Ethical Decision-Making
Right vs. Wrong – Issue
Case Study
Angela works at an office where information is shared among colleagues and everyone shares their ideas openly. Today at the office meeting the team was assigned to think of a workplace scenario and bring it to the meeting the next day. When the next day arrives Angela realizes she forgot about the assignment and did not prepare, but she remembers her colleague Audrey sharing what her scenario was going to be at the last meeting. Angela decides to go first and blurts out Audrey’s original scenario, leaving Audrey blank when her turn comes. In this situation, there is a clear decision on what is right and what is wrong.
Right vs. Right – Dilemma
Case Study
In 1958 Dick founded a successful distribution business, Affiliated Steam Equipment Co., in Alsip, Illinois. Dick has 1 son – Rick, and two daughters. As of 1993 Rick was the only active or interested child in the business. He had worked in the company for 15 years, and for all practical purposes had been running it for the last six. Rick, 44, was ready to take over full control and ownership, but Dick, at 81, wasn’t ready to turn it over without some assurances.
The father named certain conditions connected with a sale, including some continuing income, financial performance criteria, and several perks he had enjoyed. He considered these minimal reward for 40 years of hard work, and would not sell to his son or anyone else without them. Dick also wanted to make sure that all three of his children would be treated equally in his estate plan, which might necessarily include transferring some stock to his daughters.
Rick, at his age, was not willing to continue building the business unless he had assurance of complete ownership. He could see the writing on the wall: He would dedicate his time and energy to building the business, only to pay twice by later having to buy out the shares held by his non-active siblings. He was not willing the pay his two sisters for what he alone had built, yet he also believed in fair treatment of everybody in his father’s estate plan. As a buyer, he felt that a fair sale price was sufficient reward for the seller of any business, and that the proceeds would create the liquidity needed to support equal distribution of his father’s estate.
Who is right?
https://www.familybusinessmagazine.com/ethical-dilemmas-right-vs-right
Influences on Ethical Behaviour
Individual Factors
Factors
Level of Control for Manager
Issue Intensity
Factors
Level of Control for Manager
Case Study – Identify the Issue Intensity for this scandal.
In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts. It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses.
Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to shady sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not honor the company’s values and that there were no incentives to commit unethical behavior. The board initially stood behind the CEO but soon after received his resignation and “clawed back” millions of dollars in his compensation.
Further reporting found more troubling information. Many employees had quit under the immense pressure to engage in unethical sales practices, and some were even fired for reporting misconduct through the company’s ethics hotline. Senior leadership was aware of these aggressive sales practices as far back as 2004, with incidents as far back as 2002 identified.
The Board of Directors commissioned an independent investigation that identified cultural, structural, and leadership issues as root causes of the improper sales practices. The report cites: the wayward sales culture and performance management system; the decentralized corporate structure that gave too much autonomy to the division’s leaders; and the unwillingness of leadership to evaluate the sales model, given its longtime success for the company.
https://www.scu.edu/ethics/focus-areas/business-ethics/resources/wells-fargo-banking-scandal/
Organizational Culture
Factors
Level of Control for Manager
Case Study – Would having good organizational culture make the situation different? How would it?/How would it not?
One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.
Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong. The general public and those who witnessed the arrest labeled it as discriminatory and racist.
This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.
In his apology statement and follow up video release shortly after the arrests, Johnson said, “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”
Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub–a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for everyone.”
Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better. Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.
After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.
