Jhon McDonald is a production manager of a company that manufactures machine parts for a heavy machinery firm. Jhon joined the company 12 years back and introduced a performance-based payment system in the company. A performance-based payment system is not very common in manufacturing industries in that locality. In this system employees are paid based on number of units they produce, and the quality of the units produced. Employees are paid below average hourly pay but high bonuses. Therefore, efficient employees are earning above average salaries. Employees with long time experience receive salaries from $80,000 - $90,000. Most experienced employees liked the system because they are earning very good remuneration and they can personally influence their salaries.

However, some employees do not like this system because they are not able to keep up with the intensive production methods and they want more payment security. In addition, they are critical that there are no health plans incorporated in this payment system. A paid annual leave clause is also missing from the system. However, employees are able to take leave, but they are not paid. Employees who do not like this system ultimately leave the company.

Ron Freeman and his five friends have worked for the company for the last 10 years. They like the system as they are earning very good salaries and happy that their experiences and efficiencies are rewarded. However, Uka Ahamed and three of her friends are very unhappy about this pay system. They joined the company two years back and feel that the pay system is unfair to them.

You must undertake independent research into the theories of egoism, and utilitarianism. Now apply them as follows assuming that you are an expert in business ethics.

1. Analyse the ethical issues of Jhon McDonald’s case using the theory of egoism.
2. Analyse the ethical issues of Jhon McDonald’s case using the theory of utilitarianism.

In each case, you must identify the key features of the theory being used and show how they apply to the case. Conclude the section by explaining how a theoretical knowledge of ethics will help Jhon deal with the ethical issues.