Salary Cap Breach Case Study
The Melbourne Storm
A scandal that was inevitable
Topic: An analysis of the ethics of the Melbourne Storm NRL Club’s salary cap breaches
Section 1
The purpose of this essay is to analyse the ethics of the Melbourne Storm NRL Club’s salary breach with reference to the management literature on business ethics. This essay will look at three separate articles discussing business ethics and then link the information found on ethical decision making towards the Melbourne Storm salary breach scandal. The first article will discuss networking and its link to business, with reference to the three types of networking and specific unethical behaviour in networking. The second article will look at the theory of planned behaviour and discuss what widespread unethical behaviour is and how closeness centrality can lead to it. The final article argues that culture plays a predominant role in ethical decision making and links individualism and collectivism to the case. After analysing all three articles and then comparing what was learned about ethics …show more content…
to the Melbourne Storm scandal, we should be able to answer the question; did the pressure of performing in an aggressive competition influence the Melbourne storm to adopt unethical behaviours?
Section 2
Practice of Networking: An ethical approach
The practice of networking has evolved more so in the last twenty years than in the previous sixty. It has been recognised as an essential component in the business context and various benefits including resources, information and knowledge can be obtained from business networks. Mélé (2010) mentions that networking can be associated with inter- and intra-organizational aspects of a business and pressure from maintaining a positive ethical standard can lead to unethical behaviour. But before we establish the specific misconducts in business ethics, we must look at the three types of networking; utilitarian, emotional and virtuous. Mélé (2010) recognises utilitarian networking as an investment into obtaining benefits related to safety or protection, economic advantages, and obtaining power. Emotional and virtuous networking differ from utilitarian networking, as the former are not influenced by material goods, but instead motivated by the desire to work pleasantly with others, and make a positive contribution to a noble cause (Mélé, 2010). Virtuous behaviour includes good faith, honest goals and applying an ethical influence within the network. The actions that are contrary to virtuous behaviour are labelled as misconduct or unethical behaviour. Acting with bad faith such as taking advantage of others without respecting network legitimate norms is a classic example of misconduct and can lead to unfair opportunism, which is another form of unethical behaviour. Opportunistic behaviour on a negative level involves the abuse of trust or disregarding network norms or principles to better the position of one’s self often at the expense of others. There is also responsibility to bear if a person is cooperating in the wrongdoing of others. This is unethical behaviour as there is a common theme of disguised bribery involved in another person’s wrongdoing.
Do competitive environments lead to the rise and spread of unethical behaviour? Parallels from Enron.
The authors of this article claim that the driving force toward Enron’s unethical behaviour was the organizational culture of the business. However, there are other aspects mentioned that lead a company to widespread unethical behaviour.
The theory of planned behaviour assumes that individuals are rational and that their decisions come after a careful evaluation of the possible implications of their actions if they choose to engage or not. The theory of planned behaviour is useful for determining why a person would act unethically because it acknowledges a person’s values as a main contributor towards their behaviour.
In Enron’s case, the behaviour within the organization was tainted and the company began to adopt unethical practices. The once organizations ethical culture had now been strewed and a new unethical counterculture emerged that saw a change between the two, “resulting in ethical behaviour as the minority counterculture rather than the norm” (Kulik, O’Fallon & Salimath, 2008). Through the example of Enron, Kulik et al (2008) were able to define widespread unethical behaviour at the organizational level as, “unethical behaviour among leaders and followers to the extent that systematic ethical behaviour becomes a minority.”
The structure of relationships is a predictor of whether widespread unethical behaviour emerges in an organizational setting, and perhaps the most relevant structural characteristic, in Enron’s case, is closeness centrality. This relates to how connected the network members are across the entire organization. This characteristic can be linked to the Enron scandal as the emergence of widespread unethical behaviour increases in relation to closeness centrality.
Toward a Model of Cross-Cultural Business Ethics: The impact of individualism and collectivism on the ethical decision-making process.
Parallel to the opinion provided by Kulik et al (2008), Husted & Allen (2008) also believe that ethical decision making is dependent on the cultural context the business is set in.
The decision to behaviour ethically can be divided into three basic aspects; the perception of moral problems, moral behaviour and moral reasoning (Husted & Allen, 2008) and it is here that we can link in individualism and collectivism. Individualism and collectivism deal with beliefs concerning the individual versus group interests and this affects ethical decision making. Because the core elements of each differ (individualism are independence and uniqueness, collectivism are duty to the in-group) Husted & Allen (2008) propose that, “cultures differ to the extent that provide situations which cue individualism or collectivism.”
It is this culturally adopted individualistic or collectivistic approach to solving moral problems that can consequently result in unethical decision making.
It is noted that in individualist cultures, people believe there is greater importance on achieving tasks whilst collectivist cultures tend to find more achievement in building good relationships with others (Husted & Allen, 2008).
As well as societal culture being a situational variable in ethical decision making, both individualists and collectivists use a reasoning-behaviour relationship that is balanced by situational and individual factors. Husted & Allen (2008) state that individualist cultures use justice-based post-conventional moral reasoning, with a focus on rules and standards, to make ethical decisions whilst collectivists use relationship-based post-conventional moral reasoning, with a focus on relationships and the good of the community.
Section
3
The Melbourne Storm NRL Club salary cap breach came to speculation on the 22nd of April 2010. The rugby league club has been estimated to have breached the salary cap by over $1.7million over five years. In order to understand how the Melbourne Storm responded to the ethical dilemmas concerning the rules and codes of the NRL salary cap, we must first apply the insights of the previous three articles on ethics.
Since there are multiple issues concerning business ethics and ethical behaviour that can be drawn from the Melbourne Storm scandal, we must first ask what actions performed by the Melbourne Storm can be classified as unethical?
Remembering what Mélé (2010) mentioned about unethical behaviour, being any action that is contrary to virtuous behaviour such as acting with bad faith, opportunism used negatively, and also cooperating in the wrong doing of others, this can be linked to the Melbourne Storm.
The Melbourne Storm have acted with bad faith by taking advantage of the public’s trust and used it in a negative opportunistic way that has seen them cheat the system and disregard legitimate norms to remain constant competition favourites over the previous three years. The trust that was gained through years of ethical utilitarian networking has now been abused
One of the other unethical behaviours mentioned by Mélé (2010) is cooperating with the wrongdoing of others. It is hard to assume that a single manager or executive could be in on the Melbourne Storm scandal, and this was found to be true. Not only the leaders (corporate managers) but the followers (Melbourne Storm players) were also linked to unethical behaviour. The players cooperating with the wrongdoing of their leaders should also be held responsible according to Mélé’s (2010) journal on business ethics, and evidence suggesting that the Melbourne Storm players took multiple disguised briberies to keep quiet corroborates the literature on unethical business ethics.
The topic of closeness centrality discussed by Kulik et al (2008) corresponds with the evidence discovered in the Melbourne Storm scandal. The fact that each NRL club is a highly central structure; this would permit the increase of unethical practices to both ends of the network, from corporate managers to Melbourne Storm players, and thus completely overturn the ethical ‘abiding of the NRL salary cap’ culture with the newly adopted ‘keep quiet cheat the system’ counterculture.
How the managers responded to ethical dilemmas, the literature suggests that the NRL club took an individualistic approach. They ignored the ethical opinion of a collectivist societal culture (ie what was ethical for the greater good) and instead their moral decisions had a focus on independence and what benefited the Melbourne Storm club executives and players the best. The club’s moral reasoning can therefore be assumed that they believed their actions were harmless and were thus convinced that the moral domain of rules and codes, did not apply.
Section 4
It is quite clear in everyday sports that people would rather win than lose. In order to achieve this, one must be the best or have the best player(s). It seems that the desire to win overrides just about anything, even corporate or personal ethics. This was the case for the Melbourne Storm. The pressure, repeatedly pushed on coaches, administrators and players, of performing in such an aggressive competition have lead to clouded judgement and seems to justify a bevy of widespread unethical behaviour.
It is difficult to say if any one of us on-lookers would do a better job, however, I believe it comes down to a personal value embedded amongst societal culture; is selling your soul worth a slight edge in competition? I believe the risk far outweighs the benefits, and evidence of the Melbourne Storm scandal and also the Enron collapse substantiates my opinion.
Possibly the greatest lesson that can be learned from the case of the Melbourne Storm salary cap breaches, to ensure that organisations maintain high standards of ethics, is to abide by business ethics because not even a conspiracy of silence will protect people from the truth. The Melbourne Storm either believed; they were above the rules, that the risk and short term gain was worth it, or that they wouldn’t get caught. From the result of both the Melbourne Storm scandal and the Enron collapse, it should suggest to other organisations that appropriate ethical behaviour is necessary to survive in the business world.
To ensure that the theoretical insights into ethics inform better practice in real organisations I believe their needs to be more specific literature written on codes of conduct concerning unethical behaviour and the consequences it entails. This Melbourne Storm scandal should hopefully scare organisations into taking real consideration over any potential ethical dilemma that might develop.
Through the analysis of business ethics established in the literature, a link has been formed that labelled the Melbourne Storm’s actions as unethical business behaviour. It was then determined that personal values embedded within societal culture and influenced by the pressure of performing in an aggressive competition, did influence the Melbourne storm to adopt unethical behaviours.
Reference List
Husted, B.W & Allen, D.B. (2008), “Toward a Model of Cross-Cultural Business Ethics: The Impact of Individualism and Collectivism on the Ethical Decision-Making Process”, Journal of Business Ethics, Vol 82, pp.293-305
Kulik, B.W, O’Fallon, M.J & Salimath, M.S. (2008), “Do Competitive Environments Lead to the Rise and Spread of Unethical Behaviour? Parallels from Enron”, Journal of Business Ethics, Vol 83, pp. 703-723
Mélé, D. (2010), “The Practice of Networking: An Ethical Approach”, Journal of Business Ethics, Vol 95, pp. 324-340
A scandal that was inevitable
Topic: An analysis of the ethics of the Melbourne Storm NRL Club’s salary cap breaches
Section 1
The purpose of this essay is to analyse the ethics of the Melbourne Storm NRL Club’s salary breach with reference to the management literature on business ethics. This essay will look at three separate articles discussing business ethics and then link the information found on ethical decision making towards the Melbourne Storm salary breach scandal. The first article will discuss networking and its link to business, with reference to the three types of networking and specific unethical behaviour in networking. The second article will look at the theory of planned behaviour and discuss what widespread unethical behaviour is and how closeness centrality can lead to it. The final article argues that culture plays a predominant role in ethical decision making and links individualism and collectivism to the case. After analysing all three articles and then comparing what was learned about ethics …show more content…
to the Melbourne Storm scandal, we should be able to answer the question; did the pressure of performing in an aggressive competition influence the Melbourne storm to adopt unethical behaviours?
Section 2
Practice of Networking: An ethical approach
The practice of networking has evolved more so in the last twenty years than in the previous sixty. It has been recognised as an essential component in the business context and various benefits including resources, information and knowledge can be obtained from business networks. Mélé (2010) mentions that networking can be associated with inter- and intra-organizational aspects of a business and pressure from maintaining a positive ethical standard can lead to unethical behaviour. But before we establish the specific misconducts in business ethics, we must look at the three types of networking; utilitarian, emotional and virtuous. Mélé (2010) recognises utilitarian networking as an investment into obtaining benefits related to safety or protection, economic advantages, and obtaining power. Emotional and virtuous networking differ from utilitarian networking, as the former are not influenced by material goods, but instead motivated by the desire to work pleasantly with others, and make a positive contribution to a noble cause (Mélé, 2010). Virtuous behaviour includes good faith, honest goals and applying an ethical influence within the network. The actions that are contrary to virtuous behaviour are labelled as misconduct or unethical behaviour. Acting with bad faith such as taking advantage of others without respecting network legitimate norms is a classic example of misconduct and can lead to unfair opportunism, which is another form of unethical behaviour. Opportunistic behaviour on a negative level involves the abuse of trust or disregarding network norms or principles to better the position of one’s self often at the expense of others. There is also responsibility to bear if a person is cooperating in the wrongdoing of others. This is unethical behaviour as there is a common theme of disguised bribery involved in another person’s wrongdoing.
Do competitive environments lead to the rise and spread of unethical behaviour? Parallels from Enron.
The authors of this article claim that the driving force toward Enron’s unethical behaviour was the organizational culture of the business. However, there are other aspects mentioned that lead a company to widespread unethical behaviour.
The theory of planned behaviour assumes that individuals are rational and that their decisions come after a careful evaluation of the possible implications of their actions if they choose to engage or not. The theory of planned behaviour is useful for determining why a person would act unethically because it acknowledges a person’s values as a main contributor towards their behaviour.
In Enron’s case, the behaviour within the organization was tainted and the company began to adopt unethical practices. The once organizations ethical culture had now been strewed and a new unethical counterculture emerged that saw a change between the two, “resulting in ethical behaviour as the minority counterculture rather than the norm” (Kulik, O’Fallon & Salimath, 2008). Through the example of Enron, Kulik et al (2008) were able to define widespread unethical behaviour at the organizational level as, “unethical behaviour among leaders and followers to the extent that systematic ethical behaviour becomes a minority.”
The structure of relationships is a predictor of whether widespread unethical behaviour emerges in an organizational setting, and perhaps the most relevant structural characteristic, in Enron’s case, is closeness centrality. This relates to how connected the network members are across the entire organization. This characteristic can be linked to the Enron scandal as the emergence of widespread unethical behaviour increases in relation to closeness centrality.
Toward a Model of Cross-Cultural Business Ethics: The impact of individualism and collectivism on the ethical decision-making process.
Parallel to the opinion provided by Kulik et al (2008), Husted & Allen (2008) also believe that ethical decision making is dependent on the cultural context the business is set in.
The decision to behaviour ethically can be divided into three basic aspects; the perception of moral problems, moral behaviour and moral reasoning (Husted & Allen, 2008) and it is here that we can link in individualism and collectivism. Individualism and collectivism deal with beliefs concerning the individual versus group interests and this affects ethical decision making. Because the core elements of each differ (individualism are independence and uniqueness, collectivism are duty to the in-group) Husted & Allen (2008) propose that, “cultures differ to the extent that provide situations which cue individualism or collectivism.”
It is this culturally adopted individualistic or collectivistic approach to solving moral problems that can consequently result in unethical decision making.
It is noted that in individualist cultures, people believe there is greater importance on achieving tasks whilst collectivist cultures tend to find more achievement in building good relationships with others (Husted & Allen, 2008).
As well as societal culture being a situational variable in ethical decision making, both individualists and collectivists use a reasoning-behaviour relationship that is balanced by situational and individual factors. Husted & Allen (2008) state that individualist cultures use justice-based post-conventional moral reasoning, with a focus on rules and standards, to make ethical decisions whilst collectivists use relationship-based post-conventional moral reasoning, with a focus on relationships and the good of the community.
Section
3
The Melbourne Storm NRL Club salary cap breach came to speculation on the 22nd of April 2010. The rugby league club has been estimated to have breached the salary cap by over $1.7million over five years. In order to understand how the Melbourne Storm responded to the ethical dilemmas concerning the rules and codes of the NRL salary cap, we must first apply the insights of the previous three articles on ethics.
Since there are multiple issues concerning business ethics and ethical behaviour that can be drawn from the Melbourne Storm scandal, we must first ask what actions performed by the Melbourne Storm can be classified as unethical?
Remembering what Mélé (2010) mentioned about unethical behaviour, being any action that is contrary to virtuous behaviour such as acting with bad faith, opportunism used negatively, and also cooperating in the wrong doing of others, this can be linked to the Melbourne Storm.
The Melbourne Storm have acted with bad faith by taking advantage of the public’s trust and used it in a negative opportunistic way that has seen them cheat the system and disregard legitimate norms to remain constant competition favourites over the previous three years. The trust that was gained through years of ethical utilitarian networking has now been abused
One of the other unethical behaviours mentioned by Mélé (2010) is cooperating with the wrongdoing of others. It is hard to assume that a single manager or executive could be in on the Melbourne Storm scandal, and this was found to be true. Not only the leaders (corporate managers) but the followers (Melbourne Storm players) were also linked to unethical behaviour. The players cooperating with the wrongdoing of their leaders should also be held responsible according to Mélé’s (2010) journal on business ethics, and evidence suggesting that the Melbourne Storm players took multiple disguised briberies to keep quiet corroborates the literature on unethical business ethics.
The topic of closeness centrality discussed by Kulik et al (2008) corresponds with the evidence discovered in the Melbourne Storm scandal. The fact that each NRL club is a highly central structure; this would permit the increase of unethical practices to both ends of the network, from corporate managers to Melbourne Storm players, and thus completely overturn the ethical ‘abiding of the NRL salary cap’ culture with the newly adopted ‘keep quiet cheat the system’ counterculture.
How the managers responded to ethical dilemmas, the literature suggests that the NRL club took an individualistic approach. They ignored the ethical opinion of a collectivist societal culture (ie what was ethical for the greater good) and instead their moral decisions had a focus on independence and what benefited the Melbourne Storm club executives and players the best. The club’s moral reasoning can therefore be assumed that they believed their actions were harmless and were thus convinced that the moral domain of rules and codes, did not apply.
Section 4
It is quite clear in everyday sports that people would rather win than lose. In order to achieve this, one must be the best or have the best player(s). It seems that the desire to win overrides just about anything, even corporate or personal ethics. This was the case for the Melbourne Storm. The pressure, repeatedly pushed on coaches, administrators and players, of performing in such an aggressive competition have lead to clouded judgement and seems to justify a bevy of widespread unethical behaviour.
It is difficult to say if any one of us on-lookers would do a better job, however, I believe it comes down to a personal value embedded amongst societal culture; is selling your soul worth a slight edge in competition? I believe the risk far outweighs the benefits, and evidence of the Melbourne Storm scandal and also the Enron collapse substantiates my opinion.
Possibly the greatest lesson that can be learned from the case of the Melbourne Storm salary cap breaches, to ensure that organisations maintain high standards of ethics, is to abide by business ethics because not even a conspiracy of silence will protect people from the truth. The Melbourne Storm either believed; they were above the rules, that the risk and short term gain was worth it, or that they wouldn’t get caught. From the result of both the Melbourne Storm scandal and the Enron collapse, it should suggest to other organisations that appropriate ethical behaviour is necessary to survive in the business world.
To ensure that the theoretical insights into ethics inform better practice in real organisations I believe their needs to be more specific literature written on codes of conduct concerning unethical behaviour and the consequences it entails. This Melbourne Storm scandal should hopefully scare organisations into taking real consideration over any potential ethical dilemma that might develop.
Through the analysis of business ethics established in the literature, a link has been formed that labelled the Melbourne Storm’s actions as unethical business behaviour. It was then determined that personal values embedded within societal culture and influenced by the pressure of performing in an aggressive competition, did influence the Melbourne storm to adopt unethical behaviours.
Reference List
Husted, B.W & Allen, D.B. (2008), “Toward a Model of Cross-Cultural Business Ethics: The Impact of Individualism and Collectivism on the Ethical Decision-Making Process”, Journal of Business Ethics, Vol 82, pp.293-305
Kulik, B.W, O’Fallon, M.J & Salimath, M.S. (2008), “Do Competitive Environments Lead to the Rise and Spread of Unethical Behaviour? Parallels from Enron”, Journal of Business Ethics, Vol 83, pp. 703-723
Mélé, D. (2010), “The Practice of Networking: An Ethical Approach”, Journal of Business Ethics, Vol 95, pp. 324-340