9-6cResolving Ethical Business Challenges

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 Douglass office. “Hello, Doug. You wanted to see me?” Charles asked.

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“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 for 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’s proposal. “Revise this and bring it back to me tomorrow,” he said.

Questions | Exercises

  1. What is a key component of a successful auditing process missing from this situation?
  2. How would you describe the corporate culture of Butterfly?
  3. What steps would you recommend Charles take?


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