Deck 9: Managing and Controlling Ethics Programs

Question 1

Mei-li stared at the code of ethics she received when she first began to consult with Business Equipment Corporation (BEC). Right there, under the heading "Competition," it stated, "BEC strongly believes in the competitive process. While we are dedicated to selling the best products, we have a strong commitment toward competing fairly and honestly." Mei-li wondered if there was any way to do her assignment without going against this core value.
Mei-li's first consulting assignment after graduating from UCLA was to work with Kyle, an engineer at BEC. Their assignment was to help develop and produce a new copy machine. Last year BEC discovered a new technology that would enable them to manufacture a copy machine with a copy quality far superior to anything else on the market. Mei-li and Kyle are both sure they have a winning product.
"I am especially excited about this. My kids are going to be so proud," said Kyle. "I've been promised a promotion and a doubling of my salary if the new product launch is successful."
Several months went by, and one morning Kyle came in, panic stricken. "Have you read the news?" Kyle asked Mei-li. "The industry reporter says that our competitor Hiyota plans to launch a new high quality copier machine within the next month! If the Hiyota machine is as good as this article says, I'm dead," said Kyle.
"What do we do?" asked Mei-li. Kyle thought for a while and then replied, "Mei-li, we have to do this quickly before they roll out their machine. We need to make sure ours is better. I want you to pretend to be a potential customer and call Hiyota. Tell him you'll meet at the Hilton in one of the conference rooms. When the salesperson starts up, make sure you ask about copy quality, get samples, and learn as much as possible about novel product features, pricing, advertising strategy, etc. If we can get this information this week, we can help the plant people modify our machine so that it kills Hiyota."
Mei-li replied, "Kyle, I'm not comfortable with pretending to be a buyer. What if Hiyota finds out? What about me wasting the time of this salesperson? I don't want the firm to get a reputation for this sort of thing."
Kyle replied, "This isn't a big deal. It's not illegal because we're not stealing trade secrets. If the salesperson is telling clients about the product, then it can't be illegal. Getting competitive product information takes place all the time, and it's Hiyota's responsibility to develop security procedures to prevent information from slipping out before the product hits the market. As far as the sales representative's time, you know that many of them have nonproductive sales calls. We can't afford to wait, Mei-li!"
As Mei-li left the office, she decided to ask Bob, their boss, about Kyle's proposal. As she discussed the information with Bob, he replied, "Unofficially, I'd say unless you can come up with some valid reasons to reject Kyle's plan, you should call Hiyota. Officially, I would say that BEC does not condone such practices and considers them unethical according to our code of ethics. Finally, unofficially, you need to know, Mei-li, that if Kyle doesn't pull this one out of the fire, he won't be here for very long."
"Have you ever done something like this, Bob?" asked Mei-li.
"I know this type of thing happens frequently, and I know some of the justifications for it. For example, it's common to state that the person had no choice or try to deny responsibility. Or they have a family to support, or everyone else does it. Those are the justifications I hear the most. However you want to justify it, it happens. Sometimes people get caught and sometimes they don't."
"You didn't answer my question, Bob. Have you ever done something like this?"
"Mei-li, I just answered your question." With those words, Bob excused himself and left.
That was Tuesday. Now Mei-li was sitting at her desk two days later staring at the code of conduct. She did not know what to do. It seemed like Kyle's job hung on the line. She heard footsteps and looked up as Kyle approached her.
"Have you set up the appointment?" Kyle asked.
Discuss whether Kyle's proposal would violate BEC's code of ethics.

Answer 1

K's proposal will certainly violate the company B's code of ethics which states that "B strongly believes in the competitive process. While we are dedicated to selling the best products, we have a strong commitment toward competing fairly and honestly."
K is proposing that M should pretend that she is a potential customer for competitor H's products and to call the competitor H stating that she is considering buying their new copier. Once H sends a sales person to meet her, M can elicit some vital information from the sales person regarding the competitor H's new product!
This is obviously against the code of ethics of the company B.

Question 2

Charles worked at Butterfly Corporation for two years after graduating from the University of Texas. He liked his job but the firm was going through some rough times. Because the firm was losing money, Douglas, the CEO, set increasingly rigorous performance goals. Charles noticed a lot of employees were grumbling about these unrealistic expectations. He also heard rumors of quality control incidents and other problems.
One day Charles was called into Douglas' office. "Hello, Doug. You wanted to see me?" Charles asked. "Yes, Charles. Come in." Doug looked grim. After Charles sat down, he began to speak. "Look, you know about the tough times we are in. We are losing money left and right. So far I've been able to keep this company afloat by drastically making cuts and speeding up production. I guess in all this cost-cutting, there have been problems that have come up. A lot of people have called the hotline to complain about ethical problems, such as employees cutting corners to make their quotas. Now I've got the board on my back."
"I'm really sorry, Doug. How can I help?" Charles asked.
"Well, the board requested we perform an ethics audit to make sure everyone is complying with company regulations. As if we don't have enough to worry about. This is only going to increase our costs. Anyway, I want you to lead the audit."
Charles was stunned. "Me? But Doug, I've only been here two years. Shouldn't you choose a more experienced manager to lead this?"
Doug shook his head. "We need all our managers to continue doing their jobs. I don't have the time to pull one of them away from their responsibilities just because the board wants us to do an ethics audit." Charles agreed to lead the audit process. That night he researched how to conduct an ethics audit. He promised to have a rudimentary plan outlining how the ethics audit should be conducted on Doug's desk for approval the next day. As he researched on the Internet, he became more excited. He spent hours forming objectives for the audit, determining the audit's scope, and defining what he thought should be the firm's ethical priorities. He created a plan for using focus groups of employees to see what the greatest concerns were. If time permitted, he wanted to get other stakeholders involved as well, especially their customers. Charles was interested in assessing the overall corporate culture of the firm. Because Charles knew his data analysis skills were not good, he recommended bringing in a committee of competent coworkers who had been in the organization for years and knew the system inside and out. He also developed a list of organizations Butterfly could hire to verify the results once data was collected and analyzed.
The next day, Charles turned in his report and waited while Doug read through it. When finished, he looked up at Charles and frowned.
"Charles, I can see you put a lot of work into this. However, what you have recommended is not going to suit our needs."
"What do you mean?" Charles asked.
"First off, I already told you, I don't want to remove people from their jobs to work on this. We're behind schedule as it is. Also, focus groups of employees and customer feedback? That's going to take up time and resources we can't afford to lose. You also propose hiring an independent third-party? We're supposed to be cutting costs, not throwing money at some organization simply to check our results."
"So what would you like me to do then?" Charles asked.
Doug sighed. "That's why I made you the person in charge of the project. You make the decisions. Just make sure it's something that won't cost a lot of money. I want this process to go as quickly as possible so we satisfy the board and get back to work. Maybe you could survey a few employees and get it over with. Just remember to make us look good."
Doug handed back Charles' proposal. "Revise this and bring it back to me tomorrow," he said.
What is a key component of a successful auditing process missing from this situation?

Answer 2

Ethical behavior:
Ethical behavior is the action of an individual or organization that includes moral principles such as fairness, equality, honesty, dignity, and individual rights.
Determine how top management supports the culture of ethical and unethical behavior:
The key component of a successful auditing process missing from this situation is the total skepticism the CEO, D shows for the ethics audit process. In fact, the CEO wants to go through an ethics audit because the Board of Directors wants the audit. The CEO himself feels that this is a waste of time!
Sadly, the CEO tells C that irrespective of the audit findings, the ethics audit report should show the company in good light.
Conclusion:
The CEO wants C to produce a doctored ethics audit report.

Question 3

Mei-li stared at the code of ethics she received when she first began to consult with Business Equipment Corporation (BEC). Right there, under the heading "Competition," it stated, "BEC strongly believes in the competitive process. While we are dedicated to selling the best products, we have a strong commitment toward competing fairly and honestly." Mei-li wondered if there was any way to do her assignment without going against this core value.
Mei-li's first consulting assignment after graduating from UCLA was to work with Kyle, an engineer at BEC. Their assignment was to help develop and produce a new copy machine. Last year BEC discovered a new technology that would enable them to manufacture a copy machine with a copy quality far superior to anything else on the market. Mei-li and Kyle are both sure they have a winning product.
"I am especially excited about this. My kids are going to be so proud," said Kyle. "I've been promised a promotion and a doubling of my salary if the new product launch is successful."
Several months went by, and one morning Kyle came in, panic stricken. "Have you read the news?" Kyle asked Mei-li. "The industry reporter says that our competitor Hiyota plans to launch a new high quality copier machine within the next month! If the Hiyota machine is as good as this article says, I'm dead," said Kyle.
"What do we do?" asked Mei-li. Kyle thought for a while and then replied, "Mei-li, we have to do this quickly before they roll out their machine. We need to make sure ours is better. I want you to pretend to be a potential customer and call Hiyota. Tell him you'll meet at the Hilton in one of the conference rooms. When the salesperson starts up, make sure you ask about copy quality, get samples, and learn as much as possible about novel product features, pricing, advertising strategy, etc. If we can get this information this week, we can help the plant people modify our machine so that it kills Hiyota."
Mei-li replied, "Kyle, I'm not comfortable with pretending to be a buyer. What if Hiyota finds out? What about me wasting the time of this salesperson? I don't want the firm to get a reputation for this sort of thing."
Kyle replied, "This isn't a big deal. It's not illegal because we're not stealing trade secrets. If the salesperson is telling clients about the product, then it can't be illegal. Getting competitive product information takes place all the time, and it's Hiyota's responsibility to develop security procedures to prevent information from slipping out before the product hits the market. As far as the sales representative's time, you know that many of them have nonproductive sales calls. We can't afford to wait, Mei-li!"
As Mei-li left the office, she decided to ask Bob, their boss, about Kyle's proposal. As she discussed the information with Bob, he replied, "Unofficially, I'd say unless you can come up with some valid reasons to reject Kyle's plan, you should call Hiyota. Officially, I would say that BEC does not condone such practices and considers them unethical according to our code of ethics. Finally, unofficially, you need to know, Mei-li, that if Kyle doesn't pull this one out of the fire, he won't be here for very long."
"Have you ever done something like this, Bob?" asked Mei-li.
"I know this type of thing happens frequently, and I know some of the justifications for it. For example, it's common to state that the person had no choice or try to deny responsibility. Or they have a family to support, or everyone else does it. Those are the justifications I hear the most. However you want to justify it, it happens. Sometimes people get caught and sometimes they don't."
"You didn't answer my question, Bob. Have you ever done something like this?"
"Mei-li, I just answered your question." With those words, Bob excused himself and left.
That was Tuesday. Now Mei-li was sitting at her desk two days later staring at the code of conduct. She did not know what to do. It seemed like Kyle's job hung on the line. She heard footsteps and looked up as Kyle approached her.
"Have you set up the appointment?" Kyle asked.
Identify the organizational pressures that Mei-li is facing to call Hiyota?

Answer 3

The following organizational pressures are forcing M to call the competitor H :
• The organization B was working on the design and development of a new copier for which they have already identified the technology, which will have better copy quality than the competition. They were taken by surprise that their competitor H has announced the launch of a new copier which promises better copy quality.
• The career progression of K and a few others in company B will depend on the successful launch of the proposed new copier from B. They have to ensure that B's new copier would be better than H's new copier.
• The department 's boss indirectly hints to M that though there is an official position on ethics, unofficially these codes of ethics are often broken. He also says that often people are able to get away with the violation of the code of ethics. Indirectly, her boss is also suggesting that M should break the code of ethics of the company.

Question 4

Charles worked at Butterfly Corporation for two years after graduating from the University of Texas. He liked his job but the firm was going through some rough times. Because the firm was losing money, Douglas, the CEO, set increasingly rigorous performance goals. Charles noticed a lot of employees were grumbling about these unrealistic expectations. He also heard rumors of quality control incidents and other problems.
One day Charles was called into Douglas' office. "Hello, Doug. You wanted to see me?" Charles asked. "Yes, Charles. Come in." Doug looked grim. After Charles sat down, he began to speak. "Look, you know about the tough times we are in. We are losing money left and right. So far I've been able to keep this company afloat by drastically making cuts and speeding up production. I guess in all this cost-cutting, there have been problems that have come up. A lot of people have called the hotline to complain about ethical problems, such as employees cutting corners to make their quotas. Now I've got the board on my back."
"I'm really sorry, Doug. How can I help?" Charles asked.
"Well, the board requested we perform an ethics audit to make sure everyone is complying with company regulations. As if we don't have enough to worry about. This is only going to increase our costs. Anyway, I want you to lead the audit."
Charles was stunned. "Me? But Doug, I've only been here two years. Shouldn't you choose a more experienced manager to lead this?"
Doug shook his head. "We need all our managers to continue doing their jobs. I don't have the time to pull one of them away from their responsibilities just because the board wants us to do an ethics audit." Charles agreed to lead the audit process. That night he researched how to conduct an ethics audit. He promised to have a rudimentary plan outlining how the ethics audit should be conducted on Doug's desk for approval the next day. As he researched on the Internet, he became more excited. He spent hours forming objectives for the audit, determining the audit's scope, and defining what he thought should be the firm's ethical priorities. He created a plan for using focus groups of employees to see what the greatest concerns were. If time permitted, he wanted to get other stakeholders involved as well, especially their customers. Charles was interested in assessing the overall corporate culture of the firm. Because Charles knew his data analysis skills were not good, he recommended bringing in a committee of competent coworkers who had been in the organization for years and knew the system inside and out. He also developed a list of organizations Butterfly could hire to verify the results once data was collected and analyzed.
The next day, Charles turned in his report and waited while Doug read through it. When finished, he looked up at Charles and frowned.
"Charles, I can see you put a lot of work into this. However, what you have recommended is not going to suit our needs."
"What do you mean?" Charles asked.
"First off, I already told you, I don't want to remove people from their jobs to work on this. We're behind schedule as it is. Also, focus groups of employees and customer feedback? That's going to take up time and resources we can't afford to lose. You also propose hiring an independent third-party? We're supposed to be cutting costs, not throwing money at some organization simply to check our results."
"So what would you like me to do then?" Charles asked.
Doug sighed. "That's why I made you the person in charge of the project. You make the decisions. Just make sure it's something that won't cost a lot of money. I want this process to go as quickly as possible so we satisfy the board and get back to work. Maybe you could survey a few employees and get it over with. Just remember to make us look good."
Doug handed back Charles' proposal. "Revise this and bring it back to me tomorrow," he said.
How would you describe the corporate culture of Butterfly?

Question 5

Mei-li stared at the code of ethics she received when she first began to consult with Business Equipment Corporation (BEC). Right there, under the heading "Competition," it stated, "BEC strongly believes in the competitive process. While we are dedicated to selling the best products, we have a strong commitment toward competing fairly and honestly." Mei-li wondered if there was any way to do her assignment without going against this core value.
Mei-li's first consulting assignment after graduating from UCLA was to work with Kyle, an engineer at BEC. Their assignment was to help develop and produce a new copy machine. Last year BEC discovered a new technology that would enable them to manufacture a copy machine with a copy quality far superior to anything else on the market. Mei-li and Kyle are both sure they have a winning product.
"I am especially excited about this. My kids are going to be so proud," said Kyle. "I've been promised a promotion and a doubling of my salary if the new product launch is successful."
Several months went by, and one morning Kyle came in, panic stricken. "Have you read the news?" Kyle asked Mei-li. "The industry reporter says that our competitor Hiyota plans to launch a new high quality copier machine within the next month! If the Hiyota machine is as good as this article says, I'm dead," said Kyle.
"What do we do?" asked Mei-li. Kyle thought for a while and then replied, "Mei-li, we have to do this quickly before they roll out their machine. We need to make sure ours is better. I want you to pretend to be a potential customer and call Hiyota. Tell him you'll meet at the Hilton in one of the conference rooms. When the salesperson starts up, make sure you ask about copy quality, get samples, and learn as much as possible about novel product features, pricing, advertising strategy, etc. If we can get this information this week, we can help the plant people modify our machine so that it kills Hiyota."
Mei-li replied, "Kyle, I'm not comfortable with pretending to be a buyer. What if Hiyota finds out? What about me wasting the time of this salesperson? I don't want the firm to get a reputation for this sort of thing."
Kyle replied, "This isn't a big deal. It's not illegal because we're not stealing trade secrets. If the salesperson is telling clients about the product, then it can't be illegal. Getting competitive product information takes place all the time, and it's Hiyota's responsibility to develop security procedures to prevent information from slipping out before the product hits the market. As far as the sales representative's time, you know that many of them have nonproductive sales calls. We can't afford to wait, Mei-li!"
As Mei-li left the office, she decided to ask Bob, their boss, about Kyle's proposal. As she discussed the information with Bob, he replied, "Unofficially, I'd say unless you can come up with some valid reasons to reject Kyle's plan, you should call Hiyota. Officially, I would say that BEC does not condone such practices and considers them unethical according to our code of ethics. Finally, unofficially, you need to know, Mei-li, that if Kyle doesn't pull this one out of the fire, he won't be here for very long."
"Have you ever done something like this, Bob?" asked Mei-li.
"I know this type of thing happens frequently, and I know some of the justifications for it. For example, it's common to state that the person had no choice or try to deny responsibility. Or they have a family to support, or everyone else does it. Those are the justifications I hear the most. However you want to justify it, it happens. Sometimes people get caught and sometimes they don't."
"You didn't answer my question, Bob. Have you ever done something like this?"
"Mei-li, I just answered your question." With those words, Bob excused himself and left.
That was Tuesday. Now Mei-li was sitting at her desk two days later staring at the code of conduct. She did not know what to do. It seemed like Kyle's job hung on the line. She heard footsteps and looked up as Kyle approached her.
"Have you set up the appointment?" Kyle asked.
How should Mei-li handle the situation?

Question 6

Charles worked at Butterfly Corporation for two years after graduating from the University of Texas. He liked his job but the firm was going through some rough times. Because the firm was losing money, Douglas, the CEO, set increasingly rigorous performance goals. Charles noticed a lot of employees were grumbling about these unrealistic expectations. He also heard rumors of quality control incidents and other problems.
One day Charles was called into Douglas' office. "Hello, Doug. You wanted to see me?" Charles asked. "Yes, Charles. Come in." Doug looked grim. After Charles sat down, he began to speak. "Look, you know about the tough times we are in. We are losing money left and right. So far I've been able to keep this company afloat by drastically making cuts and speeding up production. I guess in all this cost-cutting, there have been problems that have come up. A lot of people have called the hotline to complain about ethical problems, such as employees cutting corners to make their quotas. Now I've got the board on my back."
"I'm really sorry, Doug. How can I help?" Charles asked.
"Well, the board requested we perform an ethics audit to make sure everyone is complying with company regulations. As if we don't have enough to worry about. This is only going to increase our costs. Anyway, I want you to lead the audit."
Charles was stunned. "Me? But Doug, I've only been here two years. Shouldn't you choose a more experienced manager to lead this?"
Doug shook his head. "We need all our managers to continue doing their jobs. I don't have the time to pull one of them away from their responsibilities just because the board wants us to do an ethics audit." Charles agreed to lead the audit process. That night he researched how to conduct an ethics audit. He promised to have a rudimentary plan outlining how the ethics audit should be conducted on Doug's desk for approval the next day. As he researched on the Internet, he became more excited. He spent hours forming objectives for the audit, determining the audit's scope, and defining what he thought should be the firm's ethical priorities. He created a plan for using focus groups of employees to see what the greatest concerns were. If time permitted, he wanted to get other stakeholders involved as well, especially their customers. Charles was interested in assessing the overall corporate culture of the firm. Because Charles knew his data analysis skills were not good, he recommended bringing in a committee of competent coworkers who had been in the organization for years and knew the system inside and out. He also developed a list of organizations Butterfly could hire to verify the results once data was collected and analyzed.
The next day, Charles turned in his report and waited while Doug read through it. When finished, he looked up at Charles and frowned.
"Charles, I can see you put a lot of work into this. However, what you have recommended is not going to suit our needs."
"What do you mean?" Charles asked.
"First off, I already told you, I don't want to remove people from their jobs to work on this. We're behind schedule as it is. Also, focus groups of employees and customer feedback? That's going to take up time and resources we can't afford to lose. You also propose hiring an independent third-party? We're supposed to be cutting costs, not throwing money at some organization simply to check our results."
"So what would you like me to do then?" Charles asked.
Doug sighed. "That's why I made you the person in charge of the project. You make the decisions. Just make sure it's something that won't cost a lot of money. I want this process to go as quickly as possible so we satisfy the board and get back to work. Maybe you could survey a few employees and get it over with. Just remember to make us look good."
Doug handed back Charles' proposal. "Revise this and bring it back to me tomorrow," he said.
What steps would you recommend Charles take?