In fact, this case has been described as a complex accident including a variety of issues ranging from environmental to economic, politics and even ethical issues. The goal of our research is to find any ethical issues since this disaster happened is closely related to ethics which is concerned with moral obligation, social responsibility and justice (Carolyn Wiley, 1997) either individual (‘bad apples’) or organizational (‘bad barrels), which should be evaluated to verify this case.
Firstly, the ethical issues can largely be divided into three categories, namely (1) technical design which has had some testing flaws before the actual usage and insufficient guidelines against the negative pressure test, (2) human factors including misjudgment, errors and a failure in duty, (3) organizational system such as taking risk procedures to save time and money and refusing the advice of staff and contractors as well as slowness to react in the accident.
Thus, the ethical issues in BP oil spill case relevant to the individuals or the organization will be classified in each factor mentioned above by distributing whether it belongs to the individual level or the organizational level based on our judgments along with ethical theory to support our conclusion. 2. The importance of ethics in business world It is easy to see that the business which has been successful suffers from downfall and a sudden fall in terms of profits and popularity. One of major reasons behind these backgrounds is the lack of business ethics. The nderstanding of what is right or wrong and the ability to discern between them are ethics. In addition, the importance of ethics is no exception to running business as well as daily life. The successful business normally requires intensive ethical values in the course of business and the organizational culture based on the set ethical principles. The well-regulated ethics regarding “Going concern of business” would help to make long-term success of business unlike moneymakers who do not care of ethical values along with short-term lives of business. Thus, strong ethical values in the business can be regarded as one of intangible assets.
This paper aims to describe an ethical issue and apply it to six ethical decision making steps namely issue clarification, stakeholder analysis, values identification, issue resolution, addressing objections and resolution implementation. Main Body The ethical issue that will be discussed is giving out unacceptable levels of air and water pollution during the production process by an organization’ ...
Furthermore, the ethical issue is highly important due to the reason that it can affect stakeholders who have interests in an organization. If the organization possesses high value in terms of ethics, the impression on stakeholders would be achieved by building the trust relationship between them and sustaining stakeholders in long-term. Lastly, having professional practice which is characterized by code of ethics is essential to obtain a good reputation in society. (Murphy and Swenson 2003) Hence, the ethics in business is not ignorable providing great benefits to the business and definitely help to grow the business on long-term basis. . Ethical problems in BP: Individual level Individual ethics The individual is the essential component of organization in terms of running business; Hence, the ethics of individual need to be emphasized during the process of business. Individual factors such as personality and background can affect making behavioral choices of individuals either ethical or unethical at work and the typical infliction normally comes from individual behavior within an organizational context according to Darley, J. M. (2005).
3. 1. Employees’ perspective
In BP oil spill case, engineers’ roles such as inspecting and recognizing whether the relevant systems, critical components and equipments work correctly are very crucial because any failing to recognize can lead to dangerous situations. Thus, moral issues of engineers as the individual level will be evaluated below.. 3. 2. Moral awareness and moral judgment Ethical behaviors of individuals are based on the consequence of moral awareness and moral judgments in the individual level according to Trevino and Nelson (2004, P15).
Ethics Ethics is a branch of philosophy which seeks to find answers about the moral concepts like bad, good, evil, right, wrong, etc. According to OEC (2011) ethic is defined as “a moral philosophy which is concerned with what is right or wrong, good or bad, fair or unfair, responsible or irresponsible, obligatory or permissible, praiseworthy or blameworthy”. Many scholars have associated it with ...
Furthermore, making ethical decision and individual behavior include the four types of process illustrated in Rest (1986); (1) recognizing moral issues, (2) making moral judgments, (3) having the priority on moral concerns (establishing moral intents), and (4) action regarding the moral concerns. Normally, ethical behaviors of individual in organizations are highly dependent on both individual and situational factors and the ethical behavior of managers would obviously affect the ethical behavior of employees. Firstly, the engineers’ negligence is the fact that led to this disaster.
The inherent risks in the petroleum industry which is clearly expected by everyone were the result of moral awareness and moral judgment in this case. As the engineers play a vital role to operate and manage the systems along with inherent risks which could cause potential accidents, dealing with the systems carefully and diligently is where the moral issue arises because their working conducts are related to the possibility that might cause some risks. There are internal working procedures and regular check of the systems which they must comply with.
The engineers, however, did not follow these tasks which could incur moral issues due to the negligence. Even, they failed to recognize and act after the event happened in timely manner. Overall, there is no doubt that the engineers must recognize the moral issue because it can be generated by their negligent acts and it is inevitable to be criticized in the standard of ethics. Apart from the individual factors, situational factors which contain job context, organizational culture and characteristics of working ambient should be considered in terms of decision-making of individuals.
In fact, until just days before the disaster, BP tried to cut costs and save money by taking the risk because the schedule of projects in BP was lagged behind by losing large amounts of money with each passing day. With this circumstance, the engineers were forced to save operating costs and complete the project quickly. Thus, the situational factors also influenced what they work, making dilemmas between the saving costs by unnecessary risk taken and meeting safety criteria. 3. 3Ethical (Moral) standard and principle
The BP Oil Spill which happened on April 20, 2010, was the largest offshore oil spill in U.S. history releasing approximately 185 million gallons of crude oil into the gulf. This event was the result of a wellhead on the Deepwater Horizon oil drilling platform blowing out in the Gulf of Mexico approximately 40 miles southeast offs the Louisiana coastline. Eleven men working on the oil rig platform ...
Individuals in an organization should comply with certain moral standards in the practical work of business according to Donaldson and Thomas (1996) Also, the moral standard which contains the authority under the standard is the guideline for making ethical decisions. In the business world, the CEO or senior managers should be guided by core human values as they play an important role for the function of the organization. It means that whatever they set and follow can be a moral standard to employees.
Thus, the importance of the health and safety of individuals along with the profitability of the organization should be attached by the senior managers in BP oil spill case. 3. 4. Leaders’ perspective Empirically, the executives who play vital roles in an organization probably influence forming corporation culture, and the oil spill accident refers to the failure of executive’s behaviors having great impacts on ethics in both before and after the oil spill disaster. 3. 5.
Decision-making (Before the oil spill happens) Decision-making which is one of the most crucial parts the executives perform indicates the direction of organizational development by influencing the culture of organization. Based on Ashkanasy et al. (2005), the unethical decision made by executives can lead employees in an organization to behave unethically. In the case of BP oil spill, the hubris of BP clearly illustrates the organizational culture influenced by the CEO, Tony Hayward.
He said “What the hell did we do to deserve this” (BP calls blowout disaster ‘inconceivable, unprecedented and unforeseeable’) after the oil spill. It implies how much pride he has in the organizational systems, which can lead to recklessness and arrogance as well as poor planning. The flaw in decision-making is firstly the lack of oversight by being proud of their self-regulation and internal technology and just focus on outcomes like profit and completion of project on schedule. However, it was evident that the self-regulation has not worked effectively as the result of tragedy.
“Thank God men cannot fly and lay waste to sky, as well as the earth,” said Henry David Thoreau on environmental damage. The BP, or British Petroleum, Gulf oil spill has been widely referred to as the biggest environmental disaster that the United States has ever faced, with over four million gallons of oil pouring into the waters off the Mexican Gulf Coast. The BP oil spill occurred in April of ...
Previously, BP refinery of Texas City explosion in 2005; in year 2006, an oil field spill accident had also undergone which is located in Alaska’s Prudhoe Bay , cause about 270,000 gallons of oil leaking, as a result, the largest U. S. well was closed down. The BP staffs had reported to the London headquarters with the foreseeable consequence of Alaska pipeline corrosion problems two years before the disaster happened. But the management of BP did not give enough attentions to these unprofitable reports; both of the accidents are part of the routine accidents which can be prevented.
When Hayward charged BP, he had made a commitment to make great efforts to change the company’s complacently culture of generalist management. However, the reforms of Hayward will take time to achieved, and this oil spill accident indicated “BP did not make many changes”. Another flaw in decision-making is that he does not consider the aftermath of his decision because safety reasons were out of his ethical framework. As mentioned above, any accidents have not been expected along with confidence in self-regulation. Thus, the executive lost the opportunities to review not only the decision that he made but also long-term results.
Finally, this decision making has contributed to such an enormous disaster by forming the organizational culture and context into his ethical framework. 3. 6. Leadership (After the oil spill happens) Although it is evident that the flaws in decision-making are one of the contributing causes to the oil spill, the fundamental and more serious flaws come from the absence of ethical leadership of the executives. Particularly, Leaders are responsible for their followers and stakeholders because the decisions made by leaders affect them.
It requires ethical awareness, judgment and the ability to enact ethical decisions to fulfill these responsibilities. According to Weiss (2003), there are five essential capacities involving defining and leading the social and ethical aspects, building good relationships including sustaining with stakeholders, representing interests beyond economic facets, demonstrating collaboration in shared decision-making and strategy sessions, and showing awareness and concern for employees in the policies and practical works of the company.
BP is a British global energy company which is the third largest energy company and the fourth largest company in the world. As a multinational oil company, BP is the UK’s largest corporation, with its headquarters in London. BP’s headquarters is in Houston, Texas. The company is among the largest private sector energy corporations in the world, and one of the six private sector oil ...
Among these factors, the executives of the BP failed to show interests under ethical aspects because economic sides always were emphasized in the operation reaching the decision towards saving costs and making profits. In the same context, he did not consider social responsibilities which also can be relevant to interests of stakeholders. Even after the case incurred, the CEO have ceaseless argued the joint responsibility with Halliburton (the rig owner) and Transocean (the company that constructed the concrete encasement) which are the major suppliers of BP as the reason that the tragedy was from complex events rather than a single mistake.
However, a true leader should have responsibilities for the happened facts, and faced situations and attempting to minimize the degree of problems or responsibility is why many stakeholders criticize the BP now. In addition, downplaying the seriousness of the issue caused building more unethical actions of CEO. The actual leaked barrels were 24,000 instead of 7,000 barrels that the BP firstly estimated. Lastly, the lack of professionalism attitude was one of the ethical issues about CEO, Tony Hayward.
Professionalism is interconnected between the competency and ethical behavior about social responsibility. However, he actually enjoyed a yacht holiday in the midst of crisis so that it is hard to see that he has behaved ethically against this accident. 4. Ethical problems in BP: Organizational level Organizational ethics The perspective of this concept is to cope with the issues relevant to the organization including organization’s decision, strategies, practices and policies in its own structure or culture. Velasquez p16) and these factors highly influence the ethical behaviors of employees. Even, organizational variables normally overwhelm the individual variables which consist of personality and socialization. (Hegarty and Sims, 1978; Stead et al. , 1987; Trevino, 1986) From this viewpoint, there would have some sorts of ethical issues related to the organizational level such as external environment, internal structure and organizational culture which have generated Oil Spill. 4. 1. The external environment
Mainly, the external environments which can threaten the business ethics are composed of (1) the decay in political, social and cultural institutions, (2) increasing competitive pressure which encourages only short-term earnings and (3) different ethical standards in terms of multinational business according to Ross survey (1988) In BP case, the government intervention was performed so late due to the political system in the USA and the BP and the government did not allow the access of the press, experts and scientists even though there were significant disparities in damage estimates between experts.
Introduction Proper ethical behavior is a significant part of conducting business. Organizations must therefore find ways to incorporate ethical considerations into their strategic plan. Firms need to practice self governance and obey existing laws if they are to ensure their survival and the well-being of the society in which they exist. The decisions made by an organization affect society as a ...
These actions have led to a source of serious controversy in the aspect of how can the damage be measured and how exactly are we prepare for cleaning it up along with restricting the access of the site. In this stage, as arguing the reason that allowing the media to access this site can only cause vague comments to the public, the important ethical questions of the rights to know of the public about the detailed rate of damage could be raised. In addition to this, the other ethical issue about that restricting press or independent expert access in order to preserve the organizational image can be justified is also controversial.
Therefore, as moral awareness is necessary to be ethical according to Trevino and Nelson (2004), the moral awareness is involved in perceiving the existence of an ethical dilemma. (Wilcox 2010).
As a result, moral awareness could be affected by the external environment leading the BP to make unethical judgment after the oil spill occur. 4. 2. The internal structure The internal structure is one of the main problems that caused the oil spill. In reality, zero dollars have been spent on doing research about how to deal with oil spills for off-shore drilling by BP (“The Rachel Maddow Show” on MSNBC, aired at 7 p. m.
EST on June 28, Monday) despite large amounts of Net profits. This fact indicates that the oil spill event cannot be handled urgently in spite of the potentially inherent risks which this industry always have. Thus, the internal structure of the organization must be set wrongly leading to ethical problems of its internal structure. Apart from this, there were some failures of processes, systems and equipments such as the rig, the blowout preventer or automatic closure system. However, the mechanical failures do not explain the underlying causes for this case because the human decision-making is always involved as the key driver.
For one thing, the reason why the BP did not anticipate the devastation if the oil drilling plan does not work as expected even though BP recognized some problems with rig is that they determined to take risks and cut costs. BP actually made a series of reducing costs plans and blunders that substantially boosted the risks of oil spill due to tightly planned schedule and BP also refused the safety advice of a contractor, Halliburton regarding recommendation of using centralizers as the process of saving time and money. Thus, these carelessness and complacency of BP about its internal structures led to the tragedy.
Consequently, these factors related to the internal structure of BP have formed the atmosphere and symptoms of this oil spill so that the ethical criticism seems to be unavoidable. 4. 3. The organizational culture The organizational culture also could result in the oil spill accident as it plays an important role in the organization in terms of creating an environment of ethical practices by organizational members. (Arnold & Lampe, 1999) as overall analysis, the members of the organization have tended to ignore the safety procedures due to that BP has been proud of its internal systems and self-regulation without careful oversight.
Another reason is that the atmosphere and culture of BP were only focused on operating efficiency and saving costs to make more profits. These lack of systematic safety resulted in the unethical situation. 4. 4. BP and Corporate Social Responsibility Corporate Social Responsibility (hereafter CSR) is a form of corporate self-regulation which is combined with a business model and its aim is to accept the responsibility for the company’s actions by encouraging a positive impact via its performance on all living creatures including environments, stakeholders and the public.
The major business of BP is finding and refining oil, and selling the gas. Thus, BP usually interacts with various individuals and organizations in the ordinary course of business by being given ethical obligations such as providing products for customer’s expectation, sustaining the honest relationship with suppliers, guaranteeing acceptable levels of workplace health and safety, putting an honest effort to build long-term share value and observing environmental laws and industry best practices to BP.
Most of the ethical obligations above were met by BP except for workplace health and safety causing the deaths of 11 workers. However, the concern in the question of CSR is where the social responsibility is involved in. This is because the oil spill has resulted in tremendous negative externalities. What it means is how make the negative influences on people who have no interests economically with BP, and who did not agree to bear operating risks in the company.
All businesses involve externalities when they produce products like pollution. Thus, the issue from CSR perspective is whether the taken risks were necessary and reasonable. Most people would say “No” in this BP case and it is necessary to understand the term of CSR again along with the illustration of BP case. 5. Conclusion Based on our ethical analysis, the BP oil spill was resulted in both “bad apples” (individual character flaws) and “bad barrels” (organizational and systemic problems).
As BP faces billion dollar lawsuits now, it is time to pay for its unethical behaviors in the business. Thus, to prevent failure in the future, the culture that would encourage employees to inquiry about conventional wisdom, investigate the potential dangers more closely and embrace the responsibility in the moment when situations go wrong should be established.
In addition, for the improvement, the technical process should be less tight in designing stage and intervention of external organization is highly required like the recently instituted Ethics policy by Offshore Regulator. Once again, what we should keep in mind through the lesson of BP case is that the ethical problems in current society can affect the business in the large scale either positively or negatively.