Reference no: EM131417921

Case Study: Kelly's Next Step

The statewide news carried a story about Core-Tex that evening. There were rumors swirling that one of the largest manufacturers in the state was facing serious questions about its social responsibility. A former accountant for Core-Tex, whose identity was not revealed, made allegations about aggressive accounting methods and practices that overstated company earnings. He said he left Core-Tex after his supervisor and colleagues did not take his concerns seriously. The former accountant hinted that the company's relationship with its external auditor was quite close, since Core-Tex's new CFO had once been on the external auditing team. Core-Tex had recently laid off 270 employees-a move that was not unexpected in these turbulent financial times. However, the layoff hit some parts of the site's community pretty hard. Finally, inspectors from the state environmental protection agency had just issued a series of citations to Core-Tex for improper disposal and high emissions at one of its larger manufacturing plants. A television station had run an exposé on the environmental citations a week ago.

CEO Kelly Buscio clicked off the television set and thought about the company's next steps. Core-Tex's attorney had cautioned the executive group earlier that week about communicating too much with the media and other constituents. The firm's vice president for marketing countered the attorney by insisting that Core-Tex needed to stay ahead of the rumors and assumptions that were being made about the company. The vice president of marketing said that suppliers and business partners were starting to question Core-Tex's financial viability. The vice president of information technology and the vice president of operations were undecided on the proper next steps. The vice president of manufacturing had not been at the meeting. Buscio rubbed her eyes and wondered what tomorrow could bring.

To her surprise, the newspapers were pretty gentle on Core-Tex the next day. There had been a major oil spill, the retirement of a Fortune 500 CEO, and a major league baseball championship game the night before, so the reporters were focused on those stories. The company's stock price, which averaged around $11.15, was down $0.35 by midmorning. Her VP of marketing suggested that employees needed to hear from the CEO and be reassured about Core-Tex's strong future. Her first call after lunch came from a member of the firm's board of directors. The director asked Buscio what the board could do to help the situation.

Imagine you are Kelly. What would you do? Don't forget about the Board!