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496 Assignment

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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
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during such precarious times. Maintaining a balance between corporate interest and moral

obligation is crucial, and questioning if USAA has lost sight of this equilibrium (CrashCourse,

2016b).

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 (CrashCourse, 2016b). 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
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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. p, 170).

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
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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.
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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. p, 178).

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. p, 179).

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
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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 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
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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
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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.
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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.