This essay examines the workplace ethical issues that face businesses. Busing ethic is critical in ensuring smooth operation and safeguarding the overall image of an organization. According to Ferrell et al. (2019), business ethics entails making the right decisions that align with moral values such as honesty, fairness, treating people with dignity, avoiding bribery, and engaging in legal business practices (p.493). The stiff competition in virtually all industries has made businesses to be more likely to engage in unethical practices in a bid to counter their rivals (Ferrell et al., 2019 p.497). In many unethical business practices, managers are often held accountable because they are tasked with ensuring proper business practices among employees. Unethical business practices can not only lead to expensive litigations but can taint the image of a corporation, therefore affecting the future success of a business. In this essay, the focus is to use the business practices that are highlighted in the film, the Wolf of Wall Street (2014), to examine the failure of Jordan Belfort in his business dealings. Jordan Belfort is the protagonist in the film; a role that is played by Leonardo DiCaprio. Given the diverse decisions that are made by Jordan Belfort, the essay uses various ethical theories to understand the ethical issues, before concluding with recommendations that managers should use in their business practices to avoid ethical issues.
This section examines the factors that influence Jordan Belfort in his decision in running his company Stratton Oakmont. As one of the top managers of the Stratton Oakmont Company, Jordan unethical decisions which leads to litigations and the eventual collapse of the business.
Situational factors are out of the control of an individual. According to Zia et al. (2020), situational factors are extrinsic factors that influence the decision of an individual such as work culture and job autonomy (p,3). The situational factor that influences Jordan is the culture that runs in the stock exchange industry. Right from the time when he joins the brokerage industry, Jordan learns that the industry is solely focused on making money. While working for L.F. Rothschild, under the supervision of Mark Hanna, Jordan realizes that the industry is majorly focused on making money. As aforementioned, situational factors that influence the decision of an individual are factors beyond the control of an individual (Zia et al., 2020 p.2). The social and cultural factors that influence Jordan when he joins the stock exchange sector he is indoctrinated into the culture of making money regardless of the approach. Although there are brokers that follow the right process, Mark makes Jordan realize the challenges of the industry and the need to be aggressive, with the only focus on making more money.
The industry of the stock exchange also influenced how Jordan made decisions given that he was supposed to work on a commission basis. Working on commission creates an environment that presents stiff competition in the industry influencing the brokers to look for to earn at all means. Some brokers are likely to be influenced to turn to unscrupulous to convince investors with the aim of growing their commissions. Zia et al. (2020) argue that the working environment or the culture associated with an organization can have a considerable influence on how employees make a decision. For instance, working for a boiler room brokerage firm on Long Island, forced Jordan to also engage in similar dishonest practices. While working in this company, Jordan learned how to use lies to influence investors in their decisions.
With regard to the situation’s moral intensity, Jordan may have made the decision considering the number of people that were going to be hurt from his actions. According to Digidiki and Baka (2020), a situation’s moral intensity is based on the understanding that it is unethical to hurt few people because the magnitude is higher compared to hurting many people (p.3). With high understanding, Jordan can be considered to have made a decision based on this perception. The stock market is characterized by having different people buying stocks of a given company with the aim of selling the stock at a higher price (Wulandari, 2013, p.3). Therefore, the situation’s intensity is highly applicable given that there is a huge number of people that are buying the stock. Therefore, as a stockbroker, Jordan would easily perceive the damage he was causing on the buyers, or rather subconsciously considered the net impact to be lower because of the many buyers of the stock.
Individual factors play a huge role in the ethical practices of Jordan. The individual factor that majorly influences decisions made by Jordan are knowledge level, personal goals, and moral values. In the film, Jordan is depicted as a young ambitious person that is committed to becoming wealthy regardless of any means possible (TenBrink, 2014, p.4). With his deep knowledge of the Stock Exchange industry, Jordan is able to influence investors with false information on how was going to grow their investment. Most of the investors that contacted the company had limited knowledge about the industry, therefore, they strongly relied on the information that was provided by the information that was provided by the company. Jordan is more informed about the stock market compared to his customers, therefore they approach him for financial advice on where to position their finances. However, because of his deep knowledge, Jordan takes the opportunity to mislead his customer by making them purchase stocks at higher prices can their market value.
The culture in the stock industry considerably influenced the decisions made by Jordan. When Jordan joined the industry, he was working under Mark, who informed him that in the industry, it was all about making money. Although Jordan had already established a family, he was still attracted by wealth, sex, and drugs associated with the industry. In the argument by Digidiki and Baka (2020), the culture of a location influence how people interact and perceive their environment. Therefore, Jordan is influenced by his culture of the industry that is geared towards making money using any means necessary. Jordan learned the art of cheating the customers when he was working in a boiler stock company, which used the strategy of inflating stocks. Jordan carries on with the bad culture through his career to his major company, Stratton Oakmont. Jordan continues with his dishonest means of operation until he is investigated and arrested by the FBI.
The aspect of individualism is part of Hofstede’s cultural dimensions, which argues that members of the society tend to aggressively pursue their individual goals. The film is set in Wall Street, New York in the U.S, which exhibits the cultural dimension of individualism (Zia et al., 2020 p.4). Most western countries align with individualist because of their strong support for capitalism and democracy. Additionally, America is characterized by success, whereby every person is indoctrinated from childhood to work hard and pursue individual success. In this regard, have been brought up with such a mindset, Jordan must embrace brokerage as an individual opportunity to gaining success (TenBrink, 2014, p.7). Although he was a dedicated person, he felt that working hard alone was not enough to guarantee him the first life that he admired from seasoned stockbrokers that he met at Wall Street. Therefore, from the start, Jordan had already learned to put his needs first, which may have triggered him to be inconsiderate when selling inflated penny stocks.
This section centers on various ethical issues as highlighted in the Wolf of Wall Street film. The section focuses on the key decisions that Jordan made that exposed his lack of ethics in his role as a manager. Additionally, the evaluation of different ethical issues in the film is backed by ethical theories.
Utilitarianism: this is a consequential theory that determines the ethical aspect of an action based on the results (Savulescu et al, 2020 p.622). This theory is clearly evident based on the actions and decisions made by Jordan. One of the ethical issues clearly evident in the film is inflating prices of stock. When Jordan is suddenly fired from his first job when he was working in L.F. Rothschild, he finds a job at a boiler room brokerage firm. It is from this boiler room firm that Jordan learns how to inflate penny stocks. Therefore when he established his company along with his friend Donnie Azoff, he continued embracing the same mode of operation whereby he inflated stocks in a bid to win more customers (Lausen et al., 2020). Even after turning the company to Stratton Oakmont, Jordan continued to engage in stock manipulation. The aspect of utilitarianism is captured in how Jordan runs his Stratton Oakmont brokerage firm. The focus of utilitarianism promoting the common good of many people. In Stratton Oakmont, the first stakeholders that Jordan aims to please are the customers. In this regard, he collaborates with his employees to misadvise his customers with regard to investing their finances, therefore enabling the company to make a huge amount of profits. The employees and the Jordan are also stakeholders that pursue happiness by ensuring that Stratton Oakmont made massive profits. Although stakeholders can gain happiness, it is only transient because it leads to massive losses (Lausen et al., 2020). The customers lose their huge investments in the stocks, while employees and managers such as Jordan ended up facing a serious legal case that leads to huge fines and imprisonment. Through engagement in conning customers with a promise of getting high returns and promising employees wealth and success did not yield high the common good of many people.
Virtue ethics: this is an ethical theory that is largely based on the character of an individual. In the film, Jordan is the lead character, and his actions show that he lacks personal moral values. Jordan is a dishonest and self-centered person that is focused on achieving his selfish desire at the expense of other people. Right from the time when he joined the industry, Jordan was influenced into the culture of making money. Prior to joining the stock market, Jordan had established a family, which later ended in divorce after being carried away by the lifestyle in the industry. Jordan embraces a lifestyle of dishonesty, which he spread to other members of staff in his Stratton Oakmont. Based on his decisions and actions, Jordan fails to align with virtue ethics because of his lack of moral values such as honesty and integrity. The use of deception to win the trust of the customers and influencing employees to also follow the same trend shows the lack of moral values.
Jordan failed to align with the ethics of care through his actions of lying to the customers. Jordan had already learned how to mislead investors into making investment decisions. For instance, he would sell cheap stocks at relatively high prices, which would only lead to losses to the investors. By inflating stocks and providing investors with a positive probability of a high increase in sales, Jordan was able to win many investors that he used to expand his business. In order to win more investors, Jordan changed the name of his company to Stratton Oakmont. However, he continued with his same dishonest approach in business, which enabled the company to win more investors, therefore making the company attract the attention of Forbes. After the story of the success of Stratton Oakmont on Forbes, it attracted more financiers leading to exponential growth in wealth. Jordan Belfort was the leader of the company therefore strongly blamed for his failure to ensure that the company made informed decisions. Towards the end of the film, Jordan Belfort is investigated by the FBI on various issues of concern that are related to the company. The investigations show that Jordan Belfort engages in illegal business practices, which have contributed to his success in the industry. For instance, Jordan Belfort is found to be engaging in stock inflation in a bid to convince his investors.
Kantianism theory: By setting a bad example of other employees, Jordan failed to align with the Kantianism theory of ethics. According to Tesón (2017), Kantianism argues that people should take consistent actions and think sensibly by helping others make the same rational decisions (558). Jordan failed on this because he used his position to influence his employees at Stratton Oakmont to embrace misinformation in order to convince investors. From the start of his career, Jordan learns that the sole purpose of the stock market is to make money. The art of using misinformation is strongly embraced in the Wall Street stock exchange sector because the investors are not quite informed or are not able to effectively predict the market (Salek, 2018 p.5). Therefore most of the workers in the industry are pressured to make a catch because their earnings mostly rely on commission. In the case of Jordan Belfort, he learns about using misleading information to achieve his way when he got a job in a boiler room brokerage firm on Long Island. As a penny stockbroker, Jordan Belfort is able to use dubious and aggressive means to get a fortune that enables him to gain a fortune that he uses to collaborate with Donnie Azoff to establish a boiler room brokerage.
Social contract theory: Based on the failure of Jordan of being the custodian of the customers and the employees, he went against social contract theory. According to Congleton (2020), the social contract theory argues that leaders have an obligation to the stakeholders that engage with the organization. This means the management of an organization should uphold practices that will disadvantage their stakeholders such as employees, customers, and overall members of the society. By setting a bad example to his employees, Jordan influenced them to engage in a practice that negatively impacted the members of society. The huge number of customers that were affected by the deception that was used by Stratton Oakmont employees can largely blame it on the top management (TenBrink, 2014, p.9). The top management such as Jordan influences the bad culture because of their selfish goals of making more money, which only lead to huge financial loss invested by the members of the society. Additionally, as part of the community, the employees that lost their jobs, and other faced litigation can also point at the failure of Jordan and the entire management. Jordan failed to uphold social contract theory that requires leaders to be responsible with their actions, to avoid inflicting negative effects on the stakeholders.
Business ethics is important because it promotes good relations and enhances the performance of a business. According to Ferrell et al., (2020), business ethics management is the formal or informal process of ensuring that employees in the workplace embrace moral values (p.493). This section provides recommendations that managers should consider when making decisions to ensure that they are in line with moral values.
The first step of ensuring that employees in the workplace make moral decisions is to ratify a Code of Ethics to guide the employees. Code of Ethics is defined by Gaillard and DeCorte (2020) as a set of rules that guide the employees on how to make an informed decision that aligns with moral values (51). The Code of Ethics has a strong influence on the behaviors that are exhibited by the management and the employees. Gaillard. and DeCorte (2020) assert that the Code of Ethics is imperative in laying the ground for warning and setting boundaries on how they should behave and make decisions (p.51). The Code of Ethics is argued by Gaillard. and DeCorte (2020) as a guideline that helps organizations to operate in line with both state and federal laws, and avoiding legal problems that can affect a company (p.51). For instance, after owning a company, Stratton Oakmont, Jordan failed to establish a Code of Ethics, which therefore meant that his employees were free to engage in any form of deception to attract investors. Therefore, with the Code of Ethics, managers can limit the chances of employees using unscrupulous means to gain success in their duties.
Secondly, a manager needs to embrace ethical leadership. Managers have a huge responsibility of guiding employees in making informed decisions in their operations. Ethical leadership is defined by Engelbrecht et al. (2017) as a leadership approach that focuses on establishing a good personal and interpersonal relationship to influence proper behavior among the subordinates (2). A good example in the film is how Jordan failed to embrace ethical leadership in his company, therefore prompting his employees to also engage in lies to win buyers of stocks. According to Engelbrecht et al. (2017), ethical leaders can identify an ethical issue and guide their employees on how to avoid the issue (p.2). Engelbrecht et al. (2017), add that ethical leadership is critical in the establishment of an ethical culture in the organization because they are able to influence employees on how to make an informed decision by leading by example (p.3). In most organizations, employees emulate the actions of their managers, therefore embracing ethics can also influence employees to embrace ethical behavior. Additionally, ethical leaders should lead by example, be open to new ideas, and constantly communicate with their subordinates on various ethical issues in the organization.
Another recommendation for promoting ethics in an organization is to embrace communication and embrace reward system. The management should openly communicate about ethical practices in the organization, to include the employees in the process of promoting ethical process. Sheer et al. (2018) argue that collaborating with employees is helps to enhance ethical practices in the organization (p.21). Communication is important because it motivates employees and provides them with an opportunity to raise their issues of concern that is related to ethics. Managers can also motivate their employees by giving them rewards for making ethical decisions. Rewards and punishing employees for their misdeeds can play an important role in compelling employees to embrace ethical practices (Sheer et al, 2018 p.21). However, it is important for managers to focus more on informing the employees on the importance of upholding ethical practices. Making employees understand the importance of ethical practices, backed with a strong organizational culture can compel employees to make ethical decisions without compulsion.
This essay has focused on understanding the ethical issues in the decisions that are made by Jordan Belfort in the film, The Wolf of the Wall Street. The decisions made by Jordan Belfort were influenced by both intrinsic and extrinsic factors. The situational factors that influenced Jordan are the culture of the stock market industry and the overall culture of America, which he learns from his early encounter with Mark Hanna. However, Jordan is also influenced by his individual factors such as his personal goals of becoming wealthy, weak moral values, and his knowledge level. The actions of Jordan were influenced by extrinsic factors such as the culture of the industry and individual factors such as lack of moral values and personal goals. Jordan’s decisions and actions such as inflating penny stocks, and lying to investors, contravened ethical theories such as virtue ethics, utilitarianism ethics, Kantianism theory, and social contract theory. Therefore, based on the actions and failure of Jordan, it therefore imperative for managers to embrace ethical leadership, embrace communication, and establish a code of ethics.