Introduction:
Unethical behavior in organization has become a common and important practice in order to enhance the revenue and achieve the targets and sale employees are more involved in this unethical practice as compare to other employees. In order to be competitive, it is essential to maintain good relation with customers and for this reasons banks have to follow the ethical behavior.
Objective of this study is to enhance the understanding of business ethics through utilizing the theories. In order to gain the objective, paper has been divided into 4 major sections. In section one, the personally evident problem has been discussed. The second section explores the unethical dimensions of this problem. In third section, solution has been proposed to this issue and the last section is based on the suggestions that how the solution can be practiced.
Description of the problem:
Loyal clientele are not born, they are generated through ethical practices and behaviors; dealing with client ethically is recognized the most important area of business ethics (The GoodHeat Willco, 2010; California Bank, 2014). Ethical problems lead organization to customer loss and ultimately to financial loss. The major function of banks is to deal with customers and currently banks are involved in selling and marketing some products such as credit cards and insurance plans. Here the interest of ethical consumption and marketing is rising rapidly. The problem that has been personally witnessed was a harsh experience of my friend. It has been determined that banks in order to meet the high selling targets utilize unethical practices. Such as I witnessed that, my friend applied for a loan and went to bank with all required supporting documents; he was sent to a person who was liable to scrutinized and investigate documents of loan applicants. After completing the process, he was confirmed on the eligibility and approval of the loan amount with mutual understanding. However, after agreeing on the terms of loans he was explained to, he was asked to fill and sign the 30 pages booklet that was communicated as a loan application form with same terms and condition that have been explained to him verbally. Hence, going with trust factor he signed the form and in a week the loan amount was credited, but later a week it was noticed that the another upfront and processing fees; on the detailed look of statement, it was encountered that he was charged for credit card for which he did not apply and even received. When this problem was discussed with corresponding brand, he came to know that the loan application form included credit card application as well and he was not told regarding this issue while filling the form. In result of such an unethical behavior, he transferred the loan to another bank and cancelled the credit card as well. This normal practice has been used in banks in order to meet the unrealistic targets.
Either the problem is ethical and if so what are the dimension of the problem of being unethical:
What exactly the problem is and why it is a problem:
Amongst the unethical behaviors of the workers, the most unethical behavior that is considered important is unethical selling behavior (Bellizzi &Hasty, 2003). It has been determined that sale personnel in order to meet the targets and enhance the revenues mislead the customers. According to deontological theories, the ethics should be based on right principles or duty (BBC, 2014a) and the right actions are based on keeping up the promises, be open, transparent truth worthy, and impose things on others (Harper & Stein, 1992). The consequence of these ethics is positive always and following ethics add trust and respect among customers (Robinson and Dowson, 2012). Bank services are dependent upon the interest of customers and in order to sell the product, banks must keep the clear mutual interest in mind (Anderloni, Braga and Carluccio, 2007). According to the notion of customers right, customers must be treated with dignity, they must be treated fairly, and seller must be open to customer (which means nothing should be hidden) (Crane and Matten, 2010; Alexender, 2008). From the supplier point of view, supplier should not misuse his power, the loyalty should be maintained, and conflict of interest must not occur (Carne and Matten 2010; Auka, 2012).
According to the Carroll’s corporate social responsibility model, the cross selling practices of the bank lies under the second stage of the model. The problem of selling credit card without customer consent is an ethical issue because all rights of customers have been violated, (he was not told about the card issuance and was charged for the thing he did not requested for) and supplier (bank) has been unable to behave ethically. The second stage of pyramid says that it is not enough to be legal but it is also essential to meet the ethical norms and standards (Nilsen, 2010). This pyramid at ethical stage communicates that banks must do what is right, fair, and should not harm the customers; banks should avoid questionable practices. The case is unethical because customer was no treated fairly and seller was not open to the customer. This is the right of customer that he is told all aspects of contracts; the application forms should be transparent and all information should be communicated regarding the product or service and all terms and conditions should be clearly communicated to customers (Kulkarni, 2014) Bank misused its power, allotted the credit card to customer without his consent, and charged for the product he had not applied for; moreover, his permission was not taken to open an account. Such issues raised the question on loyalty and conflict of interest occurred (Caragher, 2014).
Trust is an element of ethical behavior and manipulation comes under the unethical behavior; banks mostly practice such techniques in order to meet aggressive sale targets of banks and appreciate to cross sell the products (Buckner, 2010; Nwikina, 2013). If customers are continued to be cheated and misguided, this can lead banks to trust loss (Carroll, 1991).
Organizational initiative to resolve the problem and its authenticity:
The consequentialism (normative theory) theory is about the ethical actions; according to the theory, an organization must understand the consequences of action (SPI, 2015; BBC, 2014b). Same as utilitarian theory suggest that ethics should be translated by considering the outcome of the actions, which means that the act should be supported that produce most goods and do not care about some who are dissatisfied; but if the particular mentioned case is considered then bank is not considering the bad consequences that can occur in long-term. Customers are the backbone of financial institutes and in order to retain them trust is major factor (Einaesdottir and Marteinsdottri, 2010). Currently, bank is continuing its practices and has not paid any attention to this issue. Word of mouth is very powerful marketing tactic and negative word of mount can reduce the customers immensely. After having bad experience an unsatisfied customers will market the negative image of the organization that result in negative consequences (Saylor Foundation, 2014). The utilitarian concept is important because it guides to analyze the consequences of action, but organization can rely on this argument solely. When the corresponding branch in a particular case was asked that how all this issue (credit card issue) came in to existence then they told that this is the normal practice they use to meet the targets, some customers use the credit card when found attached and so cancelled it out; but bankers’ argument is not valid because there is no evidence that customers who states using product (credit card) are satisfied and not speaks out negative words for bank. The justice theory presented by Rawls communicates that people should be treated fairly, but when banks issue card to customers without their consent, they are not fair to them and following unethical practice because it harms customers. According to the justice theory, inequality allows to least benefit and in the mentioned case it is true because bank is not considering the equal benefit of it and customer that will lead to only one time benefit.
Proposed approach to resolve the issue of unethical cross selling:
Banking services are based on trust (Mullineux and Murinde, 2003) and it has been determined that sale employees are involved more in unethical practices as compare to other employees in order to achieve the targets (Román & Luis Munuera, 2005), but organization must consider the ethical behavior of such employees because they have face to face communication with customers and in case of any wrong doingorganization has to face the consequences. In such a competitive arena banks are struggling, and maintaining good relations with customers has become pivotal to them in order to lead the industry and sale people play strategic role in this sense (Alrubaiee, 2012).It has been determined that organization who follow ethical practices regardless of the consequences face positive outcomes; these ethical practices are applicable at universal level and comes from rational foundation. Such ethical practices include respect for the self-governance of the client, working for the benefit of the client, avoiding to make any harm for client (such a bank did with my friend), and treating clients with justice, which means without being partial (Beaychamp, Bowie and Arnold, 2012; Beauchamp and Childress, 1994). Therefore, bank must acquire the deontological approach when considering the customers and include some universally accepted ethical principles such as fairness, transparency, openness, avoid cheating, respecting customers, and maintaining consistency. Such practices can save the trust and time both. For example, bank must communicate all the terms and conditions clearly to customers. If bank wants to sell credit cards and insurance policies then rather to cheat customers, bank should try to convince them by communication the advantages of products or services; this practice will improve the relationships and keep the customers loyal. Loyal customers bring business to banks. However, the contrast approach that has been used by banks is unethical, will case to break the trust of the organization, and will damage the image of bank. Bank just will not lose the customers but also waste the time. Banks must acquire the rational approach through providing the customers what they want and should keep the employees accountable for unethical practice.
Ethical validity of proposed approach and its practical implications
However, ethical behavior of organization is important in order to keep the relations healthy with customers; organizations use different techniques to force ethical practices (Adnan et al., 2013; Grewal and Levy, 2011).Customer oriented services approach in is ethical because it will prevent banks from waste; waste of time, waste of resources (credit cards required material that has cost), and waste of efforts (Bradburn, 2001; Godfrey & Hatch, 2007). In order to bring the ethical behavior into practice developing the code of ethics is an essential practice that has been followed by multiple organizations in order keep save themselves from ethical dilemmas. The aim of widelydistributed and written ethical code of conduct is to guide the employees regarding ethical behaviors (Grewal and Levy, 2011; Christina, 2006).
Banks in order to maintain the positive image and good relations with customers must design the ethical code of conduct and should ask employees to follow the conduct. Unethical employees many bring more business as compare to employees who are committed to ethical conduct, but they will cause to lose the relations and will lead organization toward decline in term of profitability in long run (Abratt, Bendixen, & Drop, 1999). Moreover, performance of employee can be used to measure ethical behavior (Tansu, 2001), but it is not the only measure of ethical practices, people may buy product because they have been misguided and cancelled out later. Therefore it is essential to analyze the ethical behavior of employees (Piercy, Cravens, & Morgan, 1998; Babakus et al., 1994). Ethical environment force employees to be ethical (Douglas, Davidson, & Schwartz, 2001; LRN, 2006; Meinert, 2014).Conclusion:
It has been determined that unethical cross selling is common practice in banks and banks are using this approach widely. However, this approach is not going to benefit banks in long run and in order to be competitive banks have to acquire ethical practices. It has been determined that organizations that strictly follow the ethical behaviors are successful as compare to those who do not (Wadhwa, 2009). It has been suggested that banks must acquire ethical behavior and rather to mislead customers should acquire customer-oriented approach that will prevent banks from waste of resources, time, and image. It has been recognized that employee performance in sale profession is not an accurate measure of its ethical behavior because employee may bring temporary business by misleading the customers and after realizing the fact, they cancelled out the product. Therefore, it is essential that banks in order to maintain the positive image and good relations with customers design appropriate measures in order to analyze the employees’ ethical behavior such as customer feedback (Eccles, Newquist, & Schatz, 2007; Grish, 2010).
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