Project 3

Create an analysis of ethical and legal issues in the Electropic LLC case.

Vice President Dodger has asked you to write a memo with your recommendations on how human resources should handle this issue. June has a record of excellence with Electropic LLC, and her superiors would be unhappy to lose her; however, ethical practice and the law must be considered here as well.”In Project 3.  You MUST use the Badaracco framework. Use the Badaracco material in the classroom resources, not from elsewhere.  After reviewing all the material, take Badaracco’s ethical analysis and address his four questions and his three tests.  The questions should be applied to different possible situations.  For example, the company could terminate June, could allow her to keep her promotion, or could demote her but allow her to keep a job of some kind.  So, the important thing is to do the complete analysis and particularly not jump to an early conclusion.  I am not interested in what your common sense says – I am interested in the analysis of the questions and tests that Badaracco raises as applied to different factual patterns.  So you would go through each question one by one.  Good luck. Lecture Text
Joseph L. Badaracco, Jr.: Defining Moments*
This will probably surprise many of you: I’m going to say very little
about Enron. As I understand the Enron story, if you put aside the
colossal scale of the collapse, and all the disruption and harm it caused
to thousands of people—and that’s an enormous set of things to put
aside—I don’t think it is a particularly interesting story.
From what I’ve read in the newspapers, and I’ve tried to follow this
very carefully and have gotten lots of inquiries from journalists, the
folks at Enron and some folks at Anderson did a lot of things that were
wrong. They shouldn’t have done them. It was clear what was right
and what was wrong. And for the vast majority of people, there is very
little value in talking about right and wrong. Most people fortunately
have a sense of what the difference is between the two; for those who
don’t, in most cases, it is often hopeless. You have to keep an eye out
for them. If you find them in your organization, you must usher them
toward the doorway.
I’m going to talk about a different kind of problem, a different set of
problems. And these are the kinds of problems which, in the years I’ve
spent looking at managers who take their responsibilities really
seriously, are the problems that when they recount them for you, you
get a sense that their stomachs are tightening a little bit, that they’re
breathing a little faster. It might be an experience that they learned
from, something that they were glad they did once, but in many cases,
the problem is something that they don’t want to relive again. These
problems have a simple name. I call them “right versus right”
problems.
Let me give you a couple of examples. Let me start with one; since
I’ve mentioned Enron, let’s talk about the bookend to Enron. If Enron
is the biggest and worst of the corporate ethic scandals, let me talk
just a little bit about the famous Tylenol episode of the early 1980s.
I’m sure you’ve all heard the standard story. In the fall—I believe it
was 1982—six people in the Chicago area died of cyanide-laced Tylenol
tablets. James Burke, the chairman of the company at the time, has
been widely praised as a hero for, in the standard phrase, “doing the
right thing.”
Burke is an alumnus of Harvard Business School. We have a case
study of the Tylenol episode. He’s come back and talked about it. I’ve
had the chance to interview him. And, like several of my colleagues,
I’ve put a blunt question to him. I said, “Mr. Burke, look, what you did
resurrecting the brand was phenomenal.” (Think about a brand that’s
*
Edited for clarity
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been implicated in a series of deaths: That was phenomenal.) “But
surely this couldn’t have been a difficult issue about doing the right
thing. You had to get that product off the shelves. Other people might
have died if there was more cyanide. You would have been litigated to
death if you left even more of the product out there. You had to
remove it.”
Burke’s answer, surprisingly, in private conversations, is that it is
largely true; the decision to pull the product was not a difficult one.
But on one occasion he went on and told me a fascinating story that
took place a couple of days before J&J decided to pull Tylenol.
The company had decided it was going to pull the product, and Burke
decided that he ought to come down to Washington D.C. and talk to
two people. One was the head of the Food and Drug Administration;
his company’s principal regulator. The other was the head of the FBI.
He sat down with the two men. They said, “Look, Mr. Burke, we’ve
thought about this a lot. We want you to leave the Tylenol out on the
shelves.” Burke asked why.
The head of the FDA said, “We’ve got Halloween coming up. We don’t
want copycats to think that they can tamper with a product and
basically be the tail that wags the dog of a big company.”
And the head of the FBI, William Webster, said, “We don’t know
whether this is terrorism or not, but the U.S. policy is ‘we don’t accede
to terrorists.’ So could you please leave the product on the shelves?”
Burke said, still says, that at that moment he does not know what he
would have done. As a corporate officer, as a human being, he wanted
the product off the shelves. As a citizen, he was being asked by the
man who was responsible for the safety of foods and drugs, and by the
chief law enforcement officer in the United States, to leave it out
there. This was an unambiguous conflict between right and right. And
what Burke says is interesting. He says, “I got lucky.”
There was a knock on the door. Somebody handed William Webster a
note. Webster read it. He talked with his counterpart. They said, “Mr.
Burke, you can pull the Tylenol.” The note said that there had been
another poisoning, this one in California, not Chicago—strychnine, not
cyanide. They concluded that it wasn’t terrorism; that if it was
copycatting, it was already underway. It was better to get the product
off the shelves, in case any more of it was contaminated. But the key
statement is Burke’s—to this day, he still doesn’t know what he would
have done.
Now, that’s a grand, once-in-a-career sort of right versus right
problem. There are some that happen every couple of months, and I
bet many of you have counterparts to the story I’m about to tell you.
You’re at home one night. I’ll dress the story up a little. There’s a
knock on the door. You open it up. It’s somebody you’ve worked with
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who lives a couple of towns away. He actually works for you. He comes
in and says, “Look, I’m sorry to interrupt. I just wanted to talk to you
for a couple of minutes.”
“Sure,” you say. “Come on in. Have a drink.”
And what this guy says to you is he has found the house of his
dreams. And he tells you that this is what he and his wife have been
looking for. And they had to take a little money out of the kids’ college
fund, and it’s going to be a really big mortgage. But, you know, since
you’re the best boss he’s ever had and a good friend, and possibly
even the best boss he could ever conceive of having, he just wanted
you to be the first to know.
But you know that there are layoffs coming to the company, and you
know that this individual’s name is on the list. Now, I dressed this
story up a little bit. But in the last ten years, I’ve been told four
different versions of this exact same story. What’s the basic issue
here?
Well, you’re supposed to do the right thing, right? What’s the right
thing? As a corporate officer, you have a duty of confidentiality, and
under that duty you are not supposed to disclose the layoffs until all
the ducks are lined up with HR and Legal, until it makes the most
sense for the company to make the announcement. And I’m sure
everybody in here can understand why. As a friend, you owe a debt to
this person. If he were just about to jump off a financial precipice,
wouldn’t a friend reach out and pull him back?
By the way, maybe this individual has actually heard something
through the grapevine and is implicitly asking you, “What’s really
going on? Should I go ahead with this?” And if somebody asks you a
question, you’re supposed to tell him the truth. So again, this is not
right versus wrong. This is right versus right versus right.
And then there are the everyday examples: the soccer game, the
budget, and the relative you ought to visit in the hospital. That’s not
right and wrong. That’s right versus right. These problems actually go
back a long way and they have an interesting name. They’re
sometimes called “dirty hands” problems. I want to tell you just briefly
about the origin of that phrase.
It’s the title of a play by the French existentialist philosopher, JeanPaul Sartre, who lived and wrote in the middle of the last century. And
his play, Dirty Hands, is set in Paris during the Second World War.
Paris is occupied. There are three characters. There’s an older man
who has run a Communist Party cell during the occupation. There’s a
young man who has just joined. He’s a brand new recruit, and he’s full
of idealism and zeal. And there is a woman in the play, so there’s a
romantic rivalry going on between the two men for her affections. But
the real rivalry is between the two men over the older man’s
stewardship of this little unit.
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At the climax of the play, the young man accuses the older man of
selling out, of having done too many deals to keep this operation
afloat. And what the older man says in response is the following: “How
you cling to your purity, young man. How afraid you are to soil your
hands. All right, stay pure. What good will it do you? Purity is an idea
for a yogi or a monk. For someone standing on the sidelines wearing
kid gloves.” He goes on to say, “Well, I have dirty hands. I have
plunged them in filth and blood, but what do you think? Do you think
you can govern innocently?”
Do you think you govern innocently? I think that is such a powerful
phrase. Do you think you can have real responsibility in life and just
get served up one nice, slow underhand softball pitch, right versus
wrong, one after another, and just do the right thing? The hard
decisions that all of us can remember making are ones where one
thing was right and another was a real obligation, and so was
something else. I am really bedeviled about finding a way to do both.
These are the hard problems. And by the way, these aren’t just a nice
little category of interesting problems to talk about. They’re
managerial problems, because when they arise in an organization,
people watch very closely. The people working for you will watch you
very closely. Why? Because when you’ve got to choose between right
and right, when you’ve got to indicate what your real priorities are,
then the veils, the masks, whatever we all wear, slip a little bit. People
get a little better sense of who you are, how much they can trust you,
what the rules of the game are, and how they get ahead.
There is between bosses and the people working for them a close,
continuous, silent, observational relationship. And in these right versus
right moments, you catch some glimpses. People do watch very
carefully.
Now, I want to do two things with the remainder of my time. I want to
put in front of you a framework for thinking about these right versus
right problems, a practically-oriented framework, and then I want to
talk a little bit about the book that’s in front of you and indicate how
some of the advice and lessons and stories in that book help form an
approach to these sorts of right versus right problems.
But let me first of all give you a framework. And by the way, this isn’t
Joe’s framework. It’s not a Harvard Business School framework. I will
give credit where credit is due, because these questions of right versus
right go back a long, long, long way.
My understanding of human evolution is that at some distant point
there was sort of a disgusting pool of some gunk that had carbon
molecules in it. And then it was hit by lightning, or a volcano
overflowed into it. And then some of these molecules started
replicating. And then some of these replicators got big and
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complicated, and then somehow some of them developed
consciousness, and eventually they became us.
There are lots of mysteries to be filled in in that story; but at some
point, very, very early on there was this spark of consciousness. And
people started thinking about the dilemmas of leadership and
competing responsibilities. So I want to put in front of you—in the
form of four questions—some of these ideas that have stood the test
of time, not just centuries, but millennia. I want to make this as useful
and practical as I can.
Question number one, faced with the right versus right dilemma, get
out a piece of paper and for each plan of action you have for dealing
with this dilemma, create a list. Make a list of everybody who’s going
to win and everybody who’s going to lose, of all the costs, of all the
benefits, of all the risks, and net, net, net, net, net. Pick the plan of
action that does the most good and the least harm.
The origin of this way of thinking can be traced way back, but it was
crystallized in the early part of the 1800s by a man named John Stuart
Mill. It’s called utilitarianism, if you want to impress people. Mill said,
“The essence of responsible behavior is doing whatever promotes the
greatest happiness for the greatest number of people.” Mill went on to
talk a little bit about happiness. He didn’t mean just stuff you could
count or stuff that makes you feel good right away.
He said happiness is everything that gives beauty and dignity and
work and value to life. Do as much of the good stuff as you can and as
little of the bad stuff, and you’re doing the right thing. And I think that
if you talk with most serious, practical people who have real
responsibilities in the world, this sort of cost-benefit way of thinking,
this look-at-the-consequences approach to ethics is their natural,
intuitive way of thinking. And it’s the first question. Which way of
proceeding is going to get me the best net-net consequences?
Why four questions if the first question is such a good one? I hesitate
to do this a little but, Rick, you’re sitting right up in front here. And I
come from Harvard Business School where we use the case method.
I’m really not that comfortable lecturing. We use cold calls, Rick. I
don’t know if you can all see Rick. He’s sitting up here with kind a
slight, forced smile on his face. He’s thinking, “Why didn’t I come back
a little earlier from lunch and sit in the back with some of my friends?
I’m never going to do this again.” Rick, do you mind telling us roughly
how old you are?
RICK: I’m fifty-three.
PROFESSOR BADARACCO: Fifty-three. Do you work out?
RICK: I do.
PROFESSOR BADARACCO: You work out. And how often?
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RICK: It could be a little more frequently, shall we say.
PROFESSOR BADARACCO: OK. You watch what you eat?
RICK: Definitely.
PROFESSOR BADARACCO: You watch it in the sense of regulating it, or
you’re just sort of observing it as it goes by?
RICK: No, I watch my diet very carefully.
PROFESSOR BADARACCO: I’ve been putting all that information in this
little hand-held device here, Rick. It’s connected to an actuarial table
up at MIT that forecasts longevity. And it factors in some biotech
breakthroughs as well. And it looks as if you could easily live, keep this
up, another good fifty years, which would put you above a hundred.
That’s the good news, Rick.
The bad news is that Jerry and Doug have planned a little ceremony
for you later in the afternoon, and they’re going to take a photo of you
for your loved ones and give you a nice medal, and then we’ve got a
Washington D.C. police officer who’s going to escort you out to a D.C.
police ambulance. It’s going to take you to a hospital. In that hospital,
we’ve got seven people on life support. They’re in urgent need of
organ transplants.
I’m assuming you’ve got the complete set. I should have checked that
out earlier. I apologize. And we calculated again, the greatest good for
the greatest number of people, certified MIT, online, real time. They’re
going to live about 350 additional years. So we’re going to have a nice
little ceremony. I see some of your coworkers are kind of getting into
this, Rick.
RICK: You have no idea.
PROFESSOR BADARACCO: Rick, why can’t we do this to you?
RICK: Well, I have a wife. I have a son.
PROFESSOR BADARACCO: He says he has a wife and a son.
RICK: They sure would like to have me around a little longer.
PROFESSOR BADARACCO: They’d like him around a little longer. Well,
that’s an empirical question. We could check that out. These other
seven, Rick, are married.
RICK: I see.
PROFESSOR BADARACCO: Big families.
RICK: You’re telling me I should have had more children.
PROFESSOR BADARACCO: Well, actually, Rick, one of them is a Nobel
Laureate. He’s already got one Nobel Prize. He’s working on a second,
on infectious diseases around the world.
RICK: My son is an honor student.
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PROFESSOR BADARACCO: His son is an honor student. Very good.
Rick, why can’t we do this to you? Anybody want to help Rick out?
PROFESSOR BADARACCO: All right, phone a friend. And the answer is
exactly right. Individual rights. In fact, what you do, Rick—you get this
right—is you pound on the table, “I am a human being. I have rights.
You can’t do this to me.” And everyone behind you would rise up like a
chorus and say, “Of course you cannot do this to Rick.” The whole
point about having a right is that people can’t do things to you, no
matter how spectacular the consequences are for everybody else.
And the second big question you’ve got to ask that has always been
asked in these right versus right situations is which groups and which
individuals in which groups have rights that we must absolutely
respect, that we cannot violate, whatever we do to wrestle with this
right versus right problem?
What’s the origin of this idea of rights? I don’t know. You can find it in
the Declaration of Independence. If you stay here a couple of days you
can go read it in the original version. You can go across any ocean, go
south of this country. You can find ideas of human rights in the
foundational political documents of many countries. But you can go
back much further to every religious tradition that says human beings
are special. They may have come out of a slime pool, but at some
point, they got a divine spark. You can’t just chop them up, no matter
how great the consequences are.
And we in America today, people doing business in this part of the
world today, live in a world where we are surrounded by rights: human
rights, political rights, and economic rights, the rights of the people
who invest in an organization to earn high, sustained, legal, riskadjusted returns.
So the second big question faced with right versus right has to do with
whose rights you’ve really got to respect. Now, I suspect there’s some
folks in the audience who have a mathematical background or
engineering training, and you might be thinking that now we are pretty
close to a really practical and analytical way of dealing with these
problems. You could almost write a formula. Maximize the net-net
consequences for everybody affected, subject to the constraint of not
violating anybody’s rights. That sounds pretty good.
Let me try another little story out on you. Again, true story, set in the
Second World War, in a Greek village. It’s recounted in a book by a
man named John Knowles. The book is called The Magus.
Imagine that you were the mayor of a small Greek village. Your village
has been occupied. A couple kids from your village got hold of a
weapon, and they killed a couple of the soldiers in the occupying force.
The commander of the occupying force is furious. He brings you, the
mayor, into the town square. He rounds up a hundred women and
children and puts them in the town square. He picks two kids at
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random out of the crowd, puts them in front you about twenty feet
away, and then he hands you a rifle. And he says, “Either you execute
these two criminals for killing my soldiers, or I’m going to have my
soldiers shoot into the crowd.”
Now, what do you do? Assume we exclude all the sort of
action/adventure options that involve swinging from ropes and
concealed weapons. It’s a stark choice and in fact it was a real choice.
Now, in terms of consequences—one hundred people or two—you
should probably fire that rifle. In terms of human rights, they’re
innocent. It’s wrong. You can’t take their life from them.
The mayor, as the story goes, picked up the rifle, aimed it at the two
kids, pulled the trigger, but all he heard were clicks. There was no
ammunition in the rifle. And the mayor was told by the soldier, “If
you’re going to kill the two kids, you’ve got to club them to death.”
True story. Horrible story. The room always goes silent at this point.
If we had more time, if we had smaller groups, and we were using a
case method, I’d push you a little bit. To those of you who said, “Look,
horrible choice, but I’d sacrifice two to save a hundred,” I’d say, well,
shouldn’t you do the same thing here, even if you’ve got to do it in this
awful way?
What’s interesting is that people won’t let you off that easily. Try this
yourselves sometime. Try this little story out. They’ll say, “Wait a
minute. If you, as the mayor, as the leader of this organization, do
something that despicable, that vivid”—I mean talk about dirty
hands—“you’re going to destroy the soul of a village, the soul of the
villagers.” Other people say, “If you do that, you’re going to get down
on the same level as your captors.” One person said, “If you do this,
what you’re going to do is you’re going to become an animal. It is
subhuman.”
And the mayor in the story—the story, I’m told, according the book, is
real—put down the rifle. There was a line that he couldn’t cross. The
soldiers did fire into the crowd. They did kill a few people and injured
some others, but they spared most of the lives. So the mayor was
spared the full horror of what might have happened.
There’s a third question, and it’s implicit in the fact that the mayor put
down the rifle, in these answers about becoming an animal, getting
down on the same level as your captors. The origin of this question in
the Western tradition goes back to Aristotle. In the East, it dates back
to Confucius. For Confucius and Aristotle, ethics—doing the right thing,
responsibility—were not really about finding the right rule. It wasn’t
really about maximizing net-net consequences or doing what people
were owed because of the rights they had.
It was about character. It was about the character of individuals and
the character of organizations. And basically, Aristotle’s answer to
what a good decision is—it’s a decision made by a person with good
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character, after reflection, in a good organization. And the right thing
to do ought to be sort of instinctive. It ought to be spontaneous, not a
matter of deliberation and calculation.
Now, when you’re in an organization, when you’re in a situation like
the mayor, you’re in a funny sort of place because you’re going to
make an irrevocable decision. It’s part of his life, his career, and the
life of this village. It is, in effect, a defining moment. And the third
question, faced with one of these right versus right decisions, is what
messages do I want to send about what I stand for, what we stand for,
about our ideals and our principles going forward? It’s writing a little
bit of your personal autobiography. But you’re not doing it on a word
processor. You’re doing it with pen and ink. You can’t go back and
change it. It is a defining moment. People will later talk. You won’t be
there to clarify. They’ll say, “Well, we’ve had decisions like this before,
and you know what so-and-so did.” Those will reverberate for a long,
long time. So that’s the third question. It’s not about consequences.
It’s not about rights. It’s about integrity. It’s about what individuals
and their organizations or their units stand for.
The fourth question will surprise you a little bit because of its origins.
It’s Nicolo Machiavelli’s question. That’s right, I’m going to spend a
little bit of time in this talk on ethics referring to the high priest of
sleaze, and the stiletto between the ribs in the dark alley late at night,
and the poisoned chalice, and all that good stuff. But let me ask you
this, do you think Machiavelli’s name would be known to anybody
today if all he said was that you can get ahead in life by being sleazy?
I don’t think that that is news to anybody. I think the ancient Greeks
knew that. The Israelites knew that. The Romans knew that.
Little kids think that that’s how the world works, you know the little
trail from the cookie jar—not the cookie jar, the Pepperidge Farm
package, excuse me. They think they can get away with that kind of
stuff, too. And you gradually try to teach them that isn’t the case.
Most of us, unfortunately, know people who, because they’re smart
and worked hard and had the right sponsorship and were sleazy, had
nice long runs in life. It’s fortunate when they get their comeuppance,
but sometimes that doesn’t come or it comes far too late.
So the idea that all Machiavelli preached was that sleaze will get you
ahead, that doesn’t have much traction. If you go to The Prince—and I
suspect many of you can recall this from having read it in college—
Machiavelli is saying something different. What he is saying is that
sometimes if you’ve got real responsibility in an organization—he was
talking about Renaissance Italian city-states—you find yourselves in
circumstances where what you want to do as a human being, you may
not be able to do and really take your responsibilities seriously. And
then you’ve got to find something that will work.
And Machiavelli’s enduring question is, what will work in the world as it
is? That’s the fourth question. What will work in the world as it is? But
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I want to come back to Machiavelli, because if you leave with just that
question, people can easily misinterpret it. They can think, well, what
will work in the world as it is? That means the lowest common
denominator, the easy way out. They’re looking for the back door exit.
That’s not Machiavelli. If you look at The Prince, the people that he
admired, the people he called leaders were the people who were
willing to take chances. Not reckless, but prudent chances. He said,
“Fortune favors the bold.”
So Machiavelli’s question, what will work in the world as it is, means
what will work if you bring initiative and imagination and creativity,
willingness to shake the tree, willingness to take prudent risks to the
party? What will work then?
Now, those are four questions, one about consequences, one about
rights, one about character, one about pragmatism. That’s a way of
getting an initial grasp of the problem. But you’re managers, and the
key question as you full well understand is, once we’ve done some
analysis, once we’ve thought about it, once we’ve talked with other
people about what will work best, the payoff question is, what do we
do? In fact, that’s part of the reason that Machiavelli’s question has
really stood the test of time because he focused so sharply, so acutely,
so realistically on what works in the world as it is.
Let me just finish this little story of “the house of my dreams.”
Whenever people bring this story up, I ask them, “Well, what did you
do?” And surprisingly in every case, they have done the same thing.
And it’s roughly what I would like to think I would do. They
compromised. They bought a little time. They bent the rules a little bit.
They said something like the following: “That’s wonderful. I hope
everything works out great for your family.” They talk a little bit about
how great the house is. But…there’s a but coming. And the “but”
wasn’t “there’s a layoff and your name is on the list,” because that
would violate confidentiality. The “but” was, “you know, I’ve even been
a little nervous these days about how long I’m likely to have my job
here. Are you sure you want to do it?” Or “there have been layoffs at
competitors. I’m a little nervous.”
Pick your own favorite, devise your own. Use your own imagination
and creativity. Is this heroic? I don’t think it is heroic. Is it fudging a
little bit? Yes, it is fudging a little bit. But with these right versus right
kind of problems, you don’t have the easy, do-the-right-thing, chargethe-hill alternatives.
Four people came to me with this story. I’m not even sure they
resolved it as they said they did. But maybe they gave a small warning
to an individual and his or her family. Maybe the family didn’t go over
the financial brink when the breadwinner was laid off. Is that World
War II heroism? No. Is it an act of decency? Did it involve
imagination? Did it involve some political savvy? Did it involve an
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acute sense of how things work in the world? Did it make the world, in
a small way, a better place? It clearly did.
Let me close by saying three things quickly about the whole set of
ideas I’ve put in front of you, the four questions, and then the
guidelines that are in the book. First of all, I noticed some of you
taking a few notes. I hope you didn’t just write down your favorite
question or two. That’s dangerous. You really have to use the four
questions together. They balance each other.
If you think only about net-net consequences, you can run over the
rights of individual human beings. If you think only about rights,
especially in America today, a highly litigious country, you can easily
be paralyzed. I live up in Brookline, Massachusetts. We have little
parks. We have a dispute in the town now, not about whether dog
owners have the right to let their dogs run free, but whether the
dogs—the dogs!—have a right to run free and to socialize. We will
settle this eventually, but you can be paralyzed if you only think about
rights.
If you only think about your conscience, what you can live with, your
sense of integrity—I’d have to ask what makes you so special that
your sense of integrity triumphs over consequences and rights of other
people. And if you think only about what will work in the world as it is,
not balanced by the other considerations, you can end up like our
friend Jeff Skilling from Enron—one of our graduates, sorry to say—
and lots of other people. You need all four questions.
The second thing I want to leave you with is another facet of these
four questions. They are great communication devices. I think these
questions have been around so long because they capture something
that is etched into our psyches. You can say to a group of people, “We
had a hard problem. We thought about it. We worked on it. And we
decided to do what was best for everybody affected.” That has got
face plausibility.
You can say, “We worked on this hard problem and we had to do the
following because we have obligations to some people with rights, and
we had to make good on those obligations.” People will understand
you. You can say, “Look, we thought hard. Given the kind of
organization we are trying to be, this is what we did.” People will
understand you. You can look people in the eye and say, “Look, it was
a tough decision, nobody’s going to like it, but this was the best, the
most practical choice in the world as it is.” They’ll understand you.
You have to fill in the details, but these are four powerful ways of
communicating. They are not just analytical tools.
Let me have one final minute, because I have covered a lot of things,
and what I would like to do is close in as useful and practical a way as
I can. And I’d like to summarize everything I’ve said in the form of
three little tests. You can use them for the everyday right versus right
Copyright 2002
Page 11
and the big right versus right. And I think they will help put you on
some of these quieter, more effective paths.
Test number one is the newspaper test. What plan is going to work
best if it’s going to be published on the front page of your local paper
tomorrow? That’s a way of picking up on the full set of consequences,
especially in our media-saturated world. It’s also a way of picking up
on the Machiavellian question of what will work in the world as it is.
The newspaper test is a very pragmatic one.
The second test is either the Native American advice to walk a mile in
the other person’s shoes or the golden rule, do unto others. Or
another version of it is, if your kids were the people who were going to
be affected by the decision, how would you want them to be treated
by somebody like you making the decision? All three of those are ways
of picking up on rights. Interests that other people have, real interests
that you ought to pay attention to.
The final question can be quite somber. It is the obituary test or
sometimes called the best friends test. What’s the right way of dealing
with this issue from the long term, the perspective of you looking
back, people you care about, whose admiration and respect you care
about, how would they have wanted you to make the decision? That’s
a way of picking up on what’s the right thing in terms of character.
Your character and the character of an organization.
Three tests. It took a minute. They are not the answer, there are no
answers. Ultimately, I vote with Aristotle, it’s ultimately a matter of
character and judgment, but a good organization and good leadership
will make it easier for people to find the right thing, or to pick the
writer of the right things, or sometimes to move in the form of quiet
leadership, in, roughly speaking, the right direction.
So, that said, I feel I have put in front of you maybe 10 percent of
what may be helpful in wrestling with these problems. The other 90
percent is up to character, experience, hard work, and good judgment,
which is something I suspect that all of you already knew. Thank you
for your time, your attention. Rick, I was just kidding.
Copyright 2002
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11/10/2019
Employment at Will
Learning Topic
Employment at Will
0:00 / 6:34
Transcript
Employment at will is a doctrine of common law that allows either the employee or the
employer to terminate an employment relationship at any time, for any reason, with or
without notice, and even for a morally reprehensible reason, so long as the ending of the
relationship does not fall into an exception to the employment-at-will doctrine.
Employment at will is the prevailing legal doctrine concerning employment relationship
termination in 49 US states (not Montana). In the overwhelming majority of the United States,
employment at will and its exceptions govern the rules by which one may legally terminate an
employee.
The generally accepted exceptions to employment at will include
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express contract,
implied contract,
promissory estoppel,
public policy violations, and
good faith and fair dealing.
We discuss these five exceptions below.
Express Contract Exception
If an employer terminates an employee in violation of the terms of an express contract
between the employer and employee, then the employee can sue the employer for breach of
contract (and, in some states, wrongful termination).
For example, an employment contract guarantees that the employee will be employed by the
employer for a definite duration of time, with cognizable boundaries, such as a “one-year
period” or “for six months.” The employer terminates the employee before the stated period
has expired, and that termination is not otherwise permitted by the contract.
Likewise, consider a case where an employment contract states that an employee can be
terminated only “for cause” or “for just cause,” and the employee is terminated without cause.
Implied Contract Exception
Implied contracts are contracts created by the conduct of the parties, which include any
representations or assurances made by the employer prior to or during the term of
employment. In some states, an implied contract is an exception to the employment-at-will
doctrine.
For example, if an employer provides an employee handbook to a new employee, the
provisions in the handbook may be considered part of the contractual relationship. Often,
such handbooks outline a procedure for performance review, discipline, and discharge of the
employee. An employer who fails to live up to procedural obligations prior to discharging an
employee could be liable.
Promissory Estoppel Exception
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In many states, promissory estoppel acts as an exception to the employment-at-will doctrine.
That is, when an employer makes a promise to an employee of employment or a period of
employment, and the employee relies on that promise to his detriment, and it leads to
injustice, then an employee may be able to have that promise enforced regardless of
employment at will.
For example, John is offered a job with Widget Co. He discusses with Widget’s manager that,
to take the job, he needs to move from California to New Jersey and give up an already
lucrative position with benefits. The manager assures John that he will have gainful
employment and a substantially larger income with Widget Co. for at least a year if he makes
the move. In reliance on this promise, John quits his job and moves to New Jersey to begin
work at Widget Co. After one week, John is laid off. Despite being an employee at will, John
may be able to recover under the theory of promissory estoppel.
Public Policy Violations Exception
Most states in the United States prohibit an employer from firing an employee if the reason
for the action violates some readily accepted public policy. This prohibition prevents an
employer from terminating an employee for exercising a legal right, including a right contained
in state and federal laws; or for failing to perform an illegal act for the employer.
Firing an employee for performing some public duty (showing up to jury duty), for exposing
illegal conduct (such as reporting violation of some law to the employer or a government
agency), or for exercising her rights as a US or state citizen (such as voting) are all against
public policy.
This exception to employment at will encompasses the inability to terminate an employee if
doing so would violate her state or federal statutory rights. If an employee is terminated
because of her race, this may be a violation of Title VII of the Civil Rights Act of 1964, and so
an otherwise at-will employee would have a claim against the employer for violating a federal
statute.
Moreover, it is against public policy to terminate an employee for refusing to commit an illegal
act, such as a crime.
Good Faith and Fair Dealing Exception
A minority of states impose upon the employer a duty to exercise good faith and fair dealing in
regard to all employees. This doctrine, to varying degrees, means that an employer must treat
an employee fairly in the decision to fire her. This generally means that an employer would
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violate these duties in firing an employee without due cause or justification.
The preceding five generally accepted exceptions to employment at will allow injured parties
to seek recovery even in the face of the employment-at-will doctrine. As such, they limit the
circumstances by which an employer can terminate an employee.
Licenses and Attributions
Business Law: An Introduction (https://thebusinessprofessor.com/business-law-anintroduction/)
, by TheBusinessProfessor.com, Jason M. Gordon & Colleagues has been
adapted with permission from Jason M. Gordon. © Business Professor, LLC.
© 2019 University of Maryland University College
All links to external sites were verified at the time of publication. UMUC is not responsible for the validity or integrity of
information located at external sites.
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Project 3: Leading Ethically and Legally at Home and Abroad
Step 1: Perform Ethical Analysis
Vice President Dodger has provided you with the Electropic LLC case file, which details recent events at
Electropic LLC, one of Colossal’s technology companies. He has asked you to analyze the legal and
ethical aspects of the case. The ethical aspects of the situation seem complex, and you realize that you
need a structured way to think through the various resolutions to the case and their implications. You
know that there are many different schools of ethical thought and a variety of frameworks or
approaches for analyzing ethical problems, but you decide that the best approach to this particular
situation is Badaracco’s right versus right framework.
You’ll start by working through the right vs. right ethical analysis, considering the various options for
action and the winners and losers for each option. What are your recommendations for the best ethical
course of action? Be sure to analyze all four questions and all three tests of Badaracco’s framework.
When you’ve finished analyzing the ethical aspects of this case, continue to the next step, in which you’ll
consider any legal issues that could affect your decisions.
Step 2: Perform Legal Analysis
As you continue to sift through and consider all the details of the Electropic LLC case, Vice President
Dodger reaches out with an important note:
INBOX (1 NEW EMAIL)
From: Kenneth Dodger, Vice President, Colossal Corporation
To: You
Just wanted to remind you that in addition to the ethical aspects of the Electropic LLC situation, there
may be legal implications that the human resources department needs to account for before moving
forward with any plan of action. To that end, you’ll need to review any relevant information
about fraud and employment at will, that might affect what could or should be done about the situation
at Electropic LLC.
When you’ve worked through the possible legal implications and arrived at a recommended course of
action for Electropic LLC’s HR department, it’s time to present your analyses, recommendations, and
action plan in a report.
Please use your outline and research notes to inform the writing of your report.
That’s all for now. I know this is a tricky case. Thank you for your efforts.
Ken
Step 3: Write Your Electropic LLC Report
Use your outline and research notes to prepare your report. Be sure to meet the following requirements
laid out by the VP:
•
Using Badaracco’s right vs. right framework and your legal analysis, prepare a report.
•
Include APA-formatted in-text citations and an APA-formatted reference list (do not format the
body of the report using APA style, just the reference list). See references and citations for
details.
•
Include in your report a detailed analysis of all four questions and three tests of the Badaracco
framework; also include an analysis of the legal issues.
•
Include a specific recommendation on what actions, if any, HR should take based on your legal
and ethical analysis and conclusions.
•
The report should be no more than 10 pages (double spaced, 12-point font; the reference list
does not count toward page limit).
•
Title your file using this protocol: lastname_Electropic_date.docx.
Submit your Electropic report to the submission dropbox located in the final step of this project. You
should try to have this report complete by the end of Week 6. In the next step, you will begin work on
the final task from the VP regarding global law and ethics.
11/10/2019
Résumé Fraud
Learning Topic
Résumé Fraud
Fraud, often called misrepresentation, is a very broad legal concept that incorporates a variety
of types of fraud and misrepresentation, both civil and criminal. There are considerable
variations across the states as to the specific categorization of types of fraud as either civil or
criminal law violations, or both. The federal government criminalizes a variety of types of fraud
including mail and wire fraud, bankruptcy fraud, and securities fraud. These federal laws apply
to everyone in the United States, regardless of the state in which the fraud occurs. Although
there is variation as to which explicit types of fraud are criminalized within each state, in all
states, some types of fraud unquestionably carry both civil and criminal penalties.
Résumé fraud is a specific type of fraud that may result in civil or criminal penalties, or both,
depending on which state the fraud occurs in. In its most primal form, résumé fraud is a type
of common law, civil fraud wherein the intentional misrepresentations of material facts are
made in a résumé, and justifiably relied upon in the hiring of an individual for employment. In
the absence of any statutory provision specifically addressing résumé fraud in a given state,
the common law provides the remedy for résumé fraud typically in the form of damages
(monetary compensation). However, many states have statutorily imposed sanctions
specifically for committing résumé fraud. For example, in New Jersey, both persons and legal
entities are prohibited from intending to deceive by falsely representing the receipt of a
degree, credential, or certification, which one has not actually acquired “in connection with
any business, trade, profession or occupation” (N.J.S.A. 18A:3-15.2). A violation of this
provision is treated as a civil law violation, and each instance of résumé fraud carries with it a
$1000.00 civil fine (N.J.S.A. 18A:3-15.5). On the other hand, in the state of Kentucky,
“fraudulent use of an educational record” is considered a Class A misdemeanor, which is
punishable by up to 12 months in jail and fines (KY Rev. Stat. Ann. 434.442). The Kentucky
statute explicitly includes making false written representations for certain educational
achievements, such as a degree, in employment applications. The states do differ as to how
they treat résumé fraud, but whether it is treated as a civil violation or as a criminal violation,
résumé fraud is a dishonest practice that should be avoided.
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At-will employees should be particularly aware that résumé fraud provides a justifiable basis
for termination that may undermine otherwise legitimate arguments for wrongful discharge (or
other exceptions to the employment at will doctrine). For contract employees, résumé fraud is
often considered “just cause” for termination of an employee who would otherwise be
protected from termination by contractual “just cause” provisions. Finally, in addition to the
legal consequences of résumé fraud, the reputational damage of lying on a résumé could
undermine one’s career prospects as it did for former Yahoo CEO, Scott Thompson, whose
résumé represented that he had a double major, including a degree in computer science, from
Stonehill College, a degree that was not awarded from until several years after he graduated.
After being exposed by a Yahoo shareholder, Thompson stepped down from his position in
disgrace (Mackay, 2012).
References
Mackey, M. (2012, May 15). Ex-Yahoo CEO Scott Thompson and seven other cases of resume
fraud. The Huffington Post. Retrieved from
http://www.huffingtonpost.com/2012/05/15/yahoo-ceo-scott-thompsons-resumefraud_n_1516061.html
Resources
Résumé Misrepresentations (/content/umuc/tgs/mba/mba630/2198/learningresourcelist1/resume-misrepresentations.html?ou=423842)
What is Fraud? (/content/umuc/tgs/mba/mba630/2198/learningresourcelist1/what-is-fraud-.html?ou=423842)
© 2019 University of Maryland University College
All links to external sites were verified at the time of publication. UMUC is not responsible for the validity or integrity of
information located at external sites.
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Electropic LLC
Course Resource
Electropic LLC
Notice: Contains Confidential Information
Electropic LLC is a respected and profitable website design and hosting company in Colossal
Corporation’s technology group. Melissa Aldredge has been a project manager at Electropic
LLC for several years and was recently considered for promotion to a senior project manager
position. Ultimately, the promotion was awarded to another long-term employee, June Pyle.
June and Melissa have a history of one-upping each other and sharing an internal rivalry
within the company.
Melissa recently reported internally that she had learned that June, who was given the
promotion over her, had never finished her MBA degree. All of June’s business cards have
“MBA” after her name, and the signature line of her email reads “June Pyle, MBA.”
Electropic LLC’s policy manual states that potential employees must submit transcripts for all
degrees listed on their resumes. However, this requirement was not in place 10 years ago
when June Pyle was hired. June has a history of stellar performance and was promoted not
because of her MBA, but because of her consistently exemplary work. June has received
excellent performance evaluations during her time at Electropic LLC, and her leadership has
led to increased revenue as well as positive press for the company. Her record of success is
what led to her promotion.
As a result of Melissa’s report, the director of human resources sent an email to all employees
who were hired prior to the policy change requiring transcript validation, asking that they
provide transcripts to validate their credentials. June did not respond to the director’s request
for transcripts and was called into the director’s office. In a very tense and tearful interview,
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June confessed to the director that she does not have an MBA. She admitted that she was 12
credits away from completing her degree, but when her dad got sick, she had to drop out. She
said that she really needed a job to support her family and she put the MBA on her resume
hoping it would help her find a job. She shared that she always intended to go back to school
but became so busy with work that she didn’t have time. Once she was hired, she felt that
there was no turning back and she had to keep the lie going by placing “MBA” in her email
signature line and on her business cards.
An MBA was not a requirement for the assistant project specialist job June was hired for 10
years ago, but four years ago, it was made a requirement for the senior project manager
position she holds now. Two of the current senior project managers do not have MBA degrees
because they were promoted before this requirement was in place.
Vice President Dodger has asked you to write a memo with your recommendations on how
human resources should handle this issue. June has a record of excellence with Electropic LLC,
and her superiors would be unhappy to lose her; however, ethical practice and the law must
be considered here as well.
© 2019 University of Maryland University College
All links to external sites were verified at the time of publication. UMUC is not responsible for the validity or integrity of
information located at external sites.
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Running head: ELECTROPIC LLC CASE
Analysis of ethical and legal issues in the Electropic LLC case
Anica Davis
November 12, 2019
Professor Goodwin
1
ELECTROPIC LLC CASE
2
TO: Vice President Dodger
FROM: Anica Davis
DATE: 11/12/2019
SUBJECT: Analysis of ethical and legal issues in the Electropic LLC case
This case deals with the promotion of June Pyle, an employee at Electropic LLC. She was
promoted as the senior manager without having the required qualifications of the job. According
to Electropic LLC rules, a person needed to be a Master’s degree holder to become a senior
manager. However, June has acquired the position with being untruthful about her educational
background. It is important to know that there are both legal and ethical contemplations to be
considered before making decisions. The decisions should be sensible to the organization’s
policies, its main aims, objectives, and one’s welfare. As a framework for identifying the
approaches to solve the matter, the Badaracco’s right versus right framework will be used.
The alternative taken in the Electropic LLC case will discuss more on the organization and its
ruling. Through the use of the four question framework, Badaracco (2002) believes that the options
between the right alternative describe a person’s character. The first question deals with the
consequences. It is very important to keep in mind that the moral decision generates the best good
for many people. At disposal of the organization, there is an ethical decision to make, for example,
whether to terminate June from her new position or agree to allow her to keep the promotion with
applied conditions. She was required to register and complete her MBA or be demoted.
ELECTROPIC LLC CASE
3
Terminating June from her position is poses disadvantages to the organization since her records in
the company were very successful and long running. Electropic LLC is likely to lose her to a rival
corporation and this may affect the firm negatively. On the other hand, June remains the senior
manager and is permitted to complete her MBA or June can be demoted from her position and be
given a job within Electropic LLC’s companies. If the company decided to demote June, to please
others the decision may inadvertently lower her self-esteem, which can hinder her activities and
might, therefore, affect her future success in the company. Badaracco’s (2002) second question
centers on the rights of June and the company. One’s unchallengeable rights include rights to
liberty, living and the search for pleasure. Electropic LLC’s investors are concerned with increasing
their profits regardless of whoever is employed and to what position.
Terminating June may rub shoulders with the investors and other directors wrongly and the
company may be negatively affected. The third question focuses on the interaction between
integrity and values. The contemplation of the question needs a long-lasting standpoint of the
person making the decision. The decision-maker is required to assess the long-lasting ramifications
of the choice made on the behalf of Electropic LLC and one’s values. Electropic LLC should
assess the type of picture portrayed to its esteemed customers and the public before making some
decisions. The last question focuses on how the line of action would be reasonable to the world.
This is a case of the newspaper ordeal. Any Elecropic LLC course of action will efficiently be
broadcast to the whole world. In some ways implicating rival organizations will help note the
problem and initiate measures to make certain that they outperform the Electropic LLC.
When viewing this incidence from another perspective, it is evident that there are several legal
considerations that apply before making a decision. To begin with, the company can terminate and
sue June for faking and lying about her credentials. Nonetheless, this put the HR department in a
ELECTROPIC LLC CASE
4
dilemma since this might make the shareholders and the public to lose hope. Again, the department
failed to countercheck these documents before hiring and promoting June. At the same time, June
can sue the company if the contract is terminated indicating that there was no ground for her layoff
since at the time of her hiring it was not a requirement to have MBA.
In this regard, the Human resource department at Electropic LLC should deal with this case
diligently. Electropic, can decide to retain her position but specify that she must complete the 12
credits remaining. Another step is to conduct training that will help employees retain their position.
Since June has been performing excellently and has never compromised organization operations
she should retain her position. This is because on the job training is very significant in ensuring g
that all employees are qualified for their position. Additionally, it helps to preset, prearrange and
safe time as it is conducted within the organization. However, if she loses her job all other
Electropic LLC employees who do not have the required educational credentials should as well
lose their positions.
No matter the decision that the management decides to take after making consideration, it is
significant to understand each action has some consequences. This is because not all employees,
shareholders and customers will be satisfied with the decision made although the decision has to
be made. It is evident that after June was discovered all other employees were reviewed on the
basis of their qualifications. In regard to June if she is demoted her morale will be killed and she
might not be able to able to replicate her early trach record. Also, she might discourage other
employees who are closer to her from giving their best but to ensure their operations contribute to
the downfall of the company.
ELECTROPIC LLC CASE
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At the same time, she might spread rumors that the organization is aim at demoting or scrutinizing
all employees. On the other hand, if she is allowed to retain her position as a senior project manager
and be required to have an MBA, other workers like Melissa might feel there is favor of some
employees. In ensuring that such an incidence has not taken place in the future, the Human
Resource department that is entrusted with hiring should ensure that the credentials of an employee
are reviewed thoroughly. This is to ensure that no one will ever repeat such an act.
From the above discussion, it is evident that the HRM should make its decision wisely through
balancing action that will help in selecting those who should continue working for the company.
For June she should be retained but be instructed to have an MBA after a certain duration and if
she fails she will be demoted. This is due to the fact that she is among the knowledgeable employee
who might cause a major issue in there. For instance, show known what it is required in organizing.
Aging the other employees, managers and customers might be fond of her hence giving her ma
chance to retain, her.
ELECTROPIC LLC CASE
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References
Badaracco, J. L. (2002). Harvard FSS: Defining Moments: A Framework for Moral Decisions. Retrieved
from
http://web.a.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/pdfviewer?vid=2&sid=0b1faf9c-
b3ae-4f48-83b0-c19f990f08ed@sessionmgr4006.