Reference no: EM132183747

Take Me to Your (Ethical) Leader

Four years ago, GeorgeMackee, his wife, Mary, and their two children moved from El Paso to Hondo, Texas. He had accepted a promotion, along with a pay raise, to manage the local plant for ArdnakIndustries, a manufacturer of plastic parts for oil refineries. The plant employed several hundred workers, a substantial portion of Hondo's employment base.

Ardnak had several plants similar to the Hondo operation in Texas and Oklahoma. George felt he had a good relationship with his boss, Bill Melon, at Ardnak's headquarters in Austin.

A problem at the Hondo plant was its smokestack emissions consistently exceeded EPA (Environmental Protection Agency) guidelines. Several months ago, Bill told George that the EPA had found the plant out of compliance and would be levying fines until the problem was cured.

Installing "scrubbers" was the best way to fix the problem, but until the company's profits improved Bill wouldn't approve George's budget request to install them. Instead, Bill asked why other Ardnak plants with older equipment than at Hondo were able to satisfy the EPA's standards.

After calling other Ardnak plant managers, George learned how they did it: work that produced out-of-compliance emissions was always scheduled for the night shift rather than during the day.

That way, when the EPA did a random daytime check, emissions levels were within standards and the plants were able to meet their production goals. George thought about re-scheduling the Hondo plant's work in this way, but realized that doing so would actually increase total emissions in the local airspace.

A month later, no solution had been found. Bill told George the EPA was continuing to levy fines and Ardnak's top management was disappointed the problem had not been solved. Bill then said the company had contacted the Mexican government and learned the Hondo plant could be relocated in Mexico, only 15 miles south of its current site.

In Mexico, none of the EPA's regulations would apply. Ardnak would be required to hire Mexican workers, but could hire them at lower wage rates and with less benefits. Bill told George to be in Austin next week with either a solution to the emissions problem or a plan for relocating the plant in Mexico.

George knew that relocating the plant to Mexico and laying off all its workers would devastate the local economy. Just as bad, it would probably cause more air contamination in Hondo. George's wife, Mary, pointed out that their two children would be going to college in the near future.

She also said she didn't want him to be responsible for causing all their friends to lose their jobs. Consider how George should solve this problem as an ethical leader in his company and community.

Arthur Andersen & Co.

The facts and circumstances of this case are fictional. For academic use only.

1. Identify any ethical issue(s) that George faces in this situation.

2. Who are the stakeholders affected by this situation?

3. How are these stakeholders affected?

4. What are George's options to resolve this problem?

5. Evaluate the pros and cons of each option.

6. What should George do? Why?