15) Distinguish the difference between law and ethics. List all of the ethical dilemmas Michael faced in this scenario? 

SOURCES

MICHAEL

Michael Jackson was hired in January as the new Operations Manager for "Just Collect It, Inc", a Texas toy assembly plant also known as JCI. As the Operations Manager Michael's duties included contract negotiations, accounts receivables & payables, Human Resources & scheduling, shipping & receiving and purchasing. Michael recognized that the duties agreed upon were customarily performed by 3-5 people, and or 3-5 departments, but due to budget concerns JCI was convinced that the right Operations Manager would be effective in all of the assigned tasks. Michael was aware that the 5 previous Operations Managers were overwhelmed with the job duties and resigned within 6 months of being hired. Michael was informed upon hiring that JCI did not have a Contracts, Account Receivable, HR, Shipping and or Purchasing department or positions because of budget restrictions and they had 2 absolutely no intention of filing the positions. Michael was convinced that he had the solution to succeed at each duty. As operations manager Michael would receive an annual salary of $250,000. Michael realized that he truly needed 4 senior type positions, which required experience and education, to assist him to assist him to success. The collective salary for all 4 of the positions needed would be over $250,000. He knew the company would not budget for the additional help so he had to make an alternative solution to succeed. Once Michael took over the leadership role, while being fully aware of the corporation's decision not to hire any additional labor, he made the executive decision to hire 4 inexperienced recent high school graduates to handle some of the task that was assigned to him. Michael had success in the past hiring "fresh minds" as he calls it. He enjoyed training young employees in the methods he preferred them to use. Hence, he hired Carl to handle the contracting, Alice for general accounting and Accounts receivable, Harry for HR demands and scheduling and Paula for purchasing. Michael retained all the other duties and felt his time would be best spent keeping a close eye on the new hires and overseeing the assembly workers. To offset budget concerns Michael used $72,000.00 of his $250,00000 and paid the new hires directly from his personal account. Their employment setup provided for pay only, they did not receive any health, retirement, 401K or workman compensation. They did not have any federal or social security withholdings. They were scheduled to receive their full hourly rate without deduction every Friday. Each employee would receive $18,000.00 annually in pay. The experienced professional would have commanded $62,500.00 for the position.  

 

Michael was notified by the Executive assistant of JCI's president that a scandal about the company would break in the news in days to come. She said that the scandal would negatively impact stock value of JCI. In fact, Michael was informed that all of the top executives were cashing in their stock so as not to lose the life's savings. One of the top executives suggested strongly that Michael sell his stock while it still had value. Michael gave it some thought for a few days and told his broker to "sell it all". He recognized a handsome profit. After cashing in his stock he admitted that he would not have cashed it in if it were not for the executives giving him the warning and basically insisting that he sell. The day after the sale of Michael's stock the value of JCI dropped more than 75%. Most of their investors lost 100% of their investments. Michael's broker inadvertently sold 75% of his stock instead of the entire 100% that Michael requested. Michael knew a wealthy older woman who had no knowledge of the devalued stock and offered to sell her his shares at a bargain price of $100 per share the next day. The stock 4 had already nose-dived and the stock that he was selling to the woman had no actual value at all. She purchased 1250 shares at a rate of $100 a share for total of $125,000.00. The woman asked him 3 times if the sock was profitable stock and he assured her it was. Five days after Michael sold his stock, the SEC visited him at JCI. The SEC took Michael into the back office for an interrogation. Michael insisted that he want to call his lawyer buy the Federal Officers just continued their questioning. After refusing to answer any questions they took him to lead him to the police car and took him to the county jail. At no time did they read him is Maranda rights. Upon arrival at the station they continue to refuse Michael's request to call his attorney. Additionally, he was not specifically told what he was being charged with and he was held in a holding cell for 80 days. His holding cell did not heat and temperatures fell to as low as 10 below zero in the cell he was kept in. On the 81 first day Michael was taken before a judge and gave his plea of Nolo Contendere.  

 

Although the terms law and ethics have a similar outcome of upholding morals, there is a distinction between them. Law refers to the set of legally binding rules and regulations that are to be upheld by all to maintain law and order while ethics are a set of moral values that are acceptable to an individual and therefore governs how one behaves. This distinction is the basis for the other differences. In relationship to business setup, the terms business law and business ethics are generally in harmony with the distinction between law and ethics. For instance, business law is a legally binding set of standards while regarding business ethics, some organizations may choose not to have one. In the given case, Michael, who was hired as the Operations manager, faces ethical dilemma right from the day he was hired. The financially-constrained company puts him at a dilemma of whether to hire the labor he needed in his capacity. Consequently, a scandal befalls the company that puts him at a dilemma on whether to rid off his stocks before they get completely devalued.

Step-by-step explanation

Ethics and Law

Difference between Law and Ethics

Ethics are a set of moral virtues that are established by an individual and which inform the individual's behaviour and conduct while law refers to the set of rules and regulations that govern the society (Frank, 2019). This contrast is key in understanding of the differences that exist between law and ethics, which forms the distinction between the two terms. Kadivar et al. (2017) concurs with this distinction by stating that laws are legal regulations while ethics are individual morals of conduct. Therefore, although the two terms have an element of upholding morals, there are differences in terms their set up and implementation. Below are some of the key differences between the two terms:

1. While ethics are morals that are upheld by an individual, laws are sanctions that are established by a relevant authority. In the application of ethics, an individual establishes and upholds the morals that he deems appropriate and acceptable. However, laws are established by a social, political or any other appropriate authority to govern the conduct of members of the society (Surbhis, 2017). A discussion of the law often considers the government which in many jurisdictions is the authority that governs the country. In this setting, the government establishes laws that aid in governing.
2. In governing the conduct and behaviour of the subjects as per the set standards, laws are enforced through a legally set procedure. The violation of the laws attracts a penalty such as a fine, a jail term or even a restraining order. The legal process establishes a law enforcement system including the courts, the lawyers and security agencies that ensure the law is maintained. On the contrary, Barrow et al. (2020) indicates that the conduct as per one's ethical values depends on the ability for self accountability. The author further explains that the application of ethical codes of conduct involves situations whereby there is no one to observe an individual therefore one must have a high degree of self-accountability to uphold the ethics.
3. The law is a systematic set of rules that are published for reference and continuity. For instance, Ogilvie et al. (2020) identifies that a country constitution is published in the official government gazette. Additionally, the authors observe that other institutions such as companies and learning institutions have written rules and regulations. On the contrary, ethics are mainly abstract. They are a set of ideas, thoughts or judgements that are morally acceptable to an individual that one upholds them.
4. The intent of creating laws is to maintain law and order, especially to maintain social order and peace while the ethical principles help people id making a decision between what is wrong and what is appropriate.
5. There is a legally binding requirement that all individuals under the law uphold it. However, it is at one's discretion whether to conduct himself in accordance with his set code of ethical principles.

With regards to business, commercial law is defined as the rules and regulations that is established to maintain order in the process of formation and running a business while business ethics are a set moral values that determines how a business should operate to uphold moral conduct in the business environment (Lyles et al. 2017). Although there exists few differences in the distinction of business law and ethics from the aforementioned differences between law and ethics, the differentiation is largely similar. For instance, Hassmiller & Bilazarian, (2018) identifies the following differences:

1. While an organization may decide whether to have an ethical code of conduct or not, business law is a legal requirement that is legally binding to a business.
2. The organization's employee may decide not to uphold some ethical conducts such as customer relations, loyalty, compassion and respect. However, the staff are obliged to conduct themselves in a manner that is in line with the set standards as per the law.
3. Lastly, violation of some business ethical codes such as loyalty and compassion may not attract a penalty. On the contrary, violation of the business law such as engagement in fraudulent transactions will attract a legal punishment.

Ethical dilemmas faced by Michael

• The first dilemma faced by Michael is upon his hiring as the operations manager for the company JCI. His job description involves duties that, in his understanding, should be performed by 5 individuals. At this point, he faces ethical commitment dilemma especially on being made aware that his predecessors resigned within 6 months.
• Michael also faces dilemma on whether to hire labor for the 4 positions he needed in hi capacity as the operations manager. The other ground of dilemma in this case is that the hired employees were to be paid only, without health or retirement compensation and no federal withholdings. The ethical consideration in this case is if it is right to hire employees without such provisions.
• Michael faces dilemma upon the news that a scandal would hit the company that would negatively impact its stock value. Further, he is informed that the top executives are selling their stocks while they are of value. Although he subsequently sells his stocks too, he faces dilemma on the issue which he gives thought for a while before authorizing his broker to sell it.
• Michael learns that his broker inadvertently failed to sell all his stocks. At this time, the company's stock value had fallen by 75%. His decision to sell his devalued stocks to a known wealthy woman is another avenue of ethical dilemma. Actually, the woman, with no knowledge of of the devalued stocks asked him 3 times if the stocks were profitable to which he answered in affirmative.
• Michael's plea of nolo contendere is another situation upon which he faced ethical dilemma. During his arrest and being put in a jail, he is neither told his offence nor is he allowed to contact his attorney. However, Michael is aware of his misdeed of duping the wealthy woman into purchasing devalued stocks. Faced with the dilemma and with the temperatures in his cell declining, he decides to take a plea of nolo contendere.