In the business world, there are diverse ethical concerns that come up while running a business. Ethical issues are sometimes complicated and cannot be easily solved by referring to the business organization’s code of ethics. There are external factors that influence ethical issues, some of which the business organization has little or no control over. People all over the world are faced with questions about the morality, fairness and good intentions of the actions of different corporate and business settings with regard to the general population (Stanwick & Stanwick, 2014). In most cases, dealing with ethical issues is perplexing, as ethical issues are complicated. This paper evaluates an ethical issue in Wendy’s International, and the possible policy implementations to deal with the ethical issue.
Wendy’s is one of the best fast food companies in more than 20 countries. The company offers a wide assortment of fast food items. This paper focuses on Wendy’s decision to slash employee working hours, so that the franchise owners would not have to pay health benefits to their workers. In January 2013, the company said they were reducing working hours, so that workers below the management positions had their work hours cut to 28 per week. The company blamed the cut on healthcare act, citing that healthcare insurance is meant for employees who work between 32 to 38 hours per week. The company also mentioned that they cannot afford to stay operational and pay for everyone’s health insurance. The employees whose working hours were cut are considered part time workers who do not have health insurance cover. Many employees were affected by this decision in other similar fast food restaurants all over the world (Clawson, 2013).
While one can understand that all business organizations are out to make profits, the reality is that the decisions are threatening these worker’s livelihoods. Cutting down one’s working hours in order to avoid healthcare insurance costs is unethical. It puts the livelihood of these workers at risk, as the lack of healthcare insurance translates to the lack of quality healthcare. This may affect the company in the sense that when these workers get sick, a lack of access to proper healthcare will negatively affect their productivity. One should note that healthcare is important to all people, regardless of their employment status. A business company should have the interests of their workforce put into consideration before making decisions that have a great impact on their daily living (Stanwick & Stanwick, 2014).
Policy Recommendation that Resolves to the Ethical Issue in Wendy’s International
Wendy’s should consider changing their employment policy, so as the company has more full time employees with all the benefits of full time employment. The part-time employees should work for more hours and enjoy a better pay and benefits, such as health insurance cover. With regard to the Patient Protection and Affordable Care Act which was signed into law on March 23, 2010, every worker working for between 32 – 38 hours per week should be provided with health insurance by the employer. Wendy’s franchise owners should not consider cutting workers’ hours to prevent them from qualifying for the Obama Care act as a solution. The franchise owners should consider balancing out the costs of the health insurance coverage that they will incur with their inputs from the business. Slightly reducing their profits to cater for their employees’ health expenses is a better option than evading health insurance charges.
The costs incurred in catering for the workers’ insurance could also be passed on to the consumers. It is worth remembering that a sudden increase in price of services may lead to reduction in sales. The cost should, therefore, be spread out over the different services they offer. The increase should also be spread out over time. Consequently, this will prevent scaring off the consumers, since the increase will not be sudden. Instead of reducing workers’ hours, they could also consider reducing the number of workers. Though it might not be the best idea, it is better than having under paid workers with no health insurance. The remaining workers will have an increased work load, so their hours can be increased, since they will now have an insurance coverage.
Ethical Decision-Making Models Applicable to the Recommended Policy
Ethical decision-making models provide a useful framework that can be used to analyze and make ethical decisions. There are different ethical problem solving models that can be used in this situation. These include the rights’ approach, the justice and fairness approach and the common good approach. In any of these models, the first step is to identify the problem and then get all the ascertained facts regarding the ethical issue. The second step involves the review of the relevant related ethical guidelines. For this case, it involves reviewing the ethical guidelines for company workers (Ferrell, Fraedrich, & Ferrell, 2008).
Since the ethical issue and the recommended policy have been identified, the next step will be to evaluate the impact of the policy on the ethical issue at hand. One should check the relevant laws and regulations, then consult with the concerned parties with regards to ethical issue. For this case, it would be the employees, the management, representatives of the franchise owners and, perhaps, a few customers – for the customer’s views on the issue. After the consultations, one should consider the probable and possible courses of action, and then consider the possible outcomes of these courses of action. Lastly, a decision should be made on the best or most suitable course of action (Ferrell et al., 2008).
Social Responsibility of the Policy
A workforce that has its healthcare needs catered for will become a happy workforce. With their medical needs taken care of, employees will work hard and more hours without concerns that divert their attention. The insurance acts as an incentive to them, and, therefore, the workers will be more dedicated to their job responsibilities. Workers tend to put in an additional effort in their jobs that cater for their essential needs, so as to keep the job. A hardworking workforce will always lead to better goods and services delivery; therefore, the company will realize increased revenues. In this case, the employees, the company and the community benefit in different ways (Idowu, Capaldi, Zu, & Das, 2013).
Once the workers have an access to healthcare and normal working hours, they will not have to go looking for other additional jobs. They will, therefore, dedicate their free time to their family and friends. This will boost social relations with their families and the society in general. Employees’ satisfaction and happy state will be reflected in the manner at which they will be offering services to the customers. Happy consumers will always tend to invite their friends the next time they come. This will, in turn, increase the sales of the franchise, in addition to creating a happy community. The workers’ living standards will improve, since they will be having a job that caters for their health needs (Idowu et al., 2013)
Examples to Support the Recommended Policy
Several fast food companies have taken reduced working hours for their employees, only to end up failing. For instance, Darden restaurants threatened to cut workers’ hours, only to have their profits drop by 30%. Denny’s Franchise and Papa Johns tried a similar strategy but ended up tainting their reputation, scaring away their customers (Clawson, 2013).
Strategy for Communicating the Policy to the Organization
The best way to communicate this policy to the organization to meet the needs of the audience is to write to all the main stakeholders of the organization. One can take the perspective of a concerned citizen, who is also a regular customer. The writing to the stakeholders should be clear and explain the need for a change in the decision. The stakeholders should understand that one of the fundamental principles of ethics is: “above everything, do no harm.” All actions in a business organization shout not risk or harm other people, especially those that are directly affected by the decision or a course of action.
All companies should have the welfare interest of their works. In this case, the decision to reduce working hours for employees, so as not to pay for their health insurance is putting the health of these workers at risk. This risk is indirectly transferred into the organization and its operations. In order to ensure that the message to the stakeholders is clear and should be taken seriously, one can get a significant number of people to write to them and voice their concerns. The workers can also put their concerns together in a well explained way, as well as what they would like the management to do about the issue. These concerns should then be discussed by representatives from the workers and the management, as well as other concerned stakeholders (Ferrell et al., 2008).
Potential Limitations of the Policy, and Strategies for Monitoring and Compliance
Once the policy is implemented, there are a few challenges that are expected to come up. For instance, the prices of goods and services offered by Wendy’s will be increased. This could cause a decrease in the number of customers who buy these products. Although, most of the loyal customers will still buy from Wendy’s, some customers might decide to look elsewhere for similar goods and services. If the number of consumers reduces, there will be a reduction in sales. However, this could only last for a few months before the sales stabilize again (Harris, Moriarty, & Wicks, 2014).
Another expected limitation is a significant decrease in profits. This is because a percentage of the company’s income will be used for catering for the workers’ health insurance. With sales being expected to decrease for a while and the company expected to pay for the health insurance for its employees, the company’s profits will be significantly reduced. Some of the workers might have to be laid off to reduce the operational costs. The health insurance payments for the workers coverage is an additional expense for the company. If the company is unable to cater for the health insurance of all its employees from its revenues, the workforce might be reduced to manageable numbers.
In order to ensure that the set up policy is effectively implemented, the workers should be allowed to form unions which can push for policy implementation, according to plan. The union will come in handy if the policy is in any way violated by the employers. It will enable the workers to speak in one voice without anyone being incriminated for demanding their rights. The government bodies in charge of employee affairs should also regularly check on the company to ensure that the policy is made fully functional. This will prevent the employer from taking advantage of the employees. The checks should be random and strict, in order to ensure that the interests of all people are put into consideration. The employees should also have a platform to air any complaints regarding the implementation of the policy, for instance, in case the management decides to go against the policy to serve the interests of the franchise owners.
Clawson, L. (2013). Wendy’s franchise cutting worker hours to avoid Obamacare, despite backlash to other chains.
Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2008). Business ethics: Ethical decision making and cases. Boston, MA: Houghton Mifflin Co.
Harris, J. D., Moriarty, B., & Wicks, A. C. (2014). Public trust in business. Cambridge University Press.
Idowu, S. O., Capaldi, N., Zu, L., & Das, G. A. (2013). Encyclopedia of corporate social responsibility. Berlin: Springer.
Stanwick, P. A., & Stanwick, S. D. (2014). Understanding business ethics. SAGE Publications.