Abstract:
Sears was once the largest retailer in the world in
1969. The business success was massive, with the construction of the Sears
Towers signifying its dominance in the world of retail. The business success
was huge in the succeeding years, with the now big giants Walmart and Amazon
not matching its success. The merger with Kmart was historical, as the move
would mean that the two giants would be operating close to 3,500 locations
(Vault, n.d). In the first year of operation as two companies, sales rose
astronomically, but it began to fell in the succeeding years. Besides, the
profits started to drop from 2006, with the main peak being in 2014 when its
debts became massive. The company’s move to reduce the number of its workers in
a move to cut costs during the period of turmoil led to low staff morale in the
process resulting in customer care deteriorating. The climax came with the
massive debt of $ 5 billion that made Sears Holdings file for bankruptcy
(Siemaszko, 2018).
The main issue with Sears Holdings was how it handled
the payout of its employees after bankruptcy. The business paid the executive
workers $ 25.3 million in bonuses, while the junior employees got a severance
cut (Siemaszko, 2018). This move meant that the junior workers would be late in
meeting its bills, while the top executive was enjoying hefty pay. The central
claim of retrenched workers was that the issue of bankruptcy laid with the
executive workers as their inaction is what led to Sears Holdings failing to
hit its financial targets. The approval by the bankruptcy court on the bonuses
of executives and severance of pay cuts to junior workers led to a huge uproar.
Ethics Case Controversy:
Sears was once the largest retailer
in the world in 1969, with the merger with Kmart leading to the operation of
close to 3,500 locations. Financial turmoil led to low staff morale in the
process resulting in the customer care deteriorating.
“Sears Holdings Sales trends 2005- 2017”
The main issue in the case study was the payment
of the executive workers $ 25.3 million in bonuses, while the junior employees
got a severance cut.
Stakeholders:
The biggest
stakeholders of Sears Holdings include employees, creditors, and customers.
Individualism:
Ethical theories
will be significant in the explanation of the actions of Sears Holdings .The
individualists do not think that being unique from the group is unethical (Ahuja, van der Schaar, & Zame, 2015).
Under individualism, the rights of a person take center stage. For a person
that believes in the upholding of individualistic behaviors, the move by the
company to award the top employees $ 25.3 million in bonuses is commendable.
Individualism proclaims that being dependent on others is shameful.
Utilitarianism:
Utilitarianism provides that the most ethical action is
the one that derives the maximum benefit or outcome (Eggleston, 2012). Sears Holding under this approach
was unethical. The main concentration of the management was not to satisfy the
majority, but rather to reward what they thought was the deserving staffs. Utilitarianism
would still consider the action by Sears Holdings as unethical.
Kantianism:
Kantianism claims that the morality of an action is not
on the outcome but majorly on the process. Kantianism does not dwell on Consequentialism.
The consequences of an act do not matter in the case of Kantianism. According
to Kant, there should be respect for the dignity of a rational human being
anytime (Dan-Cohen, 2011). The
action to pay the executive workers of the payout handsomely, while at the same
time pays the junior workers poorly qualify as an unethical practice under
Kantianism. In the case of Sears, there was no dignity to the junior employees,
since they ought to have received good severance pay.
Virtue ethics:
Virtue ethics is similar to Kantianism (Ainley, 2017).
Virtue ethics provides that action matters as part of ethics rather than the
outcome. For Sears Holdings, the administration failed to act as another person
in the same position would act. There was no need to pay the bonuses affiliated
to the executive human resources, while the larger population was suffering. The
administration of Sears Holdings could argue that virtuous ethics does not
provide a framework that would facilitate ethical practices.
Justified Ethics Evaluation
I do not believe in utilitarianism concept, but equally, the action of
Sears Holdings management does not constitute just. Individualism is not the
best approach to the issue of compensation. In my opinion, the action of Sears
Holdings was unethical.
Action Plan
It is undeniable that the success of an organization depends on its
employees. The most crucial move in attracting customers is taking care of the
workers. Poor treatment of human resources will result in the same treatment to
customers.
"Sears Store Closing"
It is evident in the case of Sears Holdings that the
decision made by the management had a negative influence on its workers. The
employees were feeling that the whole business would close done leaving them
without a job. Sears Holdings must begin to motivate its workers. The action
plan is vital in advising Sears Holdings on their next move.
By Waleed Alghamdi
Ahuja, K., van der Schaar, M., & Zame, W.
R. (2015). A Theory of Individualism,
Collectivism and Economic Outcomes. Retrieved from https://arxiv.org/pdf/1512.01230.pdf
Ainley, K. (2017). Virtue Ethics. Retrieved from http://eprints.lse.ac.uk/69534/1/Ainley_Virtue%20ethics_author_2017%20LSERO.pdf
Dan-Cohen, M. (2011). A concept of dignity. Retrieved from https://pdfs.semanticscholar.org/6ed9/29b8486c22a63e97c0680a156f1264f15ad5.pdf
Eggleston, B. (2012). Utilitarianism. Retrieved from http://www.benegg.net/publications/Eggleston_Utilitarianism.pdf
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