Essay Sample on Charles Conaway: Ethical Failures

Published: 2022-11-02
Essay Sample on Charles Conaway: Ethical Failures
Type of paper:  Research paper
Categories:  Ethical dilemma Leadership style
Pages: 7
Wordcount: 1822 words
16 min read

The leader of choice who is to undergo the scrutiny of different ethical failures is Charles Conaway. He was born in 1960 in Lapeer and got his MBA in Michigan University in 1984. In 200, Conaway became the Chief Executive Officer and the chairman of the Kmart Corporation. He was the CEO of the corporation till the year 2002 when Kmart was confirmed to be bankrupt. Legal action was taken on Conaway when he was pronounced to have inflated the worth of the company. Before the event of the economic failure, Conaway increased the company's worth to save his job. As a result, his actions failed to reflect the ethics founded on principles and concentrated more on the ethics built on Utilitarianism (Stocker, 2006). Violation of the ethical principles by leaders results into consequences that affect companies, associates and the society at large.

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Conaway exhibited moral failure in his era as the CEO of Kmart in various operations. Firstly, the suppliers were being pushed for money termed as vendor allowances, and their payments were being cut off. However, Conaway denied that practice and reported that the company's finances were not deteriorating. Secondly, officials were allotting lavish loans to themselves and the management did not disclose the details concerning the loan program. In the case of loans, Conaway received approximately 5 million US dollars in the form of retention loan. Conaway had been increasing the value of the company with selfish concerns of retaining his job.

Ethical Principles and theories violated by Conaway

Ethical theories represent the approaches that deal with the principles that govern morality and establish the values of right or wrong in people. The theories give a basis for what is right or wrong in the lives and conduct of individuals (Reynolds, 2006). In all aspects of the life of individuals, moral principles must be upheld to ensure fair treatment to others and responsibility for one's actions. Although Charles Conaway was an executive, there are several principles of ethics he violated.

The Virtue ethical principle

The virtue principle gives judgment based on the character of an individual and by the actions of that person. This principle holds that the reputation, motivation, and morals of an individual should be considered when evaluating the misconducts of an individual rated as unethical. Conaway with his reputation as a leader and a great executive, his actions were supposed to be in line with the personality of a ranked high executive. Leaders are supposed to portray the best characters when it comes to dealing with matters concerning others (Stocker, 2006). When confronted with a dilemma, individuals should ensure that they adopt the decision that is morally right. Conaway had graduated from Michigan University, a renowned institution and therefore with no doubt, he knew what was right or wrong in his decision. However, he violated this by increasing the value of the Kmart cooperation with his interests in mind which showed dishonesty. Dishonesty is condemned in the Bible in various aspects. For instance, Jesus emphasized honesty when he told his congregations that they should be truthful in their offerings and tithes. Therefore, Conaway failed to uphold his ethical conduct by giving deceptive information. By virtue, individuals can distinguish the correct decisions to make from the decisions that will impact negatively on others.

Trustworthiness as a virtue

Trustworthiness refers to the character of individuals that depicts reliability and others can have confidence in him or her. Ethically, individuals should portray the character's trustworthiness as this shows they are reliable in their actions. Companies, for instance, should provide the public with dependable information with no misappropriations. However, Conaway inflated the company's worth so as not to lose his job. In this case, he violated the principle of reliability.

The Deontological theories

According to deontological concepts, individuals should ensure that they meet their duties when engaging in ethical decision making. Therefore, people are required to follow their obligations to others in society. In this theory, the correctness or wrongness of an action depends on meeting or not meeting the obligations of an individual to others (Stocker, 2006). In this approach, an individual is considered to have done something ethically correct if he or she upholds his or her obligations to others. During the management of Conaway in Kmart, suppliers were being charged for allowances they knew nothing about. It is the executives to ensure that all the stakeholders including the suppliers are treated fairly according to their agreement with the company (Reynolds, 2006). Conaway, as the executive at that time, he could oversee the problem and find a solution, but he never considered it. As a result, he failed in his duty to protect the rights of the shareholders of the company and also to protect the success of the company. In the scriptures, it is evident that leaders should be at the service of those under them in all aspects. Jesus simply demonstrated that by washing his disciples' feet as a duty of service to them.

Accountability as a duty

Accountability refers to an act in which an individual takes responsibility for his actions and their course. In accountability; the executives are expected to be ethically right by upholding integrity and trust. In the case of companies, the reports released to the public should always be in line with the actual performance and allocation of resources (Stocker, 2006). However, Conaway did not uphold accountability when in his management official were allocated with extravagant loans that they gave no account about. The voices from the public were raised when the operations of Conaway's started being questionable. There was no accountability in his actions.

The consequences of Conaway's violations

Conaway engaged in dishonest and deceptive operations during his directorship in the Kmart Company. As a result, several ethical violations emerged. He violated the principle of virtue and that of duty through his deceitful actions. As a result of those violations, the following consequences took place.

Firstly, the company was filed for bankruptcy. During the management of Conaway, he was accused of providing deceptive information to the shareholders and other officials. He misled them on the financial crisis of the company when making lots of money and was supposedly spending the enterprise's money on personal luxuries. As a result of the financial tragedy, the company was reported to be bankrupt.

Secondly, as a result of the problem that faced the company, more than 400 stores were shut down in the United States. The stores were closed due to reported low sale and non-profitability. As a result of the mismanagement that led to the bankruptcy of the organization, the stores could no longer be in operation. For instance, the stores that were situated in Alaska were closed.

Thirdly, more than five thousand employees were fired. The company was undergoing a financial crisis and therefore to restructure its operations, numerous employees were sacked. During the operations in which Kmart officials were allotting themselves with loans, some employees were covering up that information (Stocker, 2006). Several workers failed to give information regarding the suspicious operations of their officials. To restructure Kmart, most employees needed to be terminated especially the dishonest ones. Also, the company was not in a capacity to finance the salaries of thousands of employees.

Moreover, the stocks of Kmart were canceled. When a company is seeking bankruptcy protection, holders of the company's common stock are usually the last in priority during investment recovery. Therefore, Kmart announced there were no enough finances and creditors had to be paid first before the shareholders. As a result, Kmart announced that it would issue new stocks after the crisis and cancel the former shares.

Suggestions in preventing unethical behaviors in leaders

Ethics stand out as the main determinants of the failure or success of every organization. Therefore, the leaders including the board of management in different organizations should ensure that their entities meet the expectations of shareholders and the public. Thus, ethical behaviors and operations must be upheld for the growth of the organization (Granitz &Loewy, 2007). The views of society towards an entity are determined by how the company and its officials conduct their operations. The following are ways in which ethical behavior can be maintained.

Firstly leaders should strive to ensure accountability. When it comes to the financial reporting of every business, accountability should be upheld by the accountants. The management and leaders in every sector should ensure that every expense made by the company is justifiable. Therefore, leaders and management should ensure that they provide accurate and updated systems of financial reporting. Also, the leaders should ensure that the financial statements are audited through the basic accounting doctrines (Barnett &Vaicys, 2004). As a result, the report was given to the public, and the shareholders will always be in line with the honest operations of the entity.

Additionally, the executives should ensure that the staff consists of a few individuals who are conversant with the accounting principles. As a result, such employees will simplify the process of financial management in the company. Also, the company will be able to provide accurate information to the public.

Secondly, the leaders should ensure a culture in which transparency is upheld. When it comes to ethical behaviors, transparency is a crucial element as it promotes honesty. Therefore, every leader should ensure that he promotes openness in the organization. The leaders should allow every involved associate to get hold of clear information on the operations of the organizations (Stocker, 2006). Effective communication should be enhanced for information sharing to ensure transparency. As a result, an employee or any shareholder can be able to point out a problem when it is detected and bring it forward to be solved.

Thirdly, leaders must lead by example. To promote ethical leadership and management, the leaders must ensure that they walk the talk. Every leader should portray the values of trustworthiness, accountability, and transparency the same way he or she encourages those under him to conduct themselves (Stocker, 2006). When someone leads by example, it is easier for the followers to emulate the behavior and act accordingly. Therefore, leaders should show ethical conducts to promote that among the subordinates.

Moreover, leaders can ensure ethical behaviors by hiring employees based on their values. In most organizational settings, education is used to confirm how skilled an employee is. Also, some organizations use someone's experiences to consider the ability of such a worker in performing different duties. However, this should not be the case when ensuring ethical behavior (Granitz &Loewy, 2007). Thus, the leaders should ensure that the human resource in the organization recruits employees by considering their values. As a result, such employees can promote the same values in the organization and maintain the best image. Everyone should be willing and capable of performing diligent duties.

Furthermore, when a conflict of interest arises in the organization, leaders should be able to handle it effectively. Even though the directors and executives make the main decisions in organizations, those decisions should not be based on their personal needs (Barnett &Vaicys, 2004).

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