Reference no: EM133673953
Ethical Decision Making: Resolving Ethical Business Challenges*
CrudeOil, a subsidiary of a major energy multinational that manufactures oil drilling parts around the world, experienced a lag in sales. The board of directors brought in a new manager to revamp the company. They recommended Jim Stone as the new manager because he had an impeccable reputation for achieving results, and top managers in the industry liked him because of his west Texas demeanor. After eighteen months passed, Jim was successful in increasing the company's sales and profits. He began his tenure as manager by laying off several salespeople who had not performed according to his high standards. This made those who stayed with the company uneasy and they responded in different ways. Some tried to get on Jim's good side, while others focused on achieving their sales goals and avoiding any type of interaction with him.
The problem was Jim's managing style was harsh and unpredictable. For example, when a mistake was made, he blamed salespeople he disliked even if it was not their fault. On one occasion, Marjorie, one of the newest salespeople, brought in an unusually big sale. Rather than giving her positive feedback, Jim acted like it was a normal occurrence. What was ironic was the company's most important value was to treat everyone with respect. It was considered so significant it was printed on a banner and hung at the front of the office for all to see. When Jim lost his temper, it often happened while he stood in front of all the employees underneath the banner.
His personality really came out when he got angry. At several meetings he would randomly pick out salespeople and engage in intimidating behaviors such as staring at them for long periods of time, discounting their ideas, or simply ignoring them. Jim treated all of the employees with intimidating behavior, even the ones he claimed to like. Every so often Jim picked out an employee and make snide comments over the course of several days. He made no excuses about it.
One day, when one of the employees finally broached Jim about the matter, Jim announced to the entire office, "I pick out the employees who are under performing. I am the boss, and I need to make sure you people make as many sales as possible." He paused and looked at the expressions on the employees' faces. He then continued, "Actually, you should make more sales than that!" Jim turned toward his office, laughing as he shut the door. The employee who spoke up was given the subsidiary's lesser sales accounts.
Madison, who hired in as a salesperson a few months before Jim took control of the company, was continuously in Jim's cross hairs. He told her even though she made her sales quota, it was not satisfactory. Furthermore, he took credit for her performance at meetings. When her numbers exceeded the quota, he spread rumors suggesting she wasn't meeting her goals because of problems in her personal life.
One day Peter, another salesperson, approached Madison and asked her how she was doing. Madison looked at him confusedly, and responded, "I'm as fine as anyone else here. Why?"
Peter answered, "Jim told me you had been in the hospital lately and you might be suffering from a serious illness." Madison was taken aback. "Peter, Jim is just saying that because my sales numbers were low this last quarter. Believe me, I am fine." Madison sat there infuriated that Jim would be spreading rumors about her.
Madison knew initiating a conversation with Jim would not be the way to resolve this issue. She felt she would be fired if she confronted him about his behavior or demoted like the other employee. She tried talking to others Jim had bullied, but many feared for their jobs and preferred to remain silent. She also considered speaking with the board of directors, but she did not know any one of them well and she knew they had a good relationship with Jim. Some kind of action had to take place because Madison could not work in an environment like that much longer. Besides, other employees' tolerance would wear out soon and the company as a whole could suffer lasting consequences. As Madison walked toward the front door at the end of the day, she avoided looking at the banner featuring Crude Oil's most important value.
Questions
Describe the organizational culture at CrudeOil. How does it contribute to the current situation?
How is CrudeOil violating its core value of treating others with respect? What are some ways it could reincorporate this core value into its organizational culture?
If Madison cannot report her problems to her immediate supervisor, what are some other ways she can handle the situation?
Individual Factors: Moral Philosophies and Values: Resolving Ethical Business Challenges
Individual Factors: Moral Philosophies and Values: Resolving Ethical Business Challenges*
Dr. Robert Smith owned his family practice for over 20 years. He came from a family of success. His father was a brain surgeon and his mother a well-known author. His younger brother, Saul, owned his own accounting firm for several years, but came to work with Dr. Smith after he sold it for a modest amount.
After graduating at the top of his class from Johns Hopkins University, Dr. Smith was awarded a cardiothoracic surgery fellowship in New York. He spent a few years there and was well on his way to fulfilling his dream of becoming a heart surgeon. During this time, however, his father became ill. Dr. Smith decided to return to his hometown of Zoar, Ohio, to take care of him. Under Dr. Smith's care, his father started showing signs of improvement. He was glad not only for his father, but that he could go back and continue his pursuit of becoming a heart surgeon. On the day he was set to leave, his mother became ill and died a few days later from a rare form of cancer that showed no symptoms. The devastation hit the family hard. Saul was still in college, and Dr. Smith's father needed someone to be with him at all times. Dr. Smith decided to stay in Zoar to take care of his father. He opened up a family practice in the town, thus putting his dream of becoming a heart surgeon on hold indefinitely.
Over the years, Dr. Smith sometimes felt regret that he never achieved his dream, but his job as the town doctor had been fulfilling. Now Saul was working with him, helping with the business. This made things significantly easier for Dr. Smith, who haphazardly kept his own books and patient files. One day, as Saul organized Dr. Smith's piles of paperwork, he noticed there were charges to Medicaid that must be a mistake. While most of the population of Zoar, Ohio, was considered low-level income and qualified for Medicaid, this was not the case for all patients. There were several elderly middle- and higher-income families who regularly visited the office and usually paid with a check or cash. Saul assumed his brother's administrative office skills were poor and aimed to fix it. However, as Saul organized the paperwork and checked files, these charges to Medicaid appeared to increase, dating back at least five years.
Saul approached his brother. "Robert, are you aware you charged Medicaid for Mr. and Mrs. Bennett's visits?"
"Hmmm. Let me see the paper work," Dr. Smith asked. Saul handed it to him. Dr. Smith glanced at the document and said, "Yes, they are over age 65, so I made a bill for Medicaid."
"But we have records they paid you with cash," Saul replied. He handed Dr. Smith an old receipt. "And there are similar instances with some of your other patients. Besides, Medicaid is for low-income patients, not the elderly. Mr. and Mrs. Bennett are clearly not low-income."
Looking a little bit flustered, Dr. Smith replied, "Saul, you know how I am with details. I'm no good at it. That's why I hired you. Thanks for catching my mistake." Dr. Smith walked back into his office and shut the door, leaving Saul standing in the hallway with a stack of files.
Saul knew what his brother gave up for their family and the good he did for the families in this small town, but he was convinced these charges were not accidental. There were too many of them and the amount of money charged exceeded $75,000.
"What happened to all that money?" Saul wondered. He also wondered how to handle the situation. He thought to himself, "How can I report this without sending Robert to jail? If I don't report it and Medicaid finds out, I could go to jail and lose my accounting license. This is such a small town. If anybody finds out, we'll never live it down." At that moment, the phone rang, and Saul was the only one there to answer it.
Questions
Describe Saul's ethical dilemma.
Why would Medicare fraud be a white-collar crime?
How should Saul approach the situation?