Deck 10: Making It Stick: Doing Whats Right in a Competitive Market

Question 1

On August 6, 2010, Hewlett-Packard (HP) announced that Mark Hurd was stepping down as chairman and CEO in response to allegations of sexual harassment and improper expense violations. The announcement sparked a fierce debate between self-proclaimed business pragmatists such as Larry Ellison, CEO of Oracle, who called it, "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," and corporate governance specialists such as Jeffrey A. Sonnenfeld, senior associate dean at the Yale School of Management, who called it "a courageous call."

Ironically, the decision came at a time when HP seemed to have finally found its way again after more than a decade of "flakiness" that began in the late 1990s. CEO Carly Fiorina appeared to emerge victorious from a leadership power struggle over the merger with Compaq Computer, only to see HP stock lose half its value. She was paid more than $21 million to leave in February 2005. As we saw in Chapter 5, HP then limped along to another scandal as chairwoman Patricia Dunn (who had been appointed by Fiorina when HP made a public commitment to better corporate governance by splitting the CEO and chairperson roles) authorized the use of a private security firm to spy on board members and journalists in what became known as the "pretexting" scandal. In a reversal of the separation of roles, Mark Hurd, who had been hired from National Cash Register (NCR) to replace Fiorina as CEO, then became chairman as well.
The hiring of "numbers-guy" Hurd seemed to indicate a return to sanity for HP, and the performance delivered under his tenure seemed to endorse that choice. A few critics argued that Hurd got credit for implementing Fiorina's strategy, but under his leadership HP's stock doubled, and savvy multibillion dollar purchases of Electronic Data Systems (EDS), 3Com, and Palm propelled HP to sales of more than $100 billion, passing IBM as the world's largest IT company by revenues.
So how did things fall apart so quickly? Allegations of sexual harassment were brought by Jodie Fisher, an independent contractor working with the CEO's office as a "VIP host" at executive conferences. The exact nature of the allegations has remained confidential based on a financial settlement between Hurd and Fisher and a clarification by both parties that the relationship was not a physical one. The investigation by an outside law firm ordered by the HP board determined that the allegations were groundless. Nevertheless, the implication that Hurd falsified expense reports to conceal private dinners with Fisher was considered enough of a transgression for the board to demand Hurd's resignation. From the board's perspective, Hurd was being held to the same ethical standard as any HP employee.
Several questions remain unanswered. If the expense report transgression was serious enough to demand an immediate resignation, why was Hurd given a severance package estimated to be up to $40 million in cash and stock options? If the investigation into the sexual harassment allegations found no evidence, and Hurd stated that he didn't even fill out his own expense reports, why would the board see his departure as the only appropriate resolution? To take the conspiracy theories further, why did the board hire a public relations firm (APCO) to consult on the situation? Critics argue that the board was more concerned about revealing a third fiasco in the executive offices and therefore opted for Hurd's resignation under the guise of doing "the right thing" and enforcing HP's code of ethics. Others refer to Hurd's reputed unpopularity in the company as a cost-cutting CEO who took home over $70 million in compensation in two years while trimming the research and development budget for HP from 9 percent to only 2 percent of revenue. What better way to oust an unpopular leader than to create a scandal?
If the board really was hoping to avoid a third fiasco, it was spectacularly unsuccessful. In September 2010, Larry Ellison took his vocal support of Hurd one step further by hiring him to run Oracle as its "co-president." HP sued immediately, allegedly to protect the intellectual property it believed that Hurd would be taking to Oracle. The lawsuit was settled quickly, in the interests of convincing investors that everyone was getting back to business. However, there were some specific agreements in that settlement that only served to drag out the fiasco even further.
Oracle agreed to a "standstill" proviso in which it would not make an attempt to launch a takeover bid for HP (based, presumably on Hurd's insider information) for a specific time period. In addition, Oracle agreed to continue to offer its products on HP's server platform, based on Intel's Itanium chip.
With the agreement in place, the relationship between HP and Oracle took yet another strange turn when HP hired ex-Oracle executive Ray Lane as its new chairman. Lane, in turn, convince the HP board to hire Léo Apotheker, the ex-CEO of SAP, one of Oracle's biggest rivals, as the new CEO of HP. Oracle support for HP's Itanium platform suddenly stopped, and HP sued Oracle for breach of contract. Oracle alleged that HP was planning to hire Lane and Apotheker all along, but hid the fact during negotiations in full knowledge of the fact that both men were "toxic" to any ongoing relationship between HP and Oracle. The lawsuit was settled in January 2012, with the judge siding with HP.
If the investigation over the allegations of sexual harassment found no evidence, what did the HP board gain by forcing Hurd to step down?

Answer 1

Ethics are part of a person's behavior. It also includes all the human values such as equality, human rights etc. Ethics is a study that helps a person in choosing right or wrong. It is set of principles that helps a person to choose the right behavior in his daily life. It basically helps to differentiate between right and wrong, good or evil etc.
In the provided case, even if the company found no evidences of sexual harassment but still it wanted person H to step down because the board wants to re-gain its security. Person H, by concealing the private dinners and by falsifying the expense reports has cheated the company. This affected the relation between the company and person H. Now, it would be difficult for the company to trust H as he had already concealed a number of facts. Thus, the board made the decision to remove person H from the company's personnel.

Question 2

Marissa Mayer, the former vice president of Local, Maps, and Location Services at Google (where she oversaw such products as Google Maps and Google Earth), was named CEO, president and director of Yahoo! in July 2012. Her lack of experience at the helm of such a large organization, which was clearly in desperate need of a dramatic turnaround, drew much skepticism from investors and analysts alike. Her predecessor in the role, Autodesk's Carol Bartz, had left on very acrimonious terms, and the future for Yahoo! looked bleak.
Financial results for Mayer's first official quarter as CEO-the fourth quarter of 2012-brought a small revenue growth of 2 percent year on year. Not exactly stellar performance, but for a company that had its revenue decrease for the previous four years, it was seen as evidence of a positive incremental change.
On February 24, 2013, Mayer generated a large amount of media attention when a memo from its human resources director, Jackie Reese, was sent to all remote Yahoo! employees informing them that they needed to be working in Yahoo! offices by June 2013. The memo further advised that anyone who couldn't, or wouldn't, meet this new expectation should quit.
The justification for the decision was offered in Reese's memo as follows: "Speed and quality are often sacrificed when we work from home … we need to be one Yahoo!, and that starts with physically being together."
Reaction from those remote Yahoo! employees was swift and predominantly negative. Accusations of "outrageous ultimatums" and "misrepresented work agreements" filled the social media outlets, as many realized that they would be unable to meet the stated June deadline.
So, why would Yahoo! choose to take such a controversial step in an industry that is renowned for flexible working arrangements? There is no doubt that many tech companies encourage attendance on corporate "campuses" with benefits such as free food and other domestic perks, but with irregular work schedules and frequent last-minute "crunch" project deadlines being the norm, the flexibility to work from home when needed was a common accepted practice, and many positions were posted as such.
Tech analysts have already offered their opinions on both sides of the argument. Supporters have applauded Mayer for taking action on "scores of remote employees who we never see and don't really know what they do," whereas critics have called the memo a failed attempt at hiding a formal layoff to reduce costs.
What remains to be seen is how the decision will impact the general culture of Yahoo! and whether or not it will prompt an exodus to other tech companies. That, after all, is one of the biggest risks with a layoff-you pick the people you want to let go, but others that you would have preferred not to lose may choose to leave anyway.

Why is Marissa Mayer requiring all telecommuters at Yahoo! to return to the office?

Answer 2

Ethics are part of a person's behavior. It also includes all the human values such as equality, human rights etc. Ethics is a study that helps a person in choosing right or wrong. It is a set of principles that help a person to choose the right behavior in his daily life. It basically helps to differentiate between right and wrong, good or evil etc.
In the provided case, the CEO of company Y abolished the work from home policy and want all the employees to come to the office for work. She believed that work from home is a compromise to the speed and the quality of the work. She wanted to increase the productivity of the employees. That is the reason she wanted all the employees to come and work together in one place and to increase speed and efficiency.

Question 3

You Scratch My Back
A dam is a sales rep for a leading pharmaceutical company. His company is in a fierce battle with its largest competitor over the highly lucrative blood pressure medication market. Blood pressure medication is a multibillion dollar market in the United States, the largest-selling medication after drugs for cholesterol and diabetes. Adam's company has the number one drug and its competitor the number two drug in the market, but like Coke and Pepsi, they are locked in a fierce battle for market share with aggressive marketing campaigns and sales promotions. The company has produced every possible giveaway item with the name of the drug on it, and the trunk and backseat of Adam's company car (not to mention his garage) are crammed with boxes of those items to give away to any doctor who shows an interest in prescribing the medicine.
Today, Adam is visiting a new doctor. The office is actually one he has worked with for a long time, but the partners he knew recently sold their practice and retired, so Adam has a meeting with the new owner of the practice, Dr. Green. As Adam pulls into the parking lot, he has a problem finding a parking space. "This place is busier than ever," he thinks. "I hope old Doc Stevens and his partners got a good price for this practice-it's got to be a gold mine."
In the waiting room, Adam sees all the old familiar faces behind the counter but notices that no one is smiling-all are very serious and focused on paperwork. Jennifer, the office manager, takes him back to Dr. Green's office and leaves him with a word of advice: "Watch yourself, Adam; it's not like the old days."
After 15 minutes, Dr. Green walks in. Adam stands up and introduces himself and politely thanks Dr. Green for making time for him in his busy schedule. Dr. Green doesn't smile or make small talk. He gets straight to the point: "Adam, is it? Well, Adam, let me explain my philosophy in working with pharmaceutical reps. The way I see it, you make as much money on your pills as you can until the patent runs out, and I'd like to see some of that money being spent for the benefit of this practice-lots of free samples for my patients and lots of evidence that your company appreciates my support of their medicines-do you follow me?" Adam isn't sure what "lots of evidence" meant, but he is pretty sure that Dr. Green was about to explain it to him, so he nods and smiles.
"This practice represents a long-term investment for me, and I paid top dollar for it. Old man Stevens built a good base of patients, but I think we can do better-this place just needs a firm hand, and it will double in size within the year. Unfortunately, with growth comes additional expense. Did I mention I paid top dollar for this place?" Dr. Green suddenly stops and smiles-one of the most artificial smiles Adam has ever seen. "Here's what I'm thinking, Adam. Rather than wasting money on notepads and pens that the other reps give me by the case, I'd like some support-we can call it marketing funds if you'd like-in decorating my office. Some high-end furniture worthy of a doctor with a growing practice-what do you think?"
Adam coughs, trying desperately to come up with an answer: "Well, sir, that's a very unusual request, um, and while we greatly appreciate your support of our medicines, um, I don't think I could get that approved by my regional manager." Dr. Green's fake smile disappears as quickly as it had arrived. "Here's the deal, Adam. I had a very productive meeting with a delightful young man named Zachary this morning. He works for your competition, I believe."
Adam winces at the mention of Zach's name.
"Zachary didn't seem to think there would be a problem with such an unusual request. In fact, he has a friend who is an interior designer, and he was confident that her services could be included in those 'marketing funds.' So what are we going to do here?"
The four key points of a code of ethics are outlined on page 200. If we assume that Adam's company has such a code, what guidance could Adam find in those four key points?

Answer 3

Ethics are part of a person's behavior. It also includes all the human values such as equality, human rights etc. Ethics is a study that helps a person in choosing right or wrong. It is a set of principles that help a person to choose the right behavior in his daily life. It basically helps to differentiate between right and wrong, good or evil etc.
Following are the key points of the code of ethics:
• It can capture the value declarations.
• It establishes a detailed guide about what ethical behavior is.
• It specifies the policies for specific situations.
• It documents certain punishments at the violation of these policies.
Following guidance could have been found by person A from the code of ethics:
• He can capture the value statements of the company. In simple words, he has to know the things that are ethical from the company's viewpoint so that he can work accordingly.
• While working in the company, he has to observe the policies implemented by the superiors from the code. These policies will help him to make various decisions.
In the provided case, this code helps Person A when he has to make a decision regarding Dr. G's demand. The code of ethics taught him, not to accept such demands so he denied for the same by saying that his regional manager will never approve this demand.

Question 4

You Scratch My Back-Adam Makes a Decision
D r. Green continued to stare at Adam. He was obviously looking for an answer now, and Adam knew that if he tried to stall by asking to check with his regional manager, Green would show him the door.
One small part of Adam wanted to laugh out loud at this ridiculous situation. Doctors had asked him for extra free samples before, and the industry had always been willing to underwrite lunches and tickets to sports events or shows as appropriate marketing expenses, but no one had ever asked him outright for money to decorate his office-and this guy was dead serious!
For a moment Adam wondered if he was bluffing about Zach. He knew Zach was a tough competitor, and they fought a tough battle in this region, usually managing to win clients away from each other on a couple of occasions. "Come to think of it," thought Adam, "Zach probably would go along with this deal. Winning this practice would be a real catch for his territory."
Then Adam looked at Dr. Green again. Something was bothering him about this guy. He got the feeling that this wasn't a one-time special request. If Adam gave in on this, he knew there would be other requests for "marketing funds" in the future, always with the threat of switching to the competition.
Suddenly Adam, almost as a surprise to himself, knew what he had to do: "I'm sorry Dr. Green. We value our relationships with our doctors very highly-that's how we were able to work so closely with Dr. Stevens for as long as we did. Unfortunately, that type of relationship doesn't include 'marketing funds.' I hope Zach's interior designer friend does a good job for you."
With that, Adam got up and turned to leave.
Six weeks later, the local paper featured a very unflattering picture of Dr. Green and Zach on the front page. Dr. Green had developed a very close relationship with Zach and his company-so close, in fact, that Dr. Green had been willing to massage some of his patient data to help Zach's company in a new drug trial.
What do you think the reaction of Adam's regional manager was to the initial news of the loss of Dr. Green's business?

Question 5

List six characteristics of a tough market.

Question 6

When Hurricane Sandy hit the eastern seaboard of the United States at the end of October 2012, the sheer size and force of the storm had already earned it the name "Superstorm Sandy." Reaching over 1,100 miles in diameter at its peak, the storm claimed 285 lives in seven countries on its journey from the western Caribbean.
On the New Jersey shore, entire towns were wiped out, with houses floating off their foundations into the bay and streets being buried under tons of sand blown in from the beach. It took Brad O'Connell two months to get back to what was left of his house, and another month before it could be repaired enough to be habitable. You can imagine his surprise, then, when he received a letter from his local city council advising him that his property taxes for 2013-2014 would be increasing by 9 percent.
When he called the city finance office to complain that his house was now worth less, not more, he was told that the increase was part of a five-year budget plan that included predetermined tax increases.
Which ethical theories could be applied here?

Question 7

You have been asked to join a team as the representative of your department. The team has been tasked with the development of an ethics training program to support the company's new code of ethics. What would your recommendations be?

Question 8

On August 6, 2010, Hewlett-Packard (HP) announced that Mark Hurd was stepping down as chairman and CEO in response to allegations of sexual harassment and improper expense violations. The announcement sparked a fierce debate between self-proclaimed business pragmatists such as Larry Ellison, CEO of Oracle, who called it, "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," and corporate governance specialists such as Jeffrey A. Sonnenfeld, senior associate dean at the Yale School of Management, who called it "a courageous call."

Ironically, the decision came at a time when HP seemed to have finally found its way again after more than a decade of "flakiness" that began in the late 1990s. CEO Carly Fiorina appeared to emerge victorious from a leadership power struggle over the merger with Compaq Computer, only to see HP stock lose half its value. She was paid more than $21 million to leave in February 2005. As we saw in Chapter 5, HP then limped along to another scandal as chairwoman Patricia Dunn (who had been appointed by Fiorina when HP made a public commitment to better corporate governance by splitting the CEO and chairperson roles) authorized the use of a private security firm to spy on board members and journalists in what became known as the "pretexting" scandal. In a reversal of the separation of roles, Mark Hurd, who had been hired from National Cash Register (NCR) to replace Fiorina as CEO, then became chairman as well.
The hiring of "numbers-guy" Hurd seemed to indicate a return to sanity for HP, and the performance delivered under his tenure seemed to endorse that choice. A few critics argued that Hurd got credit for implementing Fiorina's strategy, but under his leadership HP's stock doubled, and savvy multibillion dollar purchases of Electronic Data Systems (EDS), 3Com, and Palm propelled HP to sales of more than $100 billion, passing IBM as the world's largest IT company by revenues.
So how did things fall apart so quickly? Allegations of sexual harassment were brought by Jodie Fisher, an independent contractor working with the CEO's office as a "VIP host" at executive conferences. The exact nature of the allegations has remained confidential based on a financial settlement between Hurd and Fisher and a clarification by both parties that the relationship was not a physical one. The investigation by an outside law firm ordered by the HP board determined that the allegations were groundless. Nevertheless, the implication that Hurd falsified expense reports to conceal private dinners with Fisher was considered enough of a transgression for the board to demand Hurd's resignation. From the board's perspective, Hurd was being held to the same ethical standard as any HP employee.
Several questions remain unanswered. If the expense report transgression was serious enough to demand an immediate resignation, why was Hurd given a severance package estimated to be up to $40 million in cash and stock options? If the investigation into the sexual harassment allegations found no evidence, and Hurd stated that he didn't even fill out his own expense reports, why would the board see his departure as the only appropriate resolution? To take the conspiracy theories further, why did the board hire a public relations firm (APCO) to consult on the situation? Critics argue that the board was more concerned about revealing a third fiasco in the executive offices and therefore opted for Hurd's resignation under the guise of doing "the right thing" and enforcing HP's code of ethics. Others refer to Hurd's reputed unpopularity in the company as a cost-cutting CEO who took home over $70 million in compensation in two years while trimming the research and development budget for HP from 9 percent to only 2 percent of revenue. What better way to oust an unpopular leader than to create a scandal?
If the board really was hoping to avoid a third fiasco, it was spectacularly unsuccessful. In September 2010, Larry Ellison took his vocal support of Hurd one step further by hiring him to run Oracle as its "co-president." HP sued immediately, allegedly to protect the intellectual property it believed that Hurd would be taking to Oracle. The lawsuit was settled quickly, in the interests of convincing investors that everyone was getting back to business. However, there were some specific agreements in that settlement that only served to drag out the fiasco even further.
Oracle agreed to a "standstill" proviso in which it would not make an attempt to launch a takeover bid for HP (based, presumably on Hurd's insider information) for a specific time period. In addition, Oracle agreed to continue to offer its products on HP's server platform, based on Intel's Itanium chip.
With the agreement in place, the relationship between HP and Oracle took yet another strange turn when HP hired ex-Oracle executive Ray Lane as its new chairman. Lane, in turn, convince the HP board to hire Léo Apotheker, the ex-CEO of SAP, one of Oracle's biggest rivals, as the new CEO of HP. Oracle support for HP's Itanium platform suddenly stopped, and HP sued Oracle for breach of contract. Oracle alleged that HP was planning to hire Lane and Apotheker all along, but hid the fact during negotiations in full knowledge of the fact that both men were "toxic" to any ongoing relationship between HP and Oracle. The lawsuit was settled in January 2012, with the judge siding with HP.
Hurd left HP with a severance package estimated to be up to $40 million in cash and stock options. Does that dilute HP's apparent commitment to strong corporate governance? Why or why not?

Question 9

Marissa Mayer, the former vice president of Local, Maps, and Location Services at Google (where she oversaw such products as Google Maps and Google Earth), was named CEO, president and director of Yahoo! in July 2012. Her lack of experience at the helm of such a large organization, which was clearly in desperate need of a dramatic turnaround, drew much skepticism from investors and analysts alike. Her predecessor in the role, Autodesk's Carol Bartz, had left on very acrimonious terms, and the future for Yahoo! looked bleak.
Financial results for Mayer's first official quarter as CEO-the fourth quarter of 2012-brought a small revenue growth of 2 percent year on year. Not exactly stellar performance, but for a company that had its revenue decrease for the previous four years, it was seen as evidence of a positive incremental change.
On February 24, 2013, Mayer generated a large amount of media attention when a memo from its human resources director, Jackie Reese, was sent to all remote Yahoo! employees informing them that they needed to be working in Yahoo! offices by June 2013. The memo further advised that anyone who couldn't, or wouldn't, meet this new expectation should quit.
The justification for the decision was offered in Reese's memo as follows: "Speed and quality are often sacrificed when we work from home … we need to be one Yahoo!, and that starts with physically being together."
Reaction from those remote Yahoo! employees was swift and predominantly negative. Accusations of "outrageous ultimatums" and "misrepresented work agreements" filled the social media outlets, as many realized that they would be unable to meet the stated June deadline.
So, why would Yahoo! choose to take such a controversial step in an industry that is renowned for flexible working arrangements? There is no doubt that many tech companies encourage attendance on corporate "campuses" with benefits such as free food and other domestic perks, but with irregular work schedules and frequent last-minute "crunch" project deadlines being the norm, the flexibility to work from home when needed was a common accepted practice, and many positions were posted as such.
Tech analysts have already offered their opinions on both sides of the argument. Supporters have applauded Mayer for taking action on "scores of remote employees who we never see and don't really know what they do," whereas critics have called the memo a failed attempt at hiding a formal layoff to reduce costs.
What remains to be seen is how the decision will impact the general culture of Yahoo! and whether or not it will prompt an exodus to other tech companies. That, after all, is one of the biggest risks with a layoff-you pick the people you want to let go, but others that you would have preferred not to lose may choose to leave anyway.

With a clear expectation of "compliance or quit," could Yahoo! have another agenda here? Why or why not?

Question 10

You Scratch My Back
A dam is a sales rep for a leading pharmaceutical company. His company is in a fierce battle with its largest competitor over the highly lucrative blood pressure medication market. Blood pressure medication is a multibillion dollar market in the United States, the largest-selling medication after drugs for cholesterol and diabetes. Adam's company has the number one drug and its competitor the number two drug in the market, but like Coke and Pepsi, they are locked in a fierce battle for market share with aggressive marketing campaigns and sales promotions. The company has produced every possible giveaway item with the name of the drug on it, and the trunk and backseat of Adam's company car (not to mention his garage) are crammed with boxes of those items to give away to any doctor who shows an interest in prescribing the medicine.
Today, Adam is visiting a new doctor. The office is actually one he has worked with for a long time, but the partners he knew recently sold their practice and retired, so Adam has a meeting with the new owner of the practice, Dr. Green. As Adam pulls into the parking lot, he has a problem finding a parking space. "This place is busier than ever," he thinks. "I hope old Doc Stevens and his partners got a good price for this practice-it's got to be a gold mine."
In the waiting room, Adam sees all the old familiar faces behind the counter but notices that no one is smiling-all are very serious and focused on paperwork. Jennifer, the office manager, takes him back to Dr. Green's office and leaves him with a word of advice: "Watch yourself, Adam; it's not like the old days."
After 15 minutes, Dr. Green walks in. Adam stands up and introduces himself and politely thanks Dr. Green for making time for him in his busy schedule. Dr. Green doesn't smile or make small talk. He gets straight to the point: "Adam, is it? Well, Adam, let me explain my philosophy in working with pharmaceutical reps. The way I see it, you make as much money on your pills as you can until the patent runs out, and I'd like to see some of that money being spent for the benefit of this practice-lots of free samples for my patients and lots of evidence that your company appreciates my support of their medicines-do you follow me?" Adam isn't sure what "lots of evidence" meant, but he is pretty sure that Dr. Green was about to explain it to him, so he nods and smiles.
"This practice represents a long-term investment for me, and I paid top dollar for it. Old man Stevens built a good base of patients, but I think we can do better-this place just needs a firm hand, and it will double in size within the year. Unfortunately, with growth comes additional expense. Did I mention I paid top dollar for this place?" Dr. Green suddenly stops and smiles-one of the most artificial smiles Adam has ever seen. "Here's what I'm thinking, Adam. Rather than wasting money on notepads and pens that the other reps give me by the case, I'd like some support-we can call it marketing funds if you'd like-in decorating my office. Some high-end furniture worthy of a doctor with a growing practice-what do you think?"
Adam coughs, trying desperately to come up with an answer: "Well, sir, that's a very unusual request, um, and while we greatly appreciate your support of our medicines, um, I don't think I could get that approved by my regional manager." Dr. Green's fake smile disappears as quickly as it had arrived. "Here's the deal, Adam. I had a very productive meeting with a delightful young man named Zachary this morning. He works for your competition, I believe."
Adam winces at the mention of Zach's name.
"Zachary didn't seem to think there would be a problem with such an unusual request. In fact, he has a friend who is an interior designer, and he was confident that her services could be included in those 'marketing funds.' So what are we going to do here?"
Do you think Zachary is willing to provide those "marketing funds" in order to win the business away from Adam, or is Dr. Green just bluffing?

Question 11

You Scratch My Back-Adam Makes a Decision
D r. Green continued to stare at Adam. He was obviously looking for an answer now, and Adam knew that if he tried to stall by asking to check with his regional manager, Green would show him the door.
One small part of Adam wanted to laugh out loud at this ridiculous situation. Doctors had asked him for extra free samples before, and the industry had always been willing to underwrite lunches and tickets to sports events or shows as appropriate marketing expenses, but no one had ever asked him outright for money to decorate his office-and this guy was dead serious!
For a moment Adam wondered if he was bluffing about Zach. He knew Zach was a tough competitor, and they fought a tough battle in this region, usually managing to win clients away from each other on a couple of occasions. "Come to think of it," thought Adam, "Zach probably would go along with this deal. Winning this practice would be a real catch for his territory."
Then Adam looked at Dr. Green again. Something was bothering him about this guy. He got the feeling that this wasn't a one-time special request. If Adam gave in on this, he knew there would be other requests for "marketing funds" in the future, always with the threat of switching to the competition.
Suddenly Adam, almost as a surprise to himself, knew what he had to do: "I'm sorry Dr. Green. We value our relationships with our doctors very highly-that's how we were able to work so closely with Dr. Stevens for as long as we did. Unfortunately, that type of relationship doesn't include 'marketing funds.' I hope Zach's interior designer friend does a good job for you."
With that, Adam got up and turned to leave.
Six weeks later, the local paper featured a very unflattering picture of Dr. Green and Zach on the front page. Dr. Green had developed a very close relationship with Zach and his company-so close, in fact, that Dr. Green had been willing to massage some of his patient data to help Zach's company in a new drug trial.
Do you think Zach's company supported his willingness to provide Dr. Green's "marketing funds"?

Question 12

Visit the website of Transparency International (TI) at www.transparency.org.
a. What does TI do?
b. How is corruption connected to a vision of organizational transparency?
c. What were the main topic and focus areas for the current Global Corruption Report?

Question 13

List four key items in a code of ethics.

Question 14

When Hurricane Sandy hit the eastern seaboard of the United States at the end of October 2012, the sheer size and force of the storm had already earned it the name "Superstorm Sandy." Reaching over 1,100 miles in diameter at its peak, the storm claimed 285 lives in seven countries on its journey from the western Caribbean.
On the New Jersey shore, entire towns were wiped out, with houses floating off their foundations into the bay and streets being buried under tons of sand blown in from the beach. It took Brad O'Connell two months to get back to what was left of his house, and another month before it could be repaired enough to be habitable. You can imagine his surprise, then, when he received a letter from his local city council advising him that his property taxes for 2013-2014 would be increasing by 9 percent.
When he called the city finance office to complain that his house was now worth less, not more, he was told that the increase was part of a five-year budget plan that included predetermined tax increases.
When Brad took his complaint to the local media, a spokesperson for the city finance office pointed out that the city's property taxes were paying for the emergency services that were currently working overtime to help everyone impacted by the storm. Is that an ethical argument? Why or why not?

Question 15

Your company wrote its code of ethics in 1986. You have been assigned to a team that has been tasked with updating the code to make it more representative of current business ethics issues like the Internet and modern business technology. What are your recommendations?

Question 16

On August 6, 2010, Hewlett-Packard (HP) announced that Mark Hurd was stepping down as chairman and CEO in response to allegations of sexual harassment and improper expense violations. The announcement sparked a fierce debate between self-proclaimed business pragmatists such as Larry Ellison, CEO of Oracle, who called it, "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," and corporate governance specialists such as Jeffrey A. Sonnenfeld, senior associate dean at the Yale School of Management, who called it "a courageous call."

Ironically, the decision came at a time when HP seemed to have finally found its way again after more than a decade of "flakiness" that began in the late 1990s. CEO Carly Fiorina appeared to emerge victorious from a leadership power struggle over the merger with Compaq Computer, only to see HP stock lose half its value. She was paid more than $21 million to leave in February 2005. As we saw in Chapter 5, HP then limped along to another scandal as chairwoman Patricia Dunn (who had been appointed by Fiorina when HP made a public commitment to better corporate governance by splitting the CEO and chairperson roles) authorized the use of a private security firm to spy on board members and journalists in what became known as the "pretexting" scandal. In a reversal of the separation of roles, Mark Hurd, who had been hired from National Cash Register (NCR) to replace Fiorina as CEO, then became chairman as well.
The hiring of "numbers-guy" Hurd seemed to indicate a return to sanity for HP, and the performance delivered under his tenure seemed to endorse that choice. A few critics argued that Hurd got credit for implementing Fiorina's strategy, but under his leadership HP's stock doubled, and savvy multibillion dollar purchases of Electronic Data Systems (EDS), 3Com, and Palm propelled HP to sales of more than $100 billion, passing IBM as the world's largest IT company by revenues.
So how did things fall apart so quickly? Allegations of sexual harassment were brought by Jodie Fisher, an independent contractor working with the CEO's office as a "VIP host" at executive conferences. The exact nature of the allegations has remained confidential based on a financial settlement between Hurd and Fisher and a clarification by both parties that the relationship was not a physical one. The investigation by an outside law firm ordered by the HP board determined that the allegations were groundless. Nevertheless, the implication that Hurd falsified expense reports to conceal private dinners with Fisher was considered enough of a transgression for the board to demand Hurd's resignation. From the board's perspective, Hurd was being held to the same ethical standard as any HP employee.
Several questions remain unanswered. If the expense report transgression was serious enough to demand an immediate resignation, why was Hurd given a severance package estimated to be up to $40 million in cash and stock options? If the investigation into the sexual harassment allegations found no evidence, and Hurd stated that he didn't even fill out his own expense reports, why would the board see his departure as the only appropriate resolution? To take the conspiracy theories further, why did the board hire a public relations firm (APCO) to consult on the situation? Critics argue that the board was more concerned about revealing a third fiasco in the executive offices and therefore opted for Hurd's resignation under the guise of doing "the right thing" and enforcing HP's code of ethics. Others refer to Hurd's reputed unpopularity in the company as a cost-cutting CEO who took home over $70 million in compensation in two years while trimming the research and development budget for HP from 9 percent to only 2 percent of revenue. What better way to oust an unpopular leader than to create a scandal?
If the board really was hoping to avoid a third fiasco, it was spectacularly unsuccessful. In September 2010, Larry Ellison took his vocal support of Hurd one step further by hiring him to run Oracle as its "co-president." HP sued immediately, allegedly to protect the intellectual property it believed that Hurd would be taking to Oracle. The lawsuit was settled quickly, in the interests of convincing investors that everyone was getting back to business. However, there were some specific agreements in that settlement that only served to drag out the fiasco even further.
Oracle agreed to a "standstill" proviso in which it would not make an attempt to launch a takeover bid for HP (based, presumably on Hurd's insider information) for a specific time period. In addition, Oracle agreed to continue to offer its products on HP's server platform, based on Intel's Itanium chip.
With the agreement in place, the relationship between HP and Oracle took yet another strange turn when HP hired ex-Oracle executive Ray Lane as its new chairman. Lane, in turn, convince the HP board to hire Léo Apotheker, the ex-CEO of SAP, one of Oracle's biggest rivals, as the new CEO of HP. Oracle support for HP's Itanium platform suddenly stopped, and HP sued Oracle for breach of contract. Oracle alleged that HP was planning to hire Lane and Apotheker all along, but hid the fact during negotiations in full knowledge of the fact that both men were "toxic" to any ongoing relationship between HP and Oracle. The lawsuit was settled in January 2012, with the judge siding with HP.
At what point did the HP board lose sight of its corporate governance issues and focus instead on apparently beating Oracle at all costs?

Question 17

Marissa Mayer, the former vice president of Local, Maps, and Location Services at Google (where she oversaw such products as Google Maps and Google Earth), was named CEO, president and director of Yahoo! in July 2012. Her lack of experience at the helm of such a large organization, which was clearly in desperate need of a dramatic turnaround, drew much skepticism from investors and analysts alike. Her predecessor in the role, Autodesk's Carol Bartz, had left on very acrimonious terms, and the future for Yahoo! looked bleak.
Financial results for Mayer's first official quarter as CEO-the fourth quarter of 2012-brought a small revenue growth of 2 percent year on year. Not exactly stellar performance, but for a company that had its revenue decrease for the previous four years, it was seen as evidence of a positive incremental change.
On February 24, 2013, Mayer generated a large amount of media attention when a memo from its human resources director, Jackie Reese, was sent to all remote Yahoo! employees informing them that they needed to be working in Yahoo! offices by June 2013. The memo further advised that anyone who couldn't, or wouldn't, meet this new expectation should quit.
The justification for the decision was offered in Reese's memo as follows: "Speed and quality are often sacrificed when we work from home … we need to be one Yahoo!, and that starts with physically being together."
Reaction from those remote Yahoo! employees was swift and predominantly negative. Accusations of "outrageous ultimatums" and "misrepresented work agreements" filled the social media outlets, as many realized that they would be unable to meet the stated June deadline.
So, why would Yahoo! choose to take such a controversial step in an industry that is renowned for flexible working arrangements? There is no doubt that many tech companies encourage attendance on corporate "campuses" with benefits such as free food and other domestic perks, but with irregular work schedules and frequent last-minute "crunch" project deadlines being the norm, the flexibility to work from home when needed was a common accepted practice, and many positions were posted as such.
Tech analysts have already offered their opinions on both sides of the argument. Supporters have applauded Mayer for taking action on "scores of remote employees who we never see and don't really know what they do," whereas critics have called the memo a failed attempt at hiding a formal layoff to reduce costs.
What remains to be seen is how the decision will impact the general culture of Yahoo! and whether or not it will prompt an exodus to other tech companies. That, after all, is one of the biggest risks with a layoff-you pick the people you want to let go, but others that you would have preferred not to lose may choose to leave anyway.

Many of the Yahoo! employees impacted by the memo have taken to social media to express their frustrations and displeasure at this decision. Do they have a case? Explain your answer.

Question 18

You Scratch My Back
A dam is a sales rep for a leading pharmaceutical company. His company is in a fierce battle with its largest competitor over the highly lucrative blood pressure medication market. Blood pressure medication is a multibillion dollar market in the United States, the largest-selling medication after drugs for cholesterol and diabetes. Adam's company has the number one drug and its competitor the number two drug in the market, but like Coke and Pepsi, they are locked in a fierce battle for market share with aggressive marketing campaigns and sales promotions. The company has produced every possible giveaway item with the name of the drug on it, and the trunk and backseat of Adam's company car (not to mention his garage) are crammed with boxes of those items to give away to any doctor who shows an interest in prescribing the medicine.
Today, Adam is visiting a new doctor. The office is actually one he has worked with for a long time, but the partners he knew recently sold their practice and retired, so Adam has a meeting with the new owner of the practice, Dr. Green. As Adam pulls into the parking lot, he has a problem finding a parking space. "This place is busier than ever," he thinks. "I hope old Doc Stevens and his partners got a good price for this practice-it's got to be a gold mine."
In the waiting room, Adam sees all the old familiar faces behind the counter but notices that no one is smiling-all are very serious and focused on paperwork. Jennifer, the office manager, takes him back to Dr. Green's office and leaves him with a word of advice: "Watch yourself, Adam; it's not like the old days."
After 15 minutes, Dr. Green walks in. Adam stands up and introduces himself and politely thanks Dr. Green for making time for him in his busy schedule. Dr. Green doesn't smile or make small talk. He gets straight to the point: "Adam, is it? Well, Adam, let me explain my philosophy in working with pharmaceutical reps. The way I see it, you make as much money on your pills as you can until the patent runs out, and I'd like to see some of that money being spent for the benefit of this practice-lots of free samples for my patients and lots of evidence that your company appreciates my support of their medicines-do you follow me?" Adam isn't sure what "lots of evidence" meant, but he is pretty sure that Dr. Green was about to explain it to him, so he nods and smiles.
"This practice represents a long-term investment for me, and I paid top dollar for it. Old man Stevens built a good base of patients, but I think we can do better-this place just needs a firm hand, and it will double in size within the year. Unfortunately, with growth comes additional expense. Did I mention I paid top dollar for this place?" Dr. Green suddenly stops and smiles-one of the most artificial smiles Adam has ever seen. "Here's what I'm thinking, Adam. Rather than wasting money on notepads and pens that the other reps give me by the case, I'd like some support-we can call it marketing funds if you'd like-in decorating my office. Some high-end furniture worthy of a doctor with a growing practice-what do you think?"
Adam coughs, trying desperately to come up with an answer: "Well, sir, that's a very unusual request, um, and while we greatly appreciate your support of our medicines, um, I don't think I could get that approved by my regional manager." Dr. Green's fake smile disappears as quickly as it had arrived. "Here's the deal, Adam. I had a very productive meeting with a delightful young man named Zachary this morning. He works for your competition, I believe."
Adam winces at the mention of Zach's name.
"Zachary didn't seem to think there would be a problem with such an unusual request. In fact, he has a friend who is an interior designer, and he was confident that her services could be included in those 'marketing funds.' So what are we going to do here?"
What should Adam do now?

Question 19

You Scratch My Back-Adam Makes a Decision
D r. Green continued to stare at Adam. He was obviously looking for an answer now, and Adam knew that if he tried to stall by asking to check with his regional manager, Green would show him the door.
One small part of Adam wanted to laugh out loud at this ridiculous situation. Doctors had asked him for extra free samples before, and the industry had always been willing to underwrite lunches and tickets to sports events or shows as appropriate marketing expenses, but no one had ever asked him outright for money to decorate his office-and this guy was dead serious!
For a moment Adam wondered if he was bluffing about Zach. He knew Zach was a tough competitor, and they fought a tough battle in this region, usually managing to win clients away from each other on a couple of occasions. "Come to think of it," thought Adam, "Zach probably would go along with this deal. Winning this practice would be a real catch for his territory."
Then Adam looked at Dr. Green again. Something was bothering him about this guy. He got the feeling that this wasn't a one-time special request. If Adam gave in on this, he knew there would be other requests for "marketing funds" in the future, always with the threat of switching to the competition.
Suddenly Adam, almost as a surprise to himself, knew what he had to do: "I'm sorry Dr. Green. We value our relationships with our doctors very highly-that's how we were able to work so closely with Dr. Stevens for as long as we did. Unfortunately, that type of relationship doesn't include 'marketing funds.' I hope Zach's interior designer friend does a good job for you."
With that, Adam got up and turned to leave.
Six weeks later, the local paper featured a very unflattering picture of Dr. Green and Zach on the front page. Dr. Green had developed a very close relationship with Zach and his company-so close, in fact, that Dr. Green had been willing to massage some of his patient data to help Zach's company in a new drug trial.
What do you think will happen to Zach and Dr. Green now?

Question 20

Provide three examples of unethical behavior by a customer.

Question 21

When Hurricane Sandy hit the eastern seaboard of the United States at the end of October 2012, the sheer size and force of the storm had already earned it the name "Superstorm Sandy." Reaching over 1,100 miles in diameter at its peak, the storm claimed 285 lives in seven countries on its journey from the western Caribbean.
On the New Jersey shore, entire towns were wiped out, with houses floating off their foundations into the bay and streets being buried under tons of sand blown in from the beach. It took Brad O'Connell two months to get back to what was left of his house, and another month before it could be repaired enough to be habitable. You can imagine his surprise, then, when he received a letter from his local city council advising him that his property taxes for 2013-2014 would be increasing by 9 percent.
When he called the city finance office to complain that his house was now worth less, not more, he was told that the increase was part of a five-year budget plan that included predetermined tax increases.
If you were in Brad's situation, how would you react?

Question 22

Does the role of an ethics officer bring real value to an organization, or is it just "window dressing" to make the company look good?

Question 23

On August 6, 2010, Hewlett-Packard (HP) announced that Mark Hurd was stepping down as chairman and CEO in response to allegations of sexual harassment and improper expense violations. The announcement sparked a fierce debate between self-proclaimed business pragmatists such as Larry Ellison, CEO of Oracle, who called it, "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago," and corporate governance specialists such as Jeffrey A. Sonnenfeld, senior associate dean at the Yale School of Management, who called it "a courageous call."

Ironically, the decision came at a time when HP seemed to have finally found its way again after more than a decade of "flakiness" that began in the late 1990s. CEO Carly Fiorina appeared to emerge victorious from a leadership power struggle over the merger with Compaq Computer, only to see HP stock lose half its value. She was paid more than $21 million to leave in February 2005. As we saw in Chapter 5, HP then limped along to another scandal as chairwoman Patricia Dunn (who had been appointed by Fiorina when HP made a public commitment to better corporate governance by splitting the CEO and chairperson roles) authorized the use of a private security firm to spy on board members and journalists in what became known as the "pretexting" scandal. In a reversal of the separation of roles, Mark Hurd, who had been hired from National Cash Register (NCR) to replace Fiorina as CEO, then became chairman as well.
The hiring of "numbers-guy" Hurd seemed to indicate a return to sanity for HP, and the performance delivered under his tenure seemed to endorse that choice. A few critics argued that Hurd got credit for implementing Fiorina's strategy, but under his leadership HP's stock doubled, and savvy multibillion dollar purchases of Electronic Data Systems (EDS), 3Com, and Palm propelled HP to sales of more than $100 billion, passing IBM as the world's largest IT company by revenues.
So how did things fall apart so quickly? Allegations of sexual harassment were brought by Jodie Fisher, an independent contractor working with the CEO's office as a "VIP host" at executive conferences. The exact nature of the allegations has remained confidential based on a financial settlement between Hurd and Fisher and a clarification by both parties that the relationship was not a physical one. The investigation by an outside law firm ordered by the HP board determined that the allegations were groundless. Nevertheless, the implication that Hurd falsified expense reports to conceal private dinners with Fisher was considered enough of a transgression for the board to demand Hurd's resignation. From the board's perspective, Hurd was being held to the same ethical standard as any HP employee.
Several questions remain unanswered. If the expense report transgression was serious enough to demand an immediate resignation, why was Hurd given a severance package estimated to be up to $40 million in cash and stock options? If the investigation into the sexual harassment allegations found no evidence, and Hurd stated that he didn't even fill out his own expense reports, why would the board see his departure as the only appropriate resolution? To take the conspiracy theories further, why did the board hire a public relations firm (APCO) to consult on the situation? Critics argue that the board was more concerned about revealing a third fiasco in the executive offices and therefore opted for Hurd's resignation under the guise of doing "the right thing" and enforcing HP's code of ethics. Others refer to Hurd's reputed unpopularity in the company as a cost-cutting CEO who took home over $70 million in compensation in two years while trimming the research and development budget for HP from 9 percent to only 2 percent of revenue. What better way to oust an unpopular leader than to create a scandal?
If the board really was hoping to avoid a third fiasco, it was spectacularly unsuccessful. In September 2010, Larry Ellison took his vocal support of Hurd one step further by hiring him to run Oracle as its "co-president." HP sued immediately, allegedly to protect the intellectual property it believed that Hurd would be taking to Oracle. The lawsuit was settled quickly, in the interests of convincing investors that everyone was getting back to business. However, there were some specific agreements in that settlement that only served to drag out the fiasco even further.
Oracle agreed to a "standstill" proviso in which it would not make an attempt to launch a takeover bid for HP (based, presumably on Hurd's insider information) for a specific time period. In addition, Oracle agreed to continue to offer its products on HP's server platform, based on Intel's Itanium chip.
With the agreement in place, the relationship between HP and Oracle took yet another strange turn when HP hired ex-Oracle executive Ray Lane as its new chairman. Lane, in turn, convince the HP board to hire Léo Apotheker, the ex-CEO of SAP, one of Oracle's biggest rivals, as the new CEO of HP. Oracle support for HP's Itanium platform suddenly stopped, and HP sued Oracle for breach of contract. Oracle alleged that HP was planning to hire Lane and Apotheker all along, but hid the fact during negotiations in full knowledge of the fact that both men were "toxic" to any ongoing relationship between HP and Oracle. The lawsuit was settled in January 2012, with the judge siding with HP.
How could the HP board have handled this situation differently?
Sources: Ashlee Vance and Matt Richtel, "Hewlett Took a P.R. Firm's Advice in the Hurd Case," The New York Times, August 9, 2010; Michael Hiltzik, "Ouster of HP Chief Hurd Has Look of Panic," LA Times, August 11, 2010; Joe Nocera, "Real Reason for Ousting H.P.'s Chief," The New York Times, August 13, 2010; Schumpeter, "The Curse of HP," The Economist, August 14, 2010; Ashlee Vance, "Despite H.P.'s Efforts, Spectacle of a Chief Goes On," The New York Times, August 16, 2010; Stephen Lawson, "HP Worried about an Oracle Takeover after Hurd Switched Sides," PC Advisor, June 19, 2012; and Julie Bort, "Mark Hurd Legal Scandal Won't Screw HP Customers After All," Business Insider, January 31, 2012.

Question 24

Marissa Mayer, the former vice president of Local, Maps, and Location Services at Google (where she oversaw such products as Google Maps and Google Earth), was named CEO, president and director of Yahoo! in July 2012. Her lack of experience at the helm of such a large organization, which was clearly in desperate need of a dramatic turnaround, drew much skepticism from investors and analysts alike. Her predecessor in the role, Autodesk's Carol Bartz, had left on very acrimonious terms, and the future for Yahoo! looked bleak.
Financial results for Mayer's first official quarter as CEO-the fourth quarter of 2012-brought a small revenue growth of 2 percent year on year. Not exactly stellar performance, but for a company that had its revenue decrease for the previous four years, it was seen as evidence of a positive incremental change.
On February 24, 2013, Mayer generated a large amount of media attention when a memo from its human resources director, Jackie Reese, was sent to all remote Yahoo! employees informing them that they needed to be working in Yahoo! offices by June 2013. The memo further advised that anyone who couldn't, or wouldn't, meet this new expectation should quit.
The justification for the decision was offered in Reese's memo as follows: "Speed and quality are often sacrificed when we work from home … we need to be one Yahoo!, and that starts with physically being together."
Reaction from those remote Yahoo! employees was swift and predominantly negative. Accusations of "outrageous ultimatums" and "misrepresented work agreements" filled the social media outlets, as many realized that they would be unable to meet the stated June deadline.
So, why would Yahoo! choose to take such a controversial step in an industry that is renowned for flexible working arrangements? There is no doubt that many tech companies encourage attendance on corporate "campuses" with benefits such as free food and other domestic perks, but with irregular work schedules and frequent last-minute "crunch" project deadlines being the norm, the flexibility to work from home when needed was a common accepted practice, and many positions were posted as such.
Tech analysts have already offered their opinions on both sides of the argument. Supporters have applauded Mayer for taking action on "scores of remote employees who we never see and don't really know what they do," whereas critics have called the memo a failed attempt at hiding a formal layoff to reduce costs.
What remains to be seen is how the decision will impact the general culture of Yahoo! and whether or not it will prompt an exodus to other tech companies. That, after all, is one of the biggest risks with a layoff-you pick the people you want to let go, but others that you would have preferred not to lose may choose to leave anyway.

How could Marissa Mayer have approached this situation differently?
Sources: Forbes: The Street, "Yahoo!'s Shut Us Up … For Now," January 29, 2013; Kara Swisher, " 'Physically Together': Here's the Internal Yahoo No-Work-from-Home Memo for Remote Workers and Maybe More," All Things D, February 22, 2013; Nicholas Carlson, "Why Marissa Mayer Told Remote Employees to Work in an Office … Or Quit," Business Insider, February 24, 2013; and Yahoo! Profile of Marissa Mayer: http://pressroom. yahoo.net/pr/ycorp/marissa-mayer.aspx.

Question 25

Provide three examples of unethical behavior by a supplier.

Question 26

When Hurricane Sandy hit the eastern seaboard of the United States at the end of October 2012, the sheer size and force of the storm had already earned it the name "Superstorm Sandy." Reaching over 1,100 miles in diameter at its peak, the storm claimed 285 lives in seven countries on its journey from the western Caribbean.
On the New Jersey shore, entire towns were wiped out, with houses floating off their foundations into the bay and streets being buried under tons of sand blown in from the beach. It took Brad O'Connell two months to get back to what was left of his house, and another month before it could be repaired enough to be habitable. You can imagine his surprise, then, when he received a letter from his local city council advising him that his property taxes for 2013-2014 would be increasing by 9 percent.
When he called the city finance office to complain that his house was now worth less, not more, he was told that the increase was part of a five-year budget plan that included predetermined tax increases.
How would you resolve the situation?

Question 27

Do you think you could be an ethics officer? Why or why not?

Question 28

When hiring an ethics officer, is it better to promote someone from within the company or hire someone from outside? Explain your answer.

Question 29

When you go shopping, do you pay attention to how transparent the company is in its business practices? Why or why not?

Question 30

List six key responsibilities of an ethics officer.

Question 31

Would organizational integrity make a difference in your loyalty to a company? Why or why not?

Question 32

Give three examples of celebrating ethical behavior.

Question 33

If you publicly celebrate ethical behavior, should you also publish punishment for unethical behavior? Why or Why not?

Question 34

List six examples of commitments that companies can make to win the trust of their stakeholders.

Question 35

Provide four of your own examples.

Question 36

Why would a code of ethics need to be updated?

Question 37

Find out when your company's code of ethics was last updated.

Question 38

What is a reactive ethical policy?

Question 39

What is a proactive ethical policy?

Question 40

Why would a company want to be transparent?

Question 41

When you consider Milton Friedman's position on corporate responsibility in Chapter 4, is it possible to defend DPS's demand for lower hourly wages?

Question 42

Is DPS considering the interests of all stakeholders in this battle? Explain why or why not?

Question 43

How could senior executives have approached this situation differently?

Question 44

MOTT'S: SOUR APPLES
In 2009, the Dr Pepper Snapple Group (DPS) reported a net income of $555 million, compared with a loss of $312 million in 2008, with sales down 3 percent at $5.5 billion. The beverage conglomerate owns 50 brands including 7UP, A W Root Beer, and Hawaiian Punch, but in 2010 it was receiving the most media attention for its Mott's apple juice plant in the Rochester area of upstate New York. The 305 hourly workers at the plant went on strike on Monday, May 24, 2010, in response to a new contract offer by the senior management of the plant that reduced production wages by $1.50 per hour, froze pension benefits, ended pension benefits for new hires, reduced employer contributions to the 401(k) plan, and increased employee copays in the health care plan.
The rationale for the pay decrease was that the Mott's workers- all members of the Retail, Wholesale, and Department Store Union (RWDSU)-were overpaid in relation to the other blue-collar production workers in the Rochester area, where companies like Xerox and Kodak have made large layoffs resulting in high unemployment. This negotiation, in line with "local industry norms," had been quite transparent. The parent company had confirmed that its finances were very healthy and that there were no plans to close the plant or move production operations overseas. When the company was spun off as a separate entity from UK conglomerate Cadbury Schweppes in 2007, the stock stood at $25 a share-it was then in the high 30s. DPS's three highest paid executives, including CEO Larry Young, all saw pay increases of more than 100 percent in 2009.
The average hourly production wage in the area, according to a U.S. Bureau of Labor Statistics National Compensation Survey conducted in 2009, was just over $14 an hour. Union officials estimated that 70 percent of Mott's production workers earned less than $19 an hour under the contract that expired in mid-April 2010. Many had reached that level after more than a decade of service.
Chris Barnes, a spokesman for the Plano, Texas-based DPS, insisted that the company approached the contract negotiations in good faith: "We offered to keep wages unchanged after three years of salary increases and, unfortunately, the union rejected this offer. … We have to manage our costs the same as everyone else and ensure that they remain sustainable over the long term."
RWDSU President Stuart Appelbaum had a different perspective. He had seen financially strapped companies needing to cut costs and had agreed to concessions in some dire situations, but to have a profitable company with strong prospects seeking to leverage high local unemployment rates to reduce wage costs was a first for him.
The striking workers saw this as more than just a strike over money. They didn't begrudge the company profits or high executive salaries, or even the 67 percent increase in the dividend paid to shareholders in April 2010. What they saw was an attitude of unfettered corporate greed. "When you get down to it, this situation is much bigger than just some unhappy workers at a Mott's apple juice plant in upstate New York," Applebaum said. "This is about a large company doing extraordinarily well demonstrating outrageously greedy behavior. It's beyond outrageous. It's un-American."
The strike ended after 16 weeks in mid-September. In a three-year deal, the union agreed to a wage freeze, but not the cuts in hourly rates that the company had demanded. Pensions for current workers were preserved (the company had wanted to freeze them), in return for a concession from the union that new workers would be offered 401(k) plans instead of pensions.
Mike LeBerth, president of the local branch of the RWDSU, admitted, "Nobody wins in a strike … neither side is happy with what we got. Was it worth it? Yes, because we stood strong and the company knows we're a force to be reckoned with."

Both sides claimed in media interviews that they had won their case. Was there a victory here? Explain why or why not.

Question 45

What evidence is there in this case that BP simply addresses fines "as a cost of doing business"?

Question 46

BP chief executive Tony Hayward argued that "changing the culture of a 100,000 person company couldn't happen overnight." He had been in charge for three years before the Deepwater Horizon spill. Were critics right to expect more change than they saw?

Question 47

Has BP been successful in its move "Beyond Petroleum"?

Question 48

How can BP begin to restore its reputation going forward?

Question 49

What were the perceived conflicts of interest in Wakefield's research activities?

Question 50

If Wakefield had disclosed the source of the funding of his study and his interest in the experimental vaccine, would that have added credibility to his campaign against MMR? Why or why not?

Question 51

Why did Wakefield lose his license to practice medicine?

Question 52

The GMC found that Wakefield brought his profession into disrepute with his conduct. What could he have done differently to share his concerns about MMR?