation of labor rights, through non-remunerated and forced work, inhuman restrictions, and other unreasonable policies. Gucci is by no means the first multinational company that has been accused of operating a “sweatshop” in Asia. For example, Nike was involved in abusive practices in Indonesia (Krueger 2007 ). What is especially interesting about this case is that it involves retail employees rather than factory workers. Also notable is that such labor abuses are generally uncommon in the Western countries, where these multinational corporations (MNCs) are quartered. Why did they come to China and “collectively fall ill”? We envisage that there are three possible reasons: First, overtime work without payment and other illegal employment arrangements are tolerated among local firms, and when foreign brands and multinational companies come to China, it is an easy temptation for them to slide into these malpractices, while giving themselves the excuse that it is a way of “adapting to the environment” (Hofstede 1993 ), i.e., moral relativism. Hence,

Proposition One: A philosophy of moral relativism allows some foreign firms in China to level down to abusive but locally condoned labor management practices.

The second possible reason for the persistence of labor abuses in China involving MNCs is that these large companies do not pay attention to the labor laws, let alone lobby to strengthen the laws and their enforcement, because they think their investment will furnish the local government with a good-looking GDP and that this is all that matters to them. Hence,

Proposition Two: Some foreign firms in China are preoccupied with economic goals, assume that local governments share their preoccupation, and believe that, because of shared economic imperatives, they can ignore the labor laws with impunity (Gao 2009 ; Ip 2009 ; McDonald 1995 ).

The third reason is closely related to the second one and concerns how the pressures faced by local governments are reflected in their actual preoccupations. Despite movement toward the balancing of economic imperatives with social and environmental concerns under the “Harmonious Society” policy platform (See 2009 ), local governments still remain under pressure to meet economic targets. Although there is a considerable body of labor laws in the PRC, officials may perceive there is little risk of being punished if it is discovered that they have failed to enforce them. Furthermore, some local governments may be afraid that the strict implementation of the labor law will drive investors away and may consciously turn a blind eye to illegal and unethical practices by firms under their purview, resulting in lax monitoring and non-enforcement.

Proposition Three: Because some local governments perceive that economic imperatives override social responsibility concerns, they are lax in enforcing labor laws.

Two perspectives—how can we tell right from wrong?

We shall draw on two very different perspectives to conduct a moral evaluation of the labor management practices in the Gucci case. The first perspective is that of traditional Confucian ethics, the second is modern labor rights theory.

Confucianism

The core of Confucian ethics is comprised of five values. We shall focus on three of them—Ren, Yi, and Li. Ren is a capacity for compassion or benevolence for fellow humans. It is essentially expressed in social relationships. One can have a harmonious relationship with others and thinking about others’ stakes when doing business draws on Ren (Wang and Juslin 2009 ). In effect, Ren expresses the Confucian formulation of the Golden Rule: People should not do to others things that they do not want others to do to them. Consideration for others, caring for others, and loving others means Ren. By contrast, in the Gucci case, the management operates only with the economic interest of company in mind, with no regard for workers’ basic needs. It abused the dispatch system for the sole purpose of lowering the cost of hiring people, without considering workers’ needs for adequate salaries, social insurance, training … etc, thereby failing to practice Ren.

Of equal importance in Confucian ethics is Yi, which concerns the morality of righteousness. It is the capacity to discern appropriateness and the right direction for actions, relationships, and other human matters. Helping people when they are in need is one expression of Yi, but in the Gucci case, Yi is absent. For example, the employee who was pregnant should have been treated with special care, and help should have been given to her when she needed it, but to the contrary, long working hours and strict working restrictions led to her miscarriage.

Third, Confucian morality is regulated by Li, or decorum. This consists of a body of norms, rites, and unwritten understandings that govern and regulate social action in every aspect of daily endeavor (Lau 1992 ). Respecting people and their dignity involves Li, but according to the employees’ allegations, the management did not respect their dignity. Subject to many unreasonable restrictions, they were treated as if they were mere instruments to make money, rather than as human beings with dignity, and did not receive due respect and appropriate treatment.

A related aspect of Confucianism concerns the respective duties of the parties in a dyadic relationship. The junior party has the obligation to serve and obey the senior party, and the senior party has the responsibility to teach, lead, and look after the junior party. Applied to modern employment relationships, this would entail a benign arrangement under which the employees would be recognized and cherished as a key stakeholder group of the company, with which the company would build and maintain a cooperative relationship and seek win–win outcomes. “Squeezing” rather than nurturing employees may save economic costs and lead to more profits in the short-term, but, as in this particular case, is likely to give rise to low morale among employees and may lead to emotional distress and physical harm. The long-term risks include that employees will make their grievances public and that the company’s reputation will be harmed as a result.

Labor rights

In the advanced Western economies, the moral basis of human rights has been incorporated into legal rights. There are strong and well-enforced government laws and regulations and established labor to advocate and negotiate on behalf of workers; well-developed nongovernmental organizations (NGOs) and independent media make problems transparent and advocate remedies. There are also high levels of citizenship education. Worker rights and protections have thus been institutionalized within a system of law and democratic political accountability, and are monitored by unions, NGOs, and educators. Through these processes, public expectations of the ethical behavior of corporations have become progressively stricter; cases of labor abuse still occur but appear to be relatively uncommon rather than endemic (Greenwood 2012 ).

In China, however, labor rights turn out not be widely institutionalized and legal rights turn out not to be strongly enforced, allowing employers as the stronger party to exploit the employees as the weaker party. While there are differences between Western countries and China, all people in the world share the need for some basic characteristics of human dignity that ought never to be violated, regardless of social context (e.g., whether one lives in a rich or poor society) and thus regardless of whether they have an abundance of employment choices or nearly none, or whether they have adequate institutional mechanisms to protect their interests.

It is ethically insufficient for corporations merely to “do in Rome as Romans do.” Expedient moral relativism should be replaced by broader and “thicker” moral norms that have universal application. The Universal Declaration of Human Rights Article 5 states that “No one shall be subjected to torture or to cruel, inhuman or degrading treatment or punishment.” And Article 23 section (3) states that “Everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.” The practices adopted by the management of Gucci in Shenzhen appear to have violated the Universal Declaration of Human Rights.

Stakeholders and their relevant stakes

To prevent the further occurrence of abusive practices in labor management requires efforts from various groups. In working out who needs to do what, we first need to define who the relevant stakeholders are (Argandona 1998 ). According to Freeman ( 1998 ), the stakeholders are defined as “any group or individual who can affect or is affected by the achievement of the firm’s objectives.” That is, we need to identify which groups can be affected by these abuses and which groups can prevent them (Carson 1993 ; Maak and Pless 2006 ). Stakeholders include the following.

The company and its shareholders, whose stake is that the company’s reputation should be rebuilt. This scandal may disrupt Gucci’s expansion plans in China, so the company has a strong incentive to take positive action repair the harm to its reputation there.

Employees: Regardless of whether an employee has resigned or still remains in employment with Gucci, he or she will require apologies and appropriate compensation. In addition, the current employees are likely to desire the adoption of more systematic management methods and improved working conditions.

Chinese government: It is the Chinese government’s responsibility to ensure that worker’s rights are enforced, especially on its own territory and that companies operate in accordance with the laws there.

Foreign (home) governments: Foreign governments have a stake in every firm that is headquartered in their territory, including those with subsidies in overseas countries, such as China. They can take action to reduce the incidence of labor abuses in China by enacting laws that are similar to the anti-bribery treaties that have been passed in many countries (OECD 2001 ).

Possible solutions

Action coordinated by Gucci: One means for a solution is for Gucci to lead efforts in developing and implementing industry-wide and worldwide codes of ethics, thereby creating a comprehensive set of explicit norms and expectation about ethical standards. This code should apply to all branches and stores in both developed and less developed countries (Beschorner and Müller 2007 ). Such codes have been successfully implemented by industries such as toys, textiles, and electronics. Those kinds of products are sold to mass markets. It is something of a paradox that Gucci, which sells a high-end product, has provided a poor working environment in China; surely a company like this is even more subject to public scrutiny and now under public pressure to adopt higher standards. We do not wish to imply that employees in mass market industries should be treated any worse, but one may expecte high-end providers to exert stronger ethical leadership worldwide in improving labor standards. The code should require every branch and stores of companies in the luxury industry to embrace ethical principles and embed them into management systems and policies and internal review processes.

Informed by common areas of worker rights identified in the literature on international labor management ethics, this code could include items on the following: use of written employment contracts with all workers, avoiding abuse of the dispatch system, equal pay for work of equal value, prohibition of compulsory and unpaid work, adherence to laws and regulations on working hours, provision of wages and benefits not below minimum legal requirements, anti-discrimination, anti-harassment, anti-abuse, and respect for occupational health and safety.

In addition, the establishment of a socially responsible management systems should include a statement of social responsibility objectives and targets, along with sufficient human and financial resources to ensure that these objects and targets are clearly communicated, that the system is adequately implemented, and that there are mechanisms for regular monitoring and auditing of the system and for corrective action in the event of shortfalls (Carroll 1991 ; Carroll and Horton 1994 ; Gond et al. 2011 ).

Simply implementing an industry code is not enough. The headquarters of Gucci, Italy, should urge and encourage its branches in China to comply with the necessary ethical standards in China (and every other host country). The encouragement needs to be strong, because managements in China may seek excuses and claim that there would be inordinate financial costs, or that the code may be difficult to implement because of cultural barriers. The headquarters may arrange for auditing by independent third parties, such as NGOs. Otherwise the enforcement might be weak or non-existent.

Action by employees : “Tolerance” is deeply rooted in Chinese people’s thoughts, and most of the time, it is even considered as a virtue (in contrast to assertiveness). In this case, we may notice that employees were tolerant of abusive practices until severe harm actually happened (the female employee’s miscarriage). The Chinese workers’ awareness of their rights may have been weak, and they appear to be accustomed to enduring their unjust treatment, which perpetuates the abusive practices. As China’s capitalism has been rapidly evolving, the institutional arrangements involved in human resource management, such as the labor dispatch system, have become increasingly complex and subject to abuse. In order to protect employees, it is of utmost importance to challenge the mindset of tolerance and to equip employees with a strong awareness of rights and of suitable ways to protect themselves collectively. They should be encouraged to get together and make their voice heard (like writing a public letter on the Internet). By voicing their grievances, they can attract more attention, thus win more support, and the relevant government departments are more likely to investigate into their concerns. Furthermore, they could express their hope to form organizations which have similar functions to those of independent trade unions in western countries, thereby helping them gain bargaining power vis-à-vis employers (Preuss et al. 2009 ).

Action by the Chinese government : It is recommended that the Chinese government should revise its entire approach to the monitoring and regulation of labor rights. “Harmonious Society” pronouncements have been a step in the right direction (See 2009 ), but there is much further to go. Workers in China are under-protected because there are few organizations that workers can appeal to, and trade unions in China do not serve the same purpose as in Western countries. It’s difficult for workers to stand up for themselves when their rights are at stake. In Western countries, companies are under the scrutiny of various NGOs and trade unions; these organizations protect workers’ labor rights through collective bargaining power. On the surface, this is paralleled in China by The Constitution of the People’s Republic of China, which requires that all its citizens have the rights of freedom of speech, freedom of the press, and freedom to peaceably assemble, organize, demonstrate, and petition. However, in practice, in order to organize in mainland China (i.e., to establish an NGO), one has to register the organization according to the Social Organizations Registration and Administration Act. If the organization does not do this, it is not protected under the law. It is criminal for such an organization to publicly accept outside donations without a legal status. In addition, to establish such an NGO, they must have a regular business location, full-time staff, a registration capital of more than thirty thousand yuan and official documents with a stamp of approval from the governmental agencies, which have been designated as “supervising offices.” This complex and time-consuming process makes it virtually impossible to form a NGO in China unless the government is prepared to champion and support the process. Another barrier is that every non-governmental organization will be co-administered by a civil affairs governmental office. This unique “Chinese way” of double administration weakens the independence of an NGO. Nonetheless, the Chinese government could consider having experiments in certain industries. China is now the biggest luxury-product-consuming country, as well as the biggest luxury-product-manufacturing country, so it has both the biggest customer group and labor force of the luxury industry worldwide. The Chinese government should consider giving permission to set up such a non-governmental organization with independent powers, to monitor these luxury multinational companies’ operations in China.

Action by foreign governments : A foreign government is typically responsible for creating and enforcing laws that apply to all the companies operating in their country, including MNCs that are operating subsidiaries all around the world, including China. A Western country could simply enact a law requiring all companies to apply fair and decent labor standards worldwide. The detail of such legislation is of course a much more complex matter that we can discuss in this article. The basic idea is that, if a company violates labor standards in China, it could then be prosecuted in the home country by the respective Western government. This arrangement might be championed by supra-national bodies, such as the United Nations, but again, we do not have space in this article in detail of the legislation process; it would help greatly if there is close collaboration between the Chinese government, Western countries, and supra-national bodies.

Theoretical and managerial implications

There are some key theoretical and managerial implications of this case. The first of these concerns the limitations and possible distortions of the virtue-based approach to business ethics as it has been applied in China. While some managers may recognize that a virtue-based Confucian firm should seek harmony by expressing benevolence to its employees, who would reciprocate with loyalty and gratitude, some key aspects of this approach can be forgotten when facing modern economic pressures. What may be remembered by managements is that Confucian ethics is based on the premise of inequality between the senior and junior parties in the relationship and that the junior party is expected to go along with whatever treatment they receive without direct protestation. What may be forgotten by managements is that all this is premised on the assumption that the senior party should consider, respect, and be responsive to the needs of the junior party. Such empathic concern is unlikely to flourish without a channel for listening and without a powerful incentive to listen. In their absence, all-powerful managements become de-sensitized from the concerns of their employees, and labor abuses will ensue.

From this, a second implication can be inferred. In order to prevent labor abuses in the PRC, it is necessary to institute strong, legally based mechanisms for enforcing and protecting labor rights. Conveying legitimate bargaining rights to labor organizations that correspond to their independent trade union counterparts in the West is one key step in this process. The second key step is for the national and local governments in the PRC to join hands in assigning a higher priority to encouraging and supporting corporate social responsibility, no longer relegating this to an afterthought or empty, token slogan. This, in turn, implies a role for foreign firms and foreign governments. Strengthening legal safeguards for labor rights in Chinese organizations is likely to require cross-national dialogues within corporations and between foreign governments and the government of the PRC.

Does this need for legal underpinning imply that the Confucian cultural legacy has no role to play in underpinning labor rights and preventing labor abuses in the PRC? Actually, this is not the case. Although concern about the Confucian virtues appear insufficient to constitute a safeguard against ethical violations in China-based firms, the picture may be radically transformed if legal imperatives are introduced that would serve to remind managements about the need to listen, understand, and respond to the needs of their employees. Confucian values originated in ancient times, when “rule of man” prevailed and when modern rule of law was inconceivable. China, having rapidly and breathtakingly developed into a modern society within the last two decades, is probably ready now to undergo the truly revolutionary process of blending Confucian morality and the Western rights-based paradigm into a moral compass that is more suitable for the contemporary world (Snell 2001 ).

Conclusions

Allegations of abusive labor practices in MNCs are by no means new phenomena but have typically referred to manufacturing sites in less developed countries. This paper highlights a less-extensively documented phenomenon, featuring abuses happening at a retail store—Gucci’s Shenzhen flagship store. Specifically, Gucci abused the dispatch system, which is a labor system with Chinese characteristics, and neglected some key labor rights. In considering how an MNC can operate ethically in China, we have considered some universal interpretations of labor rights, while taking account of Confucianism and the One-Party state, which are foundational components of China’s culture and institutional framework (Liou 2010 ). We have made recommendations for action by MNCs and other stakeholders, namely, employees, the Chinese government, and even foreign governments, where these can exert legal influence over MNCs that are headquartered in their jurisdictions. We have also foreshadowed the possibility, in the near future, of a fusion between Confucian virtue ethics and Western rational–legal approaches to the assertion and protection of labor rights and the profound practical and theoretical implications that would ensue.

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Wang, L., Snell, R.S. A case study of ethical issue at Gucci in Shenzhen, China. Asian J Bus Ethics 2 , 173–183 (2013). https://doi.org/10.1007/s13520-012-0024-6

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Received : 27 February 2012

Accepted : 25 September 2012

Published : 09 October 2012

Issue Date : July 2013

DOI : https://doi.org/10.1007/s13520-012-0024-6

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Ethical Business Practices: Case Studies and Lessons Learned

Introduction

Ethical business practices are a cornerstone of any successful company, influencing not only the public perception of a brand but also its long-term profitability. However, understanding what constitutes ethical behavior and how to implement it can be a complex process. This article explores some case studies that shine a light on ethical business practices, offering valuable lessons for businesses in any industry.

Case Study 1: Patagonia’s Commitment to Environmental Ethics

Patagonia, the outdoor clothing and gear company, has long set a standard for environmental responsibility. The company uses eco-friendly materials, promotes recycling of its products, and actively engages in various environmental causes.

Lessons Learned

• Transparency : Patagonia is vocal about its ethical practices and even provides information on the environmental impact of individual products.
• Consistency: Ethics are not an “add-on” for Patagonia; they are integrated into the very fabric of the company’s operations, from sourcing to production to marketing.
• Engagement: The company doesn’t just focus on its practices; it encourages consumers to get involved in the causes it supports.

Case Study 2: Salesforce and Equal Pay

Salesforce, the cloud-based software company, took a stand on the gender pay gap issue. They conducted an internal audit and found that there was indeed a significant wage disparity between male and female employees for similar roles. To address this, Salesforce spent over $6 million to balance the scales.

• Self-Audit: It’s crucial for companies to actively review their practices. What you don’t know can indeed hurt you, and ignorance is not an excuse.
• Taking Responsibility: Rather than sweeping the issue under the rug, Salesforce openly acknowledged the problem and took immediate corrective action.
• Long-Term Benefits: Fair treatment boosts employee morale and productivity, leading to long-term profitability.

Case Study 3: Starbucks and Racial Sensitivity Training

In 2018, Starbucks faced a public relations crisis when two Black men were wrongfully arrested at one of their Philadelphia stores. Instead of issuing just a public apology, Starbucks closed down 8,000 of its stores for an afternoon to conduct racial sensitivity training.

Lessons   Learned

• Immediate Action : Swift and meaningful action is critical in showing commitment to ethical behavior.
• Education: Sometimes, the problem is a lack of awareness. Investing in employee education can avoid repeated instances of unethical behavior.
• Public Accountability: Starbucks made their training materials available to the public, showing a level of transparency and accountability that helped regain public trust.

Why Ethics Matter

Ethical business practices are not just morally correct; they have a direct impact on a company’s bottom line. Customers today are more informed and more sensitive to ethical considerations. They often make purchasing decisions based on a company’s ethical standing, and word-of-mouth (or the digital equivalent) travels fast.

The case studies above show that ethical business practices should be a top priority for companies of all sizes and industries. These are not isolated examples but are representative of a broader trend in consumer expectations and regulatory frameworks. The lessons gleaned from these cases—transparency, consistency, engagement, self-audit, taking responsibility, and education—are universally applicable and offer a robust roadmap for any business seeking to bolster its ethical standing.

By implementing ethical business practices sincerely and not as a marketing gimmick, companies not only stand to improve their public image but also set themselves up for long-term success, characterized by a loyal customer base and a motivated, satisfied workforce.

Monitor ESG performance in portfolios, create your own ESG frameworks, and make better informed business decisions.

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Executives going back to George Cadbury and J. N. Tata have been trying to improve life for their workers and communities, according to the book Deeply Responsible Business: A Global History of Values-Driven Leadership by Geoffrey Jones. He highlights three practices that deeply responsible companies share.

• 14 Mar 2023

Can AI and Machine Learning Help Park Rangers Prevent Poaching?

Globally there are too few park rangers to prevent the illegal trade of wildlife across borders, or poaching. In response, Spatial Monitoring and Reporting Tool (SMART) was created by a coalition of conservation organizations to take historical data and create geospatial mapping tools that enable more efficient deployment of rangers. SMART had demonstrated significant improvements in patrol coverage, with some observed reductions in poaching. Then a new predictive analytic tool, the Protection Assistant for Wildlife Security (PAWS), was created to use artificial intelligence (AI) and machine learning (ML) to try to predict where poachers would be likely to strike. Jonathan Palmer, Executive Director of Conservation Technology for the Wildlife Conservation Society, already had a good data analytics tool to help park rangers manage their patrols. Would adding an AI- and ML-based tool improve outcomes or introduce new problems? Harvard Business School senior lecturer Brian Trelstad discusses the importance of focusing on the use case when determining the value of adding a complex technology solution in his case, “SMART: AI and Machine Learning for Wildlife Conservation.”

• 14 Feb 2023

Does It Pay to Be a Whistleblower?

In 2013, soon after the US Securities and Exchange Commission (SEC) had started a massive whistleblowing program with the potential for large monetary rewards, two employees of a US bank’s asset management business debated whether to blow the whistle on their employer after completing an internal review that revealed undisclosed conflicts of interest. The bank’s asset management business disproportionately invested clients’ money in its own mutual funds over funds managed by other banks, letting it collect additional fees—and the bank had not disclosed this conflict of interest to clients. Both employees agreed that failing to disclose the conflict was a problem, but beyond that, they saw the situation very differently. One employee, Neel, perceived the internal review as a good-faith effort by senior management to identify and address the problem. The other, Akash, thought that the entire business model was problematic, even with a disclosure, and believed that the bank may have even broken the law. Should they escalate the issue internally or report their findings to the US Securities and Exchange Commission? Harvard Business School associate professor Jonas Heese discusses the potential risks and rewards of whistleblowing in his case, “Conflicts of Interest at Uptown Bank.”

• 17 Jan 2023

Good Companies Commit Crimes, But Great Leaders Can Prevent Them

It's time for leaders to go beyond "check the box" compliance programs. Through corporate cases involving Walmart, Wells Fargo, and others, Eugene Soltes explores the thorny legal issues executives today must navigate in his book Corporate Criminal Investigations and Prosecutions.

• 29 Nov 2022

How Will Gamers and Investors Respond to Microsoft’s Acquisition of Activision Blizzard?

In January 2022, Microsoft announced its acquisition of the video game company Activision Blizzard for $68.7 billion. The deal would make Microsoft the world’s third largest video game company, but it also exposes the company to several risks. First, the all-cash deal would require Microsoft to use a large portion of its cash reserves. Second, the acquisition was announced as Activision Blizzard faced gender pay disparity and sexual harassment allegations. That opened Microsoft up to potential reputational damage, employee turnover, and lost sales. Do the potential benefits of the acquisition outweigh the risks for Microsoft and its shareholders? Harvard Business School associate professor Joseph Pacelli discusses the ongoing controversies around the merger and how gamers and investors have responded in the case, “Call of Fiduciary Duty: Microsoft Acquires Activision Blizzard.”

How to analyze an ethical dilemma?  Here is some background in six 30-minute videos:

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These case studies are aimed at members and students working in business.

ICAEW case studies

The case studies are illustrative and should be read in conjunction with the guidance contained in Part 1 and Part 2 of ICAEW's Code of Ethics .

• Unsupported expenses  
• Incorrect reporting of financial information  
• Non-disclosure to auditors
• Acting without sufficient expertise
• Personal financial interest in a proposal
• Inappropriate business practices
• Inducements for non-disclosure of information
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• Ethical Dilemmas Case Studies - Professional Accountants in Business

Business ethics Latest ICAEW articles and reports on business ethics.

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Read out this code to the operator.

“Ethical Dilemmas in Business: A Case Study Exploration”

Objective: To investigate and analyze real-world ethical dilemmas faced by companies, understand the consequences of ethical decision-making, and propose ethical solutions.

Introduction to Business Ethics

Start the project with an overview of business ethics, emphasizing the importance of ethical decision-making in business and its impact on various stakeholders.

Case Study Selection

• Choose a set of real-world case studies involving ethical dilemmas in business. You can find case studies from reputable sources, such as Harvard Business Review, business ethics textbooks, or online business ethics databases.

IKEA Case: One Company’s Fight to End Child Labor

Speak Up or Stay Silent: A New Employee Confronts Strange Sales Reports

Philanthropy, Corruption, and Dave’s Volunteer Journey in the Dominican Republic

A High-Stakes Deal for a Young Senior Vice President

Google’s Handling of the “Echo Chamber Manifesto”

Wells Fargo Banking Scandal

• Assign each student or group a specific case study to analyze. Ensure that the selected cases cover a range of industries and ethical issues.
• Background of the company and industry.
• The ethical dilemma faced by the company.
• Stakeholders involved and their interests.
• Consequences of the company’s decisions on stakeholders.
• Introduce various ethical theories and frameworks (e.g., utilitarianism, deontology, virtue ethics) to help students analyze the ethical dilemmas in their case studies. Here are some key ethical theories:
• Key Idea: Deontological ethics, often associated with Immanuel Kant, focuses on the inherent nature of actions rather than their consequences. It emphasizes duty, moral rules, and the concept of “categorical imperatives” – actions that are inherently right or wrong.
• Example: Kantian ethics might argue that lying is always morally wrong, regardless of the circumstances, because it violates the principle of honesty.
• Key Idea: Consequentialist theories, such as utilitarianism, evaluate the morality of actions based on their outcomes or consequences. The emphasis is on maximizing overall happiness or utility.
• Example: Utilitarianism might support a decision to sacrifice one person’s well-being for the greater good if it results in a net increase in overall happiness.
• Key Idea: Virtue ethics, associated with Aristotle, focuses on the character of the individual and the cultivation of virtuous traits. It suggests that ethical behavior arises from good character rather than adhering to rules or seeking specific outcomes.
• Example: Virtue ethics might encourage honesty as a character trait, rather than prescribing specific rules about when lying is acceptable.
• Key Idea: The ethics of care emphasizes relationships, empathy, and the importance of context in moral decision-making. It is often applied in situations involving caregiving and relationships.
• Example: In the ethics of care, the moral course of action might be determined by considering the impact on the well-being and relationships of those involved.
• Key Idea: Social contract theories, like those proposed by Hobbes, Locke, and Rousseau, explore the idea that ethical principles are agreements made among individuals in a society. People agree to follow certain rules for the sake of mutual benefit and social order.
• Example: The social contract might justify laws and regulations as necessary for maintaining social harmony and protecting individual rights.
• Key Idea: Rights-based ethics, influenced by thinkers like John Locke, focuses on the inherent rights of individuals. It asserts that people have certain fundamental rights that should be respected and protected.
• Example: The right to freedom of speech might be considered a fundamental right that should not be violated, even in cases where expressing certain views may be unpopular.
• Key Idea: Feminist ethics critiques traditional ethical theories for their often male-centric perspectives. It emphasizes the importance of equality, inclusivity, and challenging traditional power structures.
• Example: A feminist ethical analysis might question the gender bias in certain workplace policies and advocate for changes that promote equality.
• Ask students to propose ethical solutions to the dilemmas presented in their case studies.
• They should consider the long-term consequences and the impact on different stakeholders.

Presentation 

• Each student or group will prepare a presentation summarizing their case study analysis.
• Presentations should include a clear description of the ethical dilemma, an analysis of the decision-making process, and proposed ethical solutions.
• Encourage discussions and questions after each presentation to explore different perspectives on ethics.
• After all presentations, facilitate a group discussion on common themes, ethical principles, and the challenges of making ethical decisions in business.

Ethical Dilemmas in Business: KFC Company’s Case

Introduction.

The ethical decision-making process in business is associated with resolving ethical dilemmas; i.e., situations in which a choice needs to be made among several options, each of which is unethical in a way (Crane and Matten 7). In such situations, it is crucial for an organization to predict all the possible consequences of available options and make a decision that will be the least harmful and will violate business ethics to the minimum possible extent. KFC, an international corporation operating a fast food restaurant chain famous for its fried chicken, recently faced a dilemma concerning the presence of medically important antibiotics in its products (“KFC in Ethical Dilemma”). To analyze the case, it is possible to factually summarize the dilemma, examine the organization’s response to it and the effect of the response on stakeholders, share an opinion, and explore alternative responses and the changes in the organization caused by making the decision it made.

A Factual Summary of the Ethical Dilemma

KFC faced the need to engage in a particular ethical decision-making process after the standard of the fast food industry changed in 2015 (“KFC in Ethical Dilemma”). That year, McDonald’s, one of the competitors of the addressed company, declared that it would no longer serve chickens raised with the use of human antibiotics. The reason for McDonald’s to make this decision had been the growing pressure from various organizations and groups engaged in environmental issues as well as from the medical community. The concern shared by these organizations was that medically important antibiotics—i.e., antibiotics that are used to treat human patients (World Health Organization)—should not be used in raising food animals. KFC initially refused to disclose any information about the company’s suppliers’ use of antibiotics (“KFC in Ethical Dilemma”). At that time, the organization’s dilemma was either to support the trend or to ignore it, and both options were potentially unethical and harmful.

The reason for the concern is that food producers use human antibiotics when raising food animals for “production purposes” (“FDA’s Strategy on Antimicrobial Resistance”)—that is, to enhance animals’ growth or make them gain more weight upon consuming less food—and this practice can be dangerous. When these substances are transmitted to people who consume food produced according to this practice, there is a risk that those people will develop resistance to certain antibiotics; i.e., it will be impossible to use these antibiotics to treat those people in case such treatment is needed. The development of resistance remains a debatable subject, but nowadays, the World Health Organization and the United States Food and Drug Administration (“FDA’s Strategy on Antimicrobial Resistance”) suggest avoiding the use of antibiotics in raising food animals. KFC could either commit to these requirements, thus failing its suppliers and jeopardizing its operation, or refrain from the change, thus adhering to a practice that is potentially harmful to its customers’ health.

The Organization’s Reaction

As it was mentioned, KFC initially refused to comment on its suppliers’ use of medically important antibiotics. When the news about McDonald’s decision appeared, the organization’s representatives were either unavailable for comments or refused to explain anything. Moreover, the statistics on who KFC buys chickens from and how much it buys annually was not disclosed. There was only one statement made by the company that owns KFC: “The chicken served in our U.S. restaurants is USDA high quality, and free of antibiotics” (“KFC in Ethical Dilemma”). However, as it was later explained, this statement referred to the absence of antibiotics in served food products and not to the practice of using antibiotics for production purposes in general. It can be assumed that KFC’s suppliers still used antibiotics for such purposes, and the company did not want to lose them (which would have been a major shock for KFC’s operation) due to the pressure coming from the advocates of terminating the use of human antibiotics in raising food animals.

However, later response was different. It is noteworthy that, despite the FDA’s efforts aimed at “[phasing] out the use of medically important antimicrobials in food animals for production purposes” (“FDA Strategy on Antimicrobial Resistance”), many restaurant chains still use the meat of animals raised with antibiotics. However, by 2017, KFC improved and currently “says it is committed to serving chicken raised without antibiotics” (“Antibiotics in Our Meat”). At the same time, McDonald’s received a worse score than KFC in this regard (the scoring was carried out by Consumer Reports in 2017) because, while chicken served at McDonald’s is antibiotic-free, its beef and pork are not (“Antibiotics in Our Meat”). Therefore, KFC managed to follow the trend toward reducing the amount of antibiotics in its products and to gain a better reputational benefit than even the company that initially posed the dilemma for KFC—McDonald’s.

The Reaction’s Effect on Major Stakeholders

To assess the results of the decision made by KFC, it is necessary to identify the stakeholders and evaluate the effect on them. Apart from KFC itself, including its employees and decision makers, the stakeholders include Yum Brands Inc. (the corporation that owns KFC, Taco Bell, and Pizza Hut restaurant chains), KFC’s suppliers, the advocates of terminating the use of antibiotics in meat production, and the customers. Concerning KFC itself and its owner, the refusal to buy chickens from suppliers who used antibiotics would have been a major shock and could have cost the company millions of dollars that would have needed to be spent on modifying the supply chain. However, the ultimately made decision to commit to the requirement on serving antibiotic-free meat without refusing altogether to cooperate with suppliers who still used the practice allowed KFC to avoid negative effects and additional burdens on its operation without damaging its reputation seriously.

Concerning KFC’s suppliers, they may still be accused of jeopardizing people’s health because they do not give up the practice of using antibiotics. If the industry’s largest players, including KFC, refused to buy from them, the suppliers would most likely be forced to stop using antibiotics for production purposes altogether. Now, they may continue their cooperation with KFC although there was a chance that such cooperation would be stopped. Concerning the advocates of terminating the practice, they have succeeded in promoting their agenda, and the KFC’s response showed that they can continue to change the standards in the food industry. Concerning the customers, they may feel safer now knowing that KFC adheres to the antibiotic-free-chicken policy; however, some of them may be still disappointed that KFC failed to condemn the practice of using antibiotics in food production.

My Opinion on the Reaction

There are several key aspects of the presented ethical dilemma that I would like to discuss. First of all, the use of antibiotics in agriculture and farm animals can be a factor in the development of antibiotic resistance (Landers et al. 4). Therefore, this practice is a health risk because it undermines the effectiveness of antibiotic therapies in treating people who consume food produced with human antibiotics. However, KFC claims that the chicken it serves is antibiotic-free even though the company’s suppliers most likely use antibiotics in raising those chickens (“KFC in Ethical Dilemma”). Therefore, the meat needs to be processed in a specific way or other measures need to be taken by KFC to ensure that the final product contains no medically important antibiotics. It helps the company comply with the requirements technically, but the practice of using antibiotics continues.

On the one hand, I can say that KFC made a wise decision because it was a compromise: the company preserved its supplier relations but, at the same time, managed to meet the requirements issued by the FDA, to respond to the claims made by the opponents of antibiotic use, and to comfort KFC’s customers by stating that they should not worry about antibiotic resistance. On the other hand, the fact that KFC did not condemn the practice of antibiotic use altogether and did not refuse to work with suppliers who adhered to the practice means that the practice will be continued and, one way or another, a lot of meat that contains human antibiotics will be produced and consumed. In this context, the KFC’s decision is ethically questionable. However, there are no universally correct solutions to ethical dilemmas (Crane and Matten 87). I still think that KFC made a reasonable decision that allowed it to reach a compromise between protecting its operation and meeting customer needs.

Alternative Responses

In analyzing an ethical dilemma, it is important to review all the possible responses to it available to an organization and evaluate their consequences. KFC could have alternatively refused to work with suppliers who employed antibiotics in raising food animals and could have made a statement on this decision to the public. It would have attracted praise from the opponents of antibiotic use in food production, and it can also be assumed that KCF would have gained a competitive advantage in terms of its reputation and image among the members of its target audience. It would have been a strong statement on how much the company cared about the health of its customers. However, the company could have suffered serious losses due to the need to create new supply chains. The current supplier would have been harmed, and the new ones might have been hard to find.

Another alternative decision would have been to continue the initial response and refuse to make comments concerning the use of antibiotics at all. It is a widespread practice, as many companies try to hide their mistakes or improper practices by misrepresenting or concealing facts. However, it has been repeatedly demonstrated that transparency and honesty (Crane and Matten 460) are more effective strategies. KFC’s attempt to conceal the presence of human antibiotics in its products and to ignore the topic could have resulted in lowered customer trust, and the company would have suffered serious reputational losses. The compromise reached by KFC helped the company avoid the negative outcomes of these two alternative scenarios.

How the Relationship between the Organization and Its Stakeholders Changed

In its approach to resolving the described ethical dilemma, KFC tried to maintain the balance in the relationships among stakeholders. It can be argued that the relationships with suppliers have been strengthened because the company has confirmed its determination to cooperate with them and protect this cooperation even under the pressure of the advocates of terminating the practice of antibiotic use in raising food animals. However, certain negative effects on the relationships with customers as a category of stakeholders can be expected. Some customers may develop a perception that KFC is not as strongly committed to protecting their health as it should be. While technically complying with safety requirements and avoiding serving chicken with human antibiotics in it, the company fails to condemn antibiotic use in farm animals in general, and this can be seen by some customers as an unethical and inappropriate position. Therefore, a certain decrease in demand can be expected.

KFC encountered a dilemma in which it could either refuse to work with its current suppliers or face allegations of neglecting the health of its customers. On the one hand, the company wanted to continue cooperating with its current suppliers in order to avoid significant losses caused by the need to create new supply chains. On the other hand, the company did not want to be thought of as a restaurant chain that served potentially harmful food. KFC opted for a compromise and managed to comply with safety requirements technically while preserving the cooperation with suppliers. Although the ethical aspects of this decision can be questioned (like any solution to any ethical dilemma), it can be argued that KFC responded reasonably and maintained the balance in the relationships with both suppliers and customers.

Works Cited

“Antibiotics in Our Meat: Restaurant Scorecard.” WEAR . 2017, Web.

Crane, Andrew, and Dirk Matten. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization . 4th ed., Oxford University Press, 2016.

“FDA’s Strategy on Antimicrobial Resistance – Questions and Answers.” U.S. Food & Drug Administration . 2017.

“KFC in Ethical Dilemma after McDonald’s No-No to Chicken Raised with Antibiotics.” Health Care Asia Daily . 2015.

Landers, Timothy F., et al. “A Review of Antibiotic Use in Food Animals: Perspective, Policy, and Potential.” Public Health Reports , vol. 127, no. 1, 2012, pp. 4-22.

World Health Organization. WHO Guidelines on Use of Medically Important Antimicrobials in Food-Producing Animals . 2017.

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8 Important Business Ethics Cases

For those interested in researching some interesting ethical businesses cases, there are plenty from which to choose. Business leaders may feel squeezed by shareholders to produce profits.  Some have made some ethical blunders in an attempt to remain competitive. Others have used their size to squeeze out the competition.  The following includes some important business ethics cases based on well-known organizations:

• Enron – Questionable accounting practices and manipulation of the energy supply brought down this company. Enron: The Smartest Guys in the Room is an excellent documentary movie that explains the scandal.  Check out an excerpt from Enron’s Code of Ethics.
• Monsanto – Monsanto has been criticized for its mega-size.  Critics fear they are taking over the food supply as well as creating negative environmental issues. Check out Monsanto’s Code of Ethics for Chief Executives and Senior Financial Officers.
• Arthur Andersen – Arthur Andersen is known for its unethical auditing practices. Check out The Fall of Arthur Andersen for more complete details.
• WalMart – Studies have shown that WalMart may save people money but they may also negatively impact communities.  Their low prices may also hurt suppliers. The company received criticism when leadership announced they wanted to hire healthier, more productive employees. WalMart has been accused of being anti-union and has survived sweatshop and discrimination scandals. Check out WalMart’s Statement Regarding Code of Ethics .
• Countrywide – The company offered subprime loans that later resulted in default.  Critics have claimed that Countrywide employees told clients that their properties would increase in value and that their loans would be able to be refinanced when market values rose.  The market values declined causing many to lose their homes.  Check out Countrywide’s Code of Ethics .
• Beechnut – Beechnut’s ethics came into question when it was discovered that they were selling “apple juice” to foreign countries that contained something less than apple juice.  For more information on this scandal, check out Beechnut’s History and Apple Juice Scandal .
• Starbucks – Clustering strategy may force smaller companies out of business. There were so many Starbucks on street corners that movies like Best In Show made fun of how there might be one Starbucks right across the street from another.  Check out Starbucks’ Code of Ethics for CEO and Financial Leaders.
• Nike – Manufacturing practices included producing shoes offshore to save money. Nike has used its share of sweatshops in manufacturing. They have come under fire for human rights violations. Check out Nike’s Code of Ethics.

Related Articles:

• Code of Ethics for:  Amazon, Apple, Dell, Facebook, Google, Intel, LinkedIn, Microsoft, Twitter and Yahoo!
• Top 10 Company Mission Statements in 2011
• Business Ethics:  Ethical Decision Making & Cases – For more business ethics cases including Coca-Cola, Tyco, PETCO and Home Depot.

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Case Study Application of an Ethical Decision-Making Process for a Fragility Hip Fracture Patient

In Canada, up to 32,000 older adults experience a fragility hip fracture. In Ontario, the Ministry of Health and Long Term Care has implemented strategies to reduce surgical wait times and improve outcomes in target areas. These best practice standards advocate for immediate surgical repair, within 48 hours of admission, in order to achieve optimal recovery outcomes. The majority of patients are good candidates for surgical repair; however, for some patients, given the risks of anesthetic and trauma of the operative procedure, surgery may not be the best choice. Patients and families face a difficult and hurried decision, often with no time to voice their concerns, or with little-to-no information on which to guide their choice. Similarly, health-care providers may experience moral distress or hesitancy to articulate other options, such as palliative care. Is every fragility fracture a candidate for surgery, no matter what the outcome? When is it right to discuss other options with the patient? This article examines a case study via an application of a framework for ethical decision-making.

INTRODUCTION

Every year, over 30,000 Canadian older adults experience a fragility hip fracture. The Ministry of Health and Long Term Care of Ontario has promoted best practice recommendations which advocate for immediate surgical repair, within 48 hours of admission, in order to achieve optimal recovery outcomes. ( 1 , 2 ) The majority of patients are good candidates for surgical repair; however, given the risks of anesthetic and trauma of the operative procedure, surgery may not be the best choice for all. The patients at higher risk of poor outcomes perioperatively deserve the opportunity to explore options and articulate their values. Unfortunately, as a short pre-operative interval predicts the best outcomes, patients and families face a difficult and hurried decision, potentially with limited time to voice their concerns, and little to no information on which to guide their decision.

From a systems perspective, quality of care and health outcomes have not always incorporated the patient-centred perspective. ( 3 ) Patient-centred care is “a moral concept and philosophy, considering it to be the right thing to do when designing and delivering respectful, humane, and ethical care”. ( 4 , 5 ) Patients and families have reported in the past that they feel left out of crucial conversations and decisions surrounding care, ( 6 ) and that relevant information is not always provided. ( 7 )

To better understand the underlying ethical complexities which arise from critical decisions in the acute care setting, this paper will examine a case study to demonstrate application of the Corey et al . ( 8 ) 8-step framework (see Appendix A ) for ethical decision-making.

Ms. Jones is 93 years old and lives in a Long Term Care residence. She was admitted to hospital with a fragility hip fracture after being found on the floor in the middle of the night. Ms. Jones has dementia and is unable to make her own decisions. She has limited mobility, previously used a walker. Her two daughters are at her bedside. They state her health has been declining over the last few weeks, with increasing confusion and she now rarely leaves her room.

On admission, the team discovered a pleural effusion, taking up much of her right lung. Her pre-operative assessment also revealed a heart murmur; the resulting echocardiogram demonstrated a heart in very poor condition, with significant valve issues. Between her cardiac and pulmonary function, the surgery poses an increased risk of perioperative complications—she may never survive the surgery, or come off of the ventilator once she is intubated.

Interprofessional teams (surgery, anesthesia, nursing) are of differing opinions. The issue at hand is very difficult. The family is informed that the risk of not having surgery will likely result in death, yet in this patient’s case, proceeding with surgery carries its own risk. The family is left with an hour to think things over. Should they pursue the palliative care route or proceed with surgery?

Step 1. Identify the Problem or Dilemma

In our case study, 93 year old Ms. Jones is admitted to hospital with a fragility hip fracture. As a first step, we must recognize that there is actually an ethical dilemma; in this case, the dilemma is whether the patient should proceed with surgery or not, given her underlying medical conditions and potential for perioperative complications. We also need to acknowledge that there is an underlying assumption from all involved (staff, Ms. Jones’ family) that surgery will occur, and that health-care providers (HCPs) may not clearly articulate the option of ‘no surgical intervention’. The stakeholders who are required to proceed through the decision-making process include the patient and family, the surgical team, anesthesia, nursing staff, social work, and potentially the palliative care team and bioethics team.

Step 2. Identify the Potential Issues Involved

There are several assumptions made when a patient presents to the hospital with a fragility hip fracture: a) the fracture will be repaired; b) the patient will recover; and c) the patient will eventually go home or to rehabilitation. With a critically ill, frail, and/or previously compromised patient, this standard trajectory should be questioned. Barry and Edgman-Levitan ( 9 ) promote an ideology of patient-centredness, with the argument that an intervention should only be considered standard if there is ‘virtual unanimity amongst patients about the overall desirability… of the outcomes’.

The first potential issue is the ‘standard’ intervention of surgical repair—the assumption to proceed with the surgery, as directed by best practice recommendations. Is this standard intervention appropriate in all patients with a fragility hip fracture? A second potential issue arises with the patient and their family—the presumption that the acute medical issue will be resolved and the patient will eventually return home. Given her underlying health, this concept is in jeopardy. To add to the complexity, Ms. Jones is likely not able to articulate her wishes and values, as she has dementia. Finally, there is the potential issue of moral distress experienced by health-care providers (HCPs) who feel uncomfortable with the expectant surgical trajectory of this patient, and may feel they are not empowered to advocate for the wishes of the patient.

As health-care professionals, we are guided by moral principles in our decision-making process, namely, autonomy, non-malfeasance, beneficence, justice, fidelity, and veracity. ( 10 ) A focused examination and application of the principles to the case study will help to support potential resolutions for the identified issues.

The spirit of ‘patient-centred care’ endorses that patients should be involved at their level of choice to make an autonomous decision. ( 11 ) However, it is important to recognize that no decision is made in isolation. ( 12 ) The decision at hand is not a simple or straightforward one; literature demonstrates that patients and families have a difficult time with making decisions at time of a critical illness, identifying fear, worthlessness, and a lack of autonomy within the hospital system. ( 7 ) Differing levels of patient and family participation requires an individualized approach to convey meaningful, accurate, and timely information. ( 8 ) Older adult patients tend to take a ‘non-participative’ stance in their care. They often have limited participation in the process for decision-making for a variety of reasons, thereby increasing the risk of their inability to understand or find value within the end decision. ( 6 , 7 , 13 )

Non-malfeasance

Hospitalization can cause the patient to experience “needless mental and physical suffering” ( 14 ) in any number of ways (i.e., pain, waiting for surgery, uncertainty of outcomes, patient/family relationship stress). Evidence indicates that the number of different HCPs involved causes immense anxiety to the family, especially when they do not hear the same message from all members of the team. ( 13 , 15 ) HCPs must ensure that they are not withholding information, or are untruthful as to the options in order to expedite a decision. A study by Ekdahl, Andersson, and Friedrichsen ( 13 ) found that physicians perceive they are ‘too short’ of time for patients to participate in the decision making process, that decisions were ‘too complex’ and ‘time consuming’ to fit into the schedule. Ekdahl et al. ( 13 ) also found that physicians feel frustration with the ‘health-care production machine’, especially in those older adult patients with multiple co-morbidities.

Beneficence

Beneficence promotes wellbeing; or is an action that is carried out to benefit another. ( 8 ) The hospitalization ‘process’ promotes assessment of a patient, treatment of the illness, followed by a physical approach to recovery (allowing recovery to be measured against specific milestones), and discharge in a timely manner. ( 15 , 16 ) This ‘process’ may promote beneficence in an overarching global perspective of the system; however, on an individual level, it often falls short. On an individual level, key actions that have been found to be beneficial and meaningful are open communication and sharing of information. ( 6 , 7 , 14 , 17 )

“Practitioners have a responsibility to provide appropriate services to all clients”. ( 8 ) Older adult patients may not receive information about options available, especially if the HCPs feel that it would take too much time to thoroughly explain, or if HCPs assume that patients are too ill to participate in the decision-making process, ( 13 ) or if the assumption is made that all patients want to proceed with surgery. Focusing on each older adult’s individual health goals is time-consuming—in this case, the patient has dementia, and a family meeting would be required. The concept of patient-centred care revolves around patient and HCP partnerships, yet older adult patients face unique problems with hospitalization—a slower communication process, a decreased level of functioning, and a degree of family involvement. ( 14 ) Can we provide this type of relationship and communication effort equally for every patient? Or only for those patients who may be at higher risk of negative outcomes?

Fidelity and Veracity

Fidelity involves fulfilling ones’ professional roles, creating a trusting relationship, and veracity ensures that we are truthful and honest to the patients. How do we ensure that as a HCP we are providing an unbiased opinion? Do we take the same amount of time to present patients with the option of conservative, non-surgical treatment, including palliative care, as we take to advocate for surgery? The HCP team assumes that patients will commit to surgery; however, a patient often displays a suboptimal understanding of the risks and benefits of surgery. ( 18 ) Similarly, there is the very real risk of bias towards an argument of palliative care in those frail patients or those with dementia. HCPs must return to the voice of the patient through their family, to understand that patients’ identity, their meaning of life, and desired goals which emphasize the patients’ dignity. ( 12 )

It is important to acknowledge assumptions that the patient and family may have made upon admission to hospital—that surgery will occur and the patient will recover. Have we presented the patient and their family with as much information as they need to make a decision in a clear format (without medical jargon)? In addition to understanding risks of surgery, it is paramount that the family understands the non-surgical option may result in death or decreased function (if any functional ability returns). It is in an acute situation such as this that families require truthful and open communication with physicians, nurses, and other members of the health-care team. ( 11 )

Self Care (HCPs)

Can we consistently provide care that prioritizes a patient’s values? HCPs are not always able to preserve all of the values and interests at stake. ( 19 ) We know that the most common cause of moral distress in nursing is prolonged, aggressive treatment which we do not believe will be likely to have a positive outcome. ( 20 ) As a HCP, we must look to root causes operating within the larger system, to prevent and/or respond to feelings of moral distress. ( 19 )

From a systems perspective, does the hospital provide an avenue for exploration of patient values within a timely fashion? Is there a framework in place to enhance the HCP’s understanding of moral distress and provide strategies for coping with situations such as these (i.e., an opportunity for a team debriefing with the entire team, or opportunities for learning how to deal with situations that may cause moral distress)?

Step 3. Review the Relevant Ethics Codes

The philosophy of patient-centred care within the hospital encourages active listening, respect, and an attempt to understand individuals. The Canadian Medical Association (CMA) supports “practicing the profession of medicine in a manner that treats the patient with dignity and as a person worthy of respect”. ( 21 ) The College of Nurses of Ontario (CNO) supports the view that nurses “must use the client’s views as a starting point”. ( 22 ) Across all HCPs is the similarity of the need to listen, understand, support, and advocate for a respect of patients’ values with the expected course of treatment.

The importance of collaboration with the patient and respecting a patient’s values are highlighted within similar statements: ”…it is the patient who ultimately must make informed choices about the care he or she will receive”. ( 21 )

Step 4. Know the Applicable Laws and Regulations

In Ontario, legislation and common law require that the wishes of patients or substitute decision-makers be respected. ( 22 ) However, in many systems, health care is not truly patient-centred; rather, patients are required to adapt to the system. ( 11 ) A number of initiatives have been undertaken in the last few years in an attempt to improve the focus of patient-centredness, with the principle assertion that patients should be involved at the level of their choice. ( 11 )

Step 5. Obtain Consultation

It is important to realize that we bring our own biases to the decision-making process, making it difficult to view the current patient/family’s situation objectively. As an individual HCP, our previous experiences will have an impact on the messaging that we provide. From a systems perspective, we are likely to pose a ‘knowledge’ bias towards meeting treatment based outcomes—for example, surgery within 48 hours, immediate post-operative mobility, and the expected length of stay for this type of patient.

Inter-disciplinary consultations with patients and their families ensure review of unbiased information about the risks and benefits of proceeding with surgery, allowing for a fully informed decision. In addition to discussing the operative plan with the surgical team, there is an opportunity to provide Ms. Jones’ family with other options that may be available to her. Consultation with extended family members, clergy, social workers, or an ethics team may help the family to reflect on the patient values; what this illness means to them as a family unit, and how best to proceed. A discussion with palliative care may help the family to better understand what symptom management consists of for their mother. Social work may also be able help explore community services available to the family in this situation—for example, is the patient able to return to home with the future of wheelchair dependence? Are there any other options which may be available to this patient and her family that were not originally considered? How do we, as HCPs, ensure that the family is afforded the opportunity to obtain all the necessary information from differing disciplines to make an informed choice?

Step 6. Consider Possible and Probable Courses of Action

In order to fully understand the options, it is helpful to outline all the possible and probable courses of action that are open to Ms. Jones and her family.

• Surgical team offers a ‘purposeful pause’ to discover Ms. Jones’ core values; to discuss the consequences of a) delaying surgery, b) proceeding with surgery, and c) the non-surgical intervention. From an ethical and legal perspective, this may meet the concept of patient-centred care, but does not likely provide the patient and her family with all the information they need to make an informed choice. They may have more questions that the surgical team may not be able to answer, or they may request more time to consider. Additionally, the patient and her family would still be expected to adapt to the system in place in order to make a decision within the proposed wait time frame (admission to surgery less than 48 hours).
• Advocate for a family meeting with the primary nurse, social work, palliative care team, clergy, internal medicine, in addition to the surgical (surgeon, anesthesia) team, to fully explore both options, and to explore what the ‘non-surgical’ option would mean. From a legal and ethical perspective this embodies the concept of patient-centred care, with as many members of the health-care team at the table to help Ms. Jones’ family fully explore their options.
• Apply the current standard of care recommendations to Ms. Jones’ situation, without consideration of the patient’s needs, values, or preferences. From an ethical and legal perspective, this approach does not represent patient-centred care.

Step 7. Enumerate the Consequences of Various Decisions

With the first option, the surgical team takes a ‘purposeful pause’ to discover the patient’s core values and discusses pros and cons of a surgical intervention. Often, this may be most ‘efficient’ way to deal with the situation at hand. It may also be the preference of the patient; some patients have reported that they value this limited level of involvement—“I get a description of what is going to happen”. ( 13 ) As a consequence, there will be a number of patients who will want to have a greater sense of involvement other than a simple description of planned events. The first option does recognize the principle of autonomy, but does not follow the principle of justice; practitioners have the responsibility to provide information about other options which may be available. The principles of beneficence and non-maleficence are not completely met, as the team approaches the solution primarily to benefit the system (i.e., efficiency). The principles of fidelity and veracity are also partially met, as the surgical team provides an honest perspective, although it may be biased towards proceeding with surgery.

The second option, offering the patient and her family a meeting with all stakeholders, strongly aligns with the fidelity and veracity principles. The information offered is truthful and complete, and is in Ms. Jones’ best interest, as it attempts to discover her values that will affect the family’s final decision. Principles of beneficence and autonomy would be met with patient empowerment through information sharing, and secondly, by allowing the patient and family to arrive at their own decision with that information. As a consequence, taking the time to arrange for a family meeting with all stakeholders may not be possible for all patients, and the principles of justice and non-maleficence are brought to the forefront for future patients. A potential consequence could be harm to the patient, as the time it takes to arrange a meeting could push the time to surgery beyond the recommended 48 hours post-admission, placing the patient at greater risk of negative post-operative outcomes.

The third option is one of passive action, with a lack of communication and recognition of patient-centred care values. Ms. Jones would be placed on the operating room list, and the surgical repair will occur. Consent must legally be obtained for the surgery; however, the family may not think of key questions to ask that may be relevant in this situation. The onus remains on the HCP to provide a full explanation of all options to the family. The only benefit would be to the system, as the procedure will be carried out in a timely manner. Ms. Jones may benefit from the surgery; we cannot assume that surgery is a negative option. As a consequence of this option, HCPs do not explore patient values, and this option is against almost all of the ethical principles. Additionally, this option is likely to cause the highest moral distress amongst staff, as they are unable to meet the unique needs of Ms. Jones and her family.

Step 8. Choose what Appears to be the Best Course of Action

Virtue ethics asks us if we are doing the best action for our patients, and compels us to be conscious of our behaviours. ( 8 ) We need to take the necessary time to discover the patient’s values within the unique situation they are now experiencing. Simply stated, we need to remember that they are a person, with feelings, emotions, past experiences, future hopes/plans, and usually an element of fear and anxiety. The goal is to work with Ms. Jones and her family to decide together on the current care plan and the best plan for action (or inaction), a plan that truly aligns with the patient’s values.

From an ethical perspective, the best course of action is to hold a family meeting with all stakeholders to discover Ms. Jones’ values about a meaningful life and a meaningful death, and come to a consensus as to what the right decision is for this patient. ( 12 ) The team must ensure that the patient and the family have all the necessary tools in which to make this decision. Have we provided them with all the information required? Do they understand the information? Do they understand the consequences of their decision? From a systems perspective, we need to continue to strive towards engaging patients and family members more fully and consistently in care and decision-making processes. ( 6 ) Dissemination of lessons learned from assisting patients and families through difficult decision-making may be helpful to other health-care teams experiencing similar moral conflicts.

As a next step, the HCP team may consider development of an educational reference for future patients to assist with similar decisions, including promotion of an advanced care plan to help communicate goals and concerns to HCPs. ( 12 , 18 ) Additionally, decision aids, such as videos and brochures, can help deliver information to patients and their families. ( 9 ) The use of readily available technology, such as iPads and cellphones, means that families are better able to access these materials at any time of day. A recent Cochrane Review demonstrated that, in comparison to usual care, decision aids can increase knowledge, resulting in a higher proportion of patients choosing the option which most aligns with their values. ( 23 ) Providing patients with information that outlines potential options with risks and benefits clearly explained can also meet many of the ethical principles that are to be considered with ethical decision-making.

The in-depth review of the case study has helped us to examine the underlying issues that come into play when helping this patient and her family to make a critical decision. Although each patient is an individual, literature tells us that many perceive the concept of patient-centredness to represent an ‘involvement in their care’. The level of involvement may vary from person to person, but all patients want the care they receive to reflect their values and preferences, and to make them feel that they have been treated as a whole person. ( 24 )

Clinicians also like to believe that they deliver patient-centred care, yet the characterization of the concept will vary with the health-care provider, their relationship with the patient, and the circumstances surrounding the admission to hospital. Recognizing that there is potential for an ethical dilemma when patients present with a critical illness is important to ensure that we continue to act upon the key concept of understanding a patients’ values and proceeding to align provision of care with those values.

ACKNOWLEDGEMENTS

The author wishes to acknowledge Dr. Tracy Trothen (Queen’s University) for her time and expertise as a ‘practical ethicist’.

Appendix AFramework for Ethical Decision-Making (Corey et al ., 2014)

• Identify the problem or dilemma
• Identify the potential issues involved
• Review the relevant ethics codes
• Know the applicable laws and regulations
• Obtain consultation
• Consider possible and probable courses of action
• Enumerate the consequences of various decisions
• Choose what appears to be the best course of action

CONFLICT OF INTEREST DISCLOSURES

The author declares that no conflicts of interest exist.

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Post Office executives played a leading role in publicly defending their organisation over the hundreds of prosecutions it brought against the sub-postmasters who ran its branches, based on the flawed Horizon accounting system.

But, behind the scenes, it was in-house lawyers who took on the task of briefing senior executives on the robustness of its Horizon software. They were also responsible for commissioning relevant audits and setting out the UK state-owned organisation’s approach to litigation. 

More than 900 people were convicted of a range of offences, including theft and false accounting, in cases involving data from Fujitsu’s flawed Horizon system, which was introduced in 1999. More than 700 prosecutions were brought by the Post Office itself.

However, it was another lawyer — James Hartley, partner and head of dispute resolution at law firm Freeths — who represented 555 of the sub-postmasters in a landmark 2019 High Court case in which the extent of the IT scandal emerged. The judge ruled that several “bugs, errors and defects” meant there was a “material risk” that the Horizon system was to blame for faulty data used in the Post Office prosecutions.

“It’s quite a complex web of obligation, responsibility and culpability,” says Hartley, reflecting on the reach of the affair into the legal profession. “Somewhere along the way, lawyers have stepped over the red line.”

Now, a public inquiry into the scandal is gaining momentum as it takes evidence from senior Post Office executives, government ministers and figures from Fujitsu, ahead of its conclusion this summer.

In the coming months, the inquiry will hear testimony from several former general counsel at the Post Office, each of whom will give evidence against the backdrop of a debate about whether the role of an in-house lawyer needs to be more strictly regulated.

Susan Crichton, the Post Office’s general counsel between 2010 and 2013, will appear today at Aldwych House in London to respond to claims that, under her watch, the business brought prosecutions against sub-postmasters despite concerns surrounding Horizon.

Audio recordings shared with the inquiry, of conversations between Crichton and forensic accountants Second Sight in 2013, suggest she briefed the company’s chief executive that claims made by accused sub-postmasters about the Horizon system were, in fact, true.

Their discussions include the detail, long denied by the Post Office, that third parties could access systems remotely and alter transaction data. Sub-postmasters successfully argued in court that they could not be held solely responsible for any shortfalls because of this third-party access.

Crichton’s evidence is also expected to spell out some of the difficulties that existed for general counsel in raising concerns, particularly when executives fail to act in response.

Chris Aujard, Crichton’s successor, is scheduled to appear at the inquiry tomorrow. Jane MacLeod, who succeeded Aujard, is due to appear in June, shortly after current counsel Ben Foat takes the stand.

Somewhere along the way, lawyers have stepped over the red line James Hartley, Freeths

Contemporaneous documents suggest that there may have been opportunities for the Post Office to prevent litigation.

The Post Office’s general counsel were involved in commissioning half a dozen reports and reviews by external auditors and consultants, including BAE Systems, Deloitte, EY, and Second Sight, in the decade leading up to the 2019 High Court case.

Some of these reports found faults with internal systems and how they were managed. External lawyers in 2013 warned the Post Office that the business was at risk of breaching its obligations as a prosecutor over improper practices, if any decision were made to shred documents, which prevented disclosure.

Richard Moorhead, a professor of law and professional ethics at the University of Exeter, says matters should be reported “up the ladder” and that general counsel need to act as a “moral compass” within an organisation. “They need to speak up if they think things are being done which are improper and ensure the client hears those things,” he says.

Moorhead, who sits on the government-appointed Horizon Compensation Advisory Board, is a vocal critic of the lawyers involved in the Post Office Horizon scandal.

He adds that there were occasions when in-house lawyers at the Post Office should have sought to “blow the whistle” once it became obvious that errors in the Horizon system could account for shortfalls.

General counsel play a prominent role in shaping the legal strategy of a company or organisation and advising executives on the best approach to compliance and handling legal risk. But there is sometimes tension between serving the business and acting in the public’s interest. 

In the aftermath of the Enron and WorldCom fraud scandals in the early 2000s, US regulators introduced new security laws that required general counsel to report adverse information to audit committees, directors and other officials when senior leadership was unresponsive.

[GCs] need to speak up if they think things are being done which are improper and ensure the client hears those things Richard Moorhead, University of Exeter

Brian Cheffins, a professor of corporate law at the University of Cambridge, says the new rules produced a playbook for in-house lawyers who had been “stonewalled internally”, particularly as these individuals could find themselves in “deep water” when misgovernance became evident.

But Cheffins is opposed to plans to set out general counsel’s obligations formally, and warns that doing so risks duplicating duties that already exist elsewhere.

General counsel in the UK operate under the same rules as any solicitor or barrister advising a client, which stipulate acting with integrity in ensuring that senior figures are briefed on unpalatable information. The Horizon affair has reminded lawyers of their duties when advising executives.

Hartley says: “In-house lawyers need to recalibrate their thinking on where that red line is so they know when to turn around to the person they’re advising and say, ‘No, we cannot do that’.”

Post Office general counsel: in the spotlight

Susan Crichton In 2012-2013 she was involved in instructing Second Sight to conduct an independent investigation into Horizon. The forensic accountants raised concerns but these were not actioned by the business despite executives being briefed. Crichton left the Post Office to take on a similar role at TSB Bank in 2013; she retired in 2018.

Chris Aujard After becoming general counsel in 2013, he was tasked with winding down a mediation scheme set up for affected sub-postmasters and removing Second Sight from its role investigating the Post Office. Meeting minutes from 2014 showed he was present when executives discussed setting aside £1mn in “token payments” to mitigate any reputational damage.

Jane MacLeod In position as general counsel when 555 sub-postmasters brought a suit against the Post Office, MacLeod was responsible for overseeing the business’s initial response. The public inquiry will explore her handling of disclosure and response to litigation when she gives evidence in June. She resigned from the Post Office in 2019.

Ben Foat Appointed to general counsel in 2019, Foat previously served as the business’s legal director. He appeared at the inquiry in the middle of last year after widespread disclosure failures resulted in weeks of delays to evidence. Sir Wyn Williams, chair of the inquiry, has since threatened officials with criminal penalties if such problems recur.

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