Business ethics is a concept that is often forgotten. When companies are at a point where they are not meeting ideal profit goals, they often cut down on wages of hardworking employees. According to Freeman’s Stakeholder’s theory, in order for a business to be successful it has to accommodate for all groups in a business. Satisfying employee demands are essential for improving its labour productivity and product quality. However, Coca Cola Amatil strikes a deal to implement a pay freeze on its new employees by paying them 38% less. While old employee wages are unaffected, new employees are expected produce the same work efficiency as those that are paid a higher wage.
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The company puts weight onto its workers to ensure maximum profits. While cost of living is on the rise, workers are being paid the bare minimum. This makes their job This questions how ethical the business is for underpaying employees that essentially perform the same task. However Friedman’s Stockholder Theory justifies it as an ethical practice as long it remains free from deception or fraud. The company’s actions create an unequal working field and prevent the economy from growing at a steady pace.
Businesses should avoid focusing solely on its shareholders and adopt the Stakeholder’s theory, which takes in account the best interests of all aspects in a business. With more ethical practices that satisfies the needs of everyone, the business can progress in a more sustainable and economical manner.
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