Business Law Ethical Decision Making Case Questions

Leo Emmanuel has worked as an engineer at Sigma3D ProTech (Sigma3D) for the last 25 years. The company’s corporate headquarters and sole manufacturing center are in the lovely, but remote, town of Blue Ray. Blue Ray has a population of about 45,000 people and two principal employers: Blue Ray State University (BRSU) and Sigma3D ProTech. Leo and his wife Julie have raised three children there and love the town’s quaint good looks.

Julie works at Sigma3D in the accounting department. Unfortunately, recent news out of accounting has not been favorable. The company’s revenues have been down for several years now, and the company has a lot of debt. The possibility of bankruptcy is real enough that Julie told Leo “it’s really dicey now – we have about a 50-50 chance of going out of business in the next year or two.” Leo noted that Sigma3D’s stock was performing fairly well and Julie replied, “the media don’t know about our problems yet, but in the next few months it’s going to be obvious.”

Leo has recently served on his department’s hiring committee in an effort to recruit an engineer to supervise the development of the company’s new 3-D printing technology. The success of technology is critical to the company’s plans for the future, and an excellent person is essential. Last year, the company hired for this position as well, but the person they got didn’t work out well for the company and was transferred to a less demanding job. As hiring committee chair, Barry Kemp, said to Leo “we’ve got to get someone good soon or we’re in trouble.” Unfortunately, getting somebody good has been very difficult as engineers with the right skills are in great demand and most of them work in Old Town nearly 250 miles from Blue Ray.

After sifting through many resumes, the hiring committee identified two candidates. One of the candidates is quite weak but is clearly willing to take the job. Easily the best of the candidates is Mark Ross. Mr. Ross has 5 years of experience. Recommendations from senior colleagues at his previous job suggest he’s much more capable than any of the other candidates the committee has considered. Leo and the rest of the hiring committee are excited by the possibility of Mark working for Sigma3D ProTech so much so that they’ve gotten approval to make a generous salary offer. On the phone, Mark told Leo that he had other offers in Old Town, but none were quite as good as the money at Sigma3D ProTech. Mark is concerned about moving his family, though. He has two children in school in Old Town and moving would disrupt their lives. Moreover, his wife works and would have to find a new job.

Leo has realized that if Mark Ross knew that Sigma3D ProTech was very likely to go bankrupt he might not be willing to take a job that required moving to Blue Ray. When Leo mentioned this to Barry Kemp he was told: “It’s a very serious thing to reveal confidential accounting information to prospective employees. If you want to keep your job here, I’d keep quiet on this one.”

Should Leo tell Mr. Ross about the true state of the company’s finances?

  Ethical Decision
Making
Consider This: “You and Al”
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You are the manager for Big-Mart, a large
discount retailer. You recently fired Al, a
sales clerk, after Al punched a customer
during a dispute in the store(Al admitted this
after the customer complained).
Sue, manager of your competitor, Mega-Mart,
calls you to tell you that Al has applied for a
job at Mega-Mart, and to ask you whether Al
is “good with customers.”
WHAT DO YOU DO ?
WHAT IS
ETHICS?
(class discussion)
What is Ethics?
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Ethics: The study of right and wrong “in
action”
Learning Objective: Be able to
effectively resolve “ethical dilemmas” in
business
Moral philosophy: tools for this process
“Values:” principles that are important
to individual, group
Legal Responsibilities &
Ethical Dilemmas
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Legal duties may be clear
Is the decision the RIGHT action to
take?
Making a business decision can involve
ethical dilemmas
“An Ethical Dilemma?”
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Choice to be made
Implicates competing values, rights, &
goals
Potential harm to decision maker?
Potential harm to others?
“Ripple effect:” long-term, far reaching
implications of decision to be made.
LAW & ETHICS
With an Emphasis on Ethics
A COMPARISON
Is “legal” the same as
“ethical?”
YES or No or
Maybe, or I Don’t
Know?
Is “legal” the same as “ethical?”
YES?
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If one is acting within the law
presumably one is acting ethically.
The law defines specific duties.
Some conduct is allowed – some not.
Balance competing values.
Compliance – no further action
Formal punishment of illegal conduct.
Is “legal” the same as “ethical?”
NO?
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Ethics offers guidance on how one
should act.
Addresses situations where competing
values clash.
Action or inaction may be controlled by
formal or informal process.
Action beyond mere compliance to legal
duty.
How to Evaluate Solutions:
Some Theories
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Stakeholder/Utilitarian Theory: greatest good
to the greatest number
Rights Theory: Respecting and protecting
individual rights to fair and equal treatment,
privacy, freedom to advance, etc.
Justice Theory: fair distribution of benefits and
burdens: can harm to individual be justifiable?
Categorical Imperative: “what if everyone took
such action?”
“Front Page Test:” What if my decision was
reported on the front page of the Los Angeles
Times?
How to Resolve Ethical
Dilemmas in Business
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Identify relevant facts
Identify relevant issue(s)
Identify primary stakeholders
Identify possible solutions
Evaluate each possible solution
Compare and assess consequences
Decide on solution
Take action
Additional Approaches to Ethical
Decision Making
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Five Question Approach (Tucker)
Moral Standards Approach (Velasquez)
Pastin’s Approach
Practical Approaches to Ethics
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Five Question Approach (Tucker)
Evaluate each alternative on:
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Profitability (shareholders)
Legality (society at large)
Fairness
Impact on the rights of stakeholders
Impact on sustainable development
(environment)
Practical Approaches to Ethics
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Moral Standards Approach (Velasquez)
Is the decision:
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Of net benefit to society
Fair to all stakeholders (fair distribution of
benefits and burdens)
Consistent with each person’s rights
Practical Approaches to Ethics
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Pastin’s approach (Pastin)
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Ground rule ethics (organization/individual rules
and values)
End-point ethics (greatest net good for all
concerned)
Rule ethics (determine ethical boundaries to take
into account – impingement of rights)
Social contract ethics (how to move boundaries)
Consider This: “You and Al”
◼
◼
◼
You are the manager for Big-Mart, a large
discount retailer. You recently fired Al, a
sales clerk, after Al punched a customer
during a dispute in the store(Al admitted this
after the customer complained).
Sue, manager of your competitor, Mega-Mart,
calls you to tell you that Al has applied for a
job at Mega-Mart, and to ask you whether Al
is “good with customers.”
WHAT DO YOU DO ?
Class Exercise
Evaluate “You and Al” in
Light of Class Discussion
Legal vs. Ethical
“You and Al”
Action
Tell the Truth
Lie
No Comment
Other
Legal/Illegal Ethical/Unethical
End of Ethics Exercise