496 Assignment

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Nov 24, 2024

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496 Assignment Introduction The COVID-19 pandemic posed a substantial economic challenge globally, necessitating stimulus packages and relief initiatives to support businesses and individuals. In this context, USAA and Shake Shack navigated these tumultuous times with certain actions raising ethical questions concerning their management of stimulus funds and the Paycheck Protection Program (PPP). This paper will scrutinize the ethical concerns from their behavior, delineating the stakeholders implicated in this situation. We will delve into these actions' implications from a utilitarian perspective, emphasizing the greatest good for the greatest number. Moreover, we propose prudent courses of action for the future, considering the lessons learned from these ethical dilemmas. The paper will summarize key findings, enriching our understanding of ethical responsibility in crisis management and financial decision-making in unprecedented times like a global pandemic. Ethical Issues USAA’s ethical dilemma is its decision to utilize members' stimulus checks to offset their negative balances without prior notice. Although legally compliant, this move raised ethical questions about its fairness and benefits to members. The context here is critical: amidst a global pandemic, these checks were intended as economic relief for those struggling. The unilateral application of these funds by USAA, without consulting their members, strikes an ethical discord. The key ethical concern is whether it is right to redirect financial aid to alleviate pandemic-induced hardships toward settling account deficits. Despite the legality, the overriding ethical query concerns transparency and the company's responsibility towards its members during such precarious times. Gilbert (2006) posits that maintaining a balance between corporate interest and moral obligation is crucial and questioning if USAA has lost sight of this equilibrium. The ethical dilemma surrounding Shake Shack's $10 million loan under the Paycheck Protection Program (PPP) stems from the company's size and financial stability. Established to aid small businesses walloped by economic turbulence, the PPP funds were a lifeline. However, Shake Shack, a large and well-capitalized company, also applied for and received this aid. This raises ethical questions about the fairness of allocating these much-needed resources. While the application was technically legal, the loan's approval for Shake Shack potentially denied access to many small businesses. Unlike Shake Shack, these struggling entities may have had no other options for financial relief. Consequently, the ethical concerns extend beyond Shake Shack's application and receipt of the loan to the wider issue of resource allocation within crisis support mechanisms, such as the PPP (Gilbert, 2016). The episode underscores the importance of nuanced, ethical considerations in the management of public funds. Stakeholder Implications USAA's stakeholder community extends to its members, chiefly comprised of military personnel and their families, who had expectations around receiving their stimulus checks. This funding

was especially crucial during the global pandemic when financial stability was unstable. USAA's decision to offset negative account balances with these checks impacted these individuals immediately. This meant members found their stimulus checks absorbed by their existing debt instead of receiving much-needed funds, possibly leaving them in financial distress. The wider military community, too, felt the ripple effects of this decision. Military families often rely on a tightly woven support network, and financial strains on individual families can reverberate through this system. Hence, by offsetting negative balances, USAA potentially limited its stakeholders' capability to navigate emergencies in an already challenging time, inciting concerns about the financial well-being of the military community. This highlighted the delicate balance needed when managing financial responsibility and member well-being. Shake Shack's decision to obtain a Paycheck Protection Program (PPP) loan had far-reaching implications for its diverse stakeholders. The group encompasses the company's employees, shareholders, customers, and competing small businesses seeking PPP loans. In securing the loan, Shake Shack ensured its workforce's continuity and security for shareholders amidst uncertain economic times. Simultaneously, this action maintained the supply of products to their loyal customers. However, criticism arose from the perception that Shake Shack, a well- established entity, could potentially have accessed alternative financial resources, unlike smaller, vulnerable businesses. Shake Shack may have indirectly deprived these smaller businesses of desperately needed funds by accepting the loan. This scenario underscored the complexity of decision-making within large organizations, requiring a delicate balance to address stakeholder interests and societal expectations of ethical behavior (Gilbert, 2016). Utilitarianism Viewpoint Utilitarianism champions actions that result in the maximum aggregate happiness. It contends that the morality of an action depends on the overall happiness or pleasure it brings about (CrashCourse, 2016a). When USAA offsets debts, if this act deterred impending financial instability and assured enduring advantages, then a utilitarian argument might justify it. The principle asserts that if these actions culminate in long-term happiness for the larger group, then it is ethically sound, despite the possibility of some individual suffering in the short term. However, it is crucial to consider that this move also reportedly generated immediate distress among the USAA members. From a short-term perspective, this could be seen as reducing overall happiness, thereby conflicting with utilitarian ideals. The justification of USAA's action relies heavily on balancing the prospective long-term benefits and the immediate distress caused to its members. From a utilitarian perspective, Shake Shack's securing the PPP loan can be viewed as a complex moral dilemma. The company's actions certainly preserved its stability, safeguarded jobs, and ensured consistent wages for its workers, which increased overall happiness. However, it is essential to consider the larger societal implications. By obtaining this loan, Shake Shack may have inadvertently hampered smaller businesses' access to these crucial funds, potentially leading to their downfall, loss of employment, and widespread hardship. In the utilitarian calculus of maximizing overall happiness, the question remains whether the benefits reaped by Shake Shack and its employees outweigh the potential distress inflicted upon small businesses and their

employees. If the latter is greater, utilitarian ethics could argue that Shake Shack's acquisition of the loan was not the most ethical course of action. Hence, the utilitarian viewpoint highlights the complexity of such decisions and their far-reaching impacts. Rights and Duties Viewpoint From the perspective of rights and duties, there are compelling arguments that USAA, the financial services group, may have failed to uphold its obligations. Specifically, the organization appears to have neglected its duty of transparency, arguably a cornerstone of its responsibilities to its members. Additionally, the conduct appears to contravene the members' rights to receive their stimulus checks and their privilege to determine how they should be utilized. This perceived violation is a serious concern, especially given the context of economic relief, where these stimulus checks serve as critical financial lifelines for many individuals and families. USAA's actions seem to undermine the fundamental premise of the stimulus checks, which is to put direct decision-making power in the hands of the beneficiaries. Therefore, it seems clear that USAA has some considerable accountability issues to address (Gilbert, 2016). Shake Shack undeniably obliged its employees and shareholders to keep the business operational. It is clear that in pursuing this objective, they sought financial relief during a challenging economic period. Nevertheless, controversy arose when Shake Shack leveraged funds designed primarily to aid smaller businesses. These funds, intended to support establishments lacking larger corporations' financial fortitude or resources, were capitalized on by Shake Shack, which some perceived as a breach of an unwritten duty to the community and other businesses. The actions of Shake Shack have led to an important dialogue regarding the ethics of corporate conduct, specifically during economic distress. While it is evident that corporations need to survive, it is equally critical that they maintain a balance between their fiduciary responsibilities and their communal obligations, especially when their actions might disadvantage smaller, more vulnerable businesses (Gilbert, 2016). Fairness and Justice Viewpoint In the context of fairness and justice, USAA's decision to use stimulus checks to offset debts has drawn criticism. This choice may be viewed as unjust due to the lack of communication and consent. USAA members, unsuspecting of the firm's intentions, have found their stimulus checks used to repay outstanding debts instead of providing much-needed financial relief amid economic distress. This sudden decision denies them the chance to address the debts on their terms and violates their sense of financial autonomy. The stimulus checks, designed to support individuals and families struggling economically, were instead appropriated to clear debts without member consent, thus potentially disrupting the equilibrium of fairness. For these reasons, USAA's unilateral decision could be seen as violating justice principles, compromising trust and fairness within its membership community (CrashCourse, 2016). Similarly, Shake Shack's choice to accept the Paycheck Protection Program (PPP) loan has elicited criticism for potentially undercutting the fairness of fund distribution. This action is seen as unfair to small businesses that might be more desperate for such financial aid. The PPP was primarily designed to provide relief for small businesses impacted by the pandemic, but Shake

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Shack's acceptance of this aid could signal an undue advantage for larger, more established entities. Consequently, this situation prompts inquiries regarding the fairness of the distribution process. Detractors contend that the funds should be allocated primarily to those most in need, specifically small businesses grappling to maintain their operations. Therefore, Shake Shack's actions can be interpreted as undermining the purpose of the PPP loan program, thereby generating a perception of unfairness in allocating financial resources. These concerns highlight the ongoing discussions about the ethics and fairness of relief fund allocation during economic crises (CrashCourse, 2016). Recommended Actions USAA needs to prioritize open communication with its members, particularly during emergencies. This means keeping members informed about policy changes or company news and listening and responding to their concerns in real time. In crises, immediate member needs must be addressed swiftly, demonstrating the organization's commitment to its welfare. In addition, fairness must be the foundation of every action USAA takes. This includes treating all members equally and making decisions that ensure everyone's best interests are considered. Transparency, another key principle, should be exercised consistently to make decision-making processes understandable and open to scrutiny. This builds trust and reassures members that their interests are being genuinely considered. By adopting these practices, USAA can further cement its reputation as a trusted and reliable service provider. While legally done, Shake Shack's acquisition of the PPP loan has stirred controversy. Considering the company's considerable size and revenue, it is seen as a move that disproportionately benefits them while smaller businesses struggle for survival. In response to the backlash, Shake Shack could consider returning the loan to set a precedent of ethical responsibility in the corporate sector. If returning the loan is not feasible, another responsible action could be establishing a support fund for local small businesses adversely affected by the pandemic. This goodwill gesture could go a long way in easing tensions and demonstrating a commitment to community support. By acting this way, Shake Shack can mitigate the negative perception caused by the loan acquisition and promote a sense of fairness and solidarity. It is a crucial step that could potentially reinforce trust, foster goodwill, and champion the survival and prosperity of local businesses in these challenging times. Conclusion USAA and Shake Shack made decisions that stirred ethical debates throughout the pandemic. USAA furloughed employees, while Shake Shack accepted and then returned a substantial government loan. Analyzed from the perspective of utilitarianism, these actions were justifiable: Shake Shack secured funds for survival, and USAA cut costs for business sustainability. Nevertheless, Kantian ethics, prioritizing respect for persons and their autonomy, could argue that these actions adversely affected employees and small businesses, indicating an ethical lapse. Both instances bring into focus the tension between legal permissibility and ethical responsibilities. While both organizations acted within legal parameters, their decisions could be considered ethically questionable. From a stakeholder theory perspective, they must consider

employees, shareholders, and wider society when making decisions. To address these ethical dilemmas, corporations should be transparent, prioritize stakeholder well-being, uphold their social responsibilities, and integrate ethics into their decision-making processes. This way, corporate actions could balance legal and ethical obligations, promoting societal welfare and respecting rights. References CrashCourse. (2016, December 19). What is Justice?: Crash course philosophy #40 . YouTube. https://www.youtube.com/watch?v=H0CTHVCkm90 CrashCourse. (2016a, November 21). Utilitarianism: Crash course philosophy #36 . YouTube. https://www.youtube.com/watch?v=-a739VjqdSI&t=2s CrashCourse. (2016b, December 5). Aristotle & Virtue theory: Crash course philosophy #38 . YouTube. https://www.youtube.com/watch?v=PrvtOWEXDIQ Gilbert, J. (2016). Ethics for Managers: Philosophical Foundations and business realities . Routledge Taylor & Francis Group.

496 Assignment

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