Case 1

Oh Seas!, Co. is a cruise line company that deals exclusively in world travel, specifically to
Mexico and South America. The board of directors meet on the first Tuesday of every month.
As a result of becoming a publicly traded company, the firm needed to meet various rules and
regulations, one of which was the reorganization of their board of directors to include several
independent members. Independent directors are people who come from outside the company
and have no existing relationship with the company. The CEO of Oh Seas!, Co., James
Collins, is also the chairman of the board. He is mainly concerned with shareholders, and, in
addition, he owns 5 percent of the company. Dr. Wego Green is an independent board
member and is a CEO of Green Products Corp. He is the chair of the social responsibility
committee, and he believes strongly in doing what’s best for the environment.

At today’s committee meeting, Green starts off the meeting by sharing an article about
another cruise company that was fined $40 million for dumping raw sewage and other
pollutants off the coast of Peru.

“I hope this is not something Oh Seas!, Co. is doing.” Green eyes Collins.

“We only dump treated sewage,” Collins says. “But sometimes we dump it less than four
nautical miles from the nearest shore,” he admits reluctantly.

“We have to stop immediately!” Green yells. “Waste discharge should only happen at more
than four nautical miles from land, and the boat needs to travel at a speed of six knots or
more.”

“It’s a matter of time and money. How would this impact our shareholders and their value?”
asks Collins. “We don’t want to make decisions that negatively affect them.” Collins knows
that cruise liners have razor-thin profit margins. “No one will know the difference.”

“It would only initially bring down profits by 10 percent, but we might potentially bring in
more environmentally minded customers in the future,” replies Green.

An enraged Collins responds, “What do you mean it would bring profits down? Our
shareholders would be negatively affected by this! We can’t decrease our profits by 10
percent for the possibility of new customers and good press. We have a duty of loyalty to
make decisions based on what is best for the corporation and its stakeholders. To do anything
else would be a breach of our fiduciary duty to act in the best interest of shareholders. We are
responsible for our economic success and viability to shareholders.”

“I completely agree that is one of our fiduciary duties, but we also have a duty to the
environment and ecosystem,” Green replies. “The Earth could die based on the decisions we
make. Many companies are making decisions to go green, and we need to be ahead of the
curve when it comes to social responsibility. That is the entire reason we created the
committee in the first place. The board is also accountable for this because we could all be
accused of making decisions in bad faith,” says Green.

“As a director, you have a loyalty to make the best decisions for the shareholders and to
maximize value,” Green continues, “but more companies are moving toward a balanced
approach for decision making. It has become more commonplace for companies to take social
responsibility into account, as it creates a better relationship with stakeholders. We want to

1
maintain a stakeholder form of corporate governance, maximizing benefits for investors,
employees, and our consumers. In fact, I believe we will be more profitable with this
approach!”

Questions

1. How do you think this situation should be handled?

2. What does fiduciary duty mean?

3. Who are the primary stakeholders in this scenario? Secondary stakeholders?

2
Case 2

Daniel graduated from Michigan University and landed a job as a copywriter at Young,
Olsen, Lindle, and Olson (YOLO) Advertising and was assigned to the client Uber Bacon.
This conglomerate was a food processing manufacturer based in the Midwest that had been in
business for more than 100 years. Overall, its sales of beef, chicken, pork, and seafood were
more than $750 million each year. YOLO considered many advertising options and opted to
utilize a celebrity spokesperson to attract more business. That meant Daniel would work with
Gloria Kunies as the celebrity endorser. Kunies—a well-known, widely loved actress—had a
large following of young consumers on social media including Snapchat, Instagram, and
TikTok.

Chloe, an account manager at YOLO, asked Daniel to a meeting. “Daniel, this new account is
a good start for you. We usually don’t let our new copywriters handle accounts by
themselves, but you have proven to be a capable employee. Your job on this account is to
write copy for the commercials using Kunies’s product testimonials. The copy needs to be
crafted as a testimonial, targeting the market of 17- to 30-year-olds. Kunies already signed an
affidavit as to being a bona fide user of the product. The scripts should feature her testifying
to the quality, value, and tastiness of the bacon. I want you to meet her tomorrow so you can
start the writing process and understand her personality in order to script the messages. Spend
the rest of the day immersing yourself in her biography and researching her on the internet.”
After Daniel left Chloe’s office, he found an Instagram post about Kunies being a vegetarian.

At the meeting the following day, Daniel asked Kunies if she had actually tasted the bacon.
Kunies replied, “Why yes, technically and legally I have tried Uber Bacon. In fact, I’ve been
a huge fan since I was a kid. Bacon is my favorite food. I’ve done several testimonials in the
past and know the American Advertising Federation (AAF) rules. I know as long as my
comments are based on verifiable personal use, the message cannot be challenged as
deceptive. In fact, Uber Bacon has been a favorite of mine since I was young. It wasn’t until a
month ago that I became a vegetarian. Eating all that bacon for decades really did a number
on my cholesterol.”

“So, you feel comfortable about endorsing Uber Bacon even though you don’t eat it now?”
asked Daniel.

“No question about it. As far as bacon goes, Uber Bacon is second to none in taste. If people
are going to eat bacon, why not eat the best? Even if it is a heart attack waiting to happen,”
Kunies joked.

The next day Chloe asked Daniel how it went. He explained their conversation and expressed
concern over the fact Kunies is currently a vegetarian, and she attributed her high cholesterol
to meat. Daniel felt relief when he saw the concern in Chloe’s face but soon realized her
concern was about Kunies pulling out of the advertisement. Daniel reassured Chloe that
Kunies still wanted to promote the product, but it seemed like a contradiction to have a
vegetarian promoting bacon. Chloe responded by saying as long as Kunies had eaten the
bacon at some point in her life and thinks it is a good product, it makes no difference as to
whether she currently eats bacon. She continued, “Sometimes in advertising, you have to add
a spin to the message you are communicating so it fits with the product you are selling. Not
only are you selling a product, but more importantly, you are selling an experience, a feeling,
or an idea that appeals to consumers.”

3
As Daniel walked home that evening, he wondered how he was going to write this
advertisement. He did not want to begin his career in a dishonest manner, but he also wanted
to produce work that pleased his boss. He tried to think of creative ways to mask the
contradiction of the advertisement. Maybe with humor, he thought. He asked himself if this
approach would still feel dishonest. The next morning Daniel was going to meet with both
Kunies and Chloe about what he had written thus far.

Questions

1. Describe the ethical issues that Daniel is encountering.

2. Does this situation in any way violate the concepts of fairness, honesty, and integrity?
3. If the advertisement does not violate any laws, then why should Daniel be
concerned? What are the possible consequences of the advertisement?

4
Case 3

Steven, a junior at Northeast State, just started working part-time at a fast-food restaurant
chain. Although not his dream job, it paid for tuition and books, and it gave him the flexible
schedule he needed for school. After a few months, Steven found he got along well with all
of his coworkers, but it was apparent they did not respect the company or management. The
employees made fun of the manager and treated the work area like a playground. In some
respects, Steven thought it was a fun environment to work in, especially after hours when
management was gone for the day. They played their music loudly, spent time on social
media, and talked with one another during the down times instead of cleaning up their work
areas. Despite ethical policies in place telling employees how they were expected to act in the
workplace, these policies were never enforced.

One day, while working with his coworker Julie on the food assembly table, Steven saw Julie
accidentally drop a meat patty on the floor. Without so much as a flinch, she bent down,
picked up the patty, stuck it back on the bun, and wrapped it up. It happened so fast that
Steven wasn’t even sure he had seen right—especially since Julie had done it so casually.
Steven watched in dismay as another worker took the hamburger out to the customer.

Over the next few weeks, Steven saw others, including the shift supervisor, do the same thing
with burgers and other products. Once, an entire cheeseburger hit the greasy floor, was
picked up, and was taken to the customer. This time, the customer complained the burger
tasted funny and sent it back. Steven noticed other unsanitary practices such as employees not
washing their hands between handling raw meat and vegetables and not washing utensils
between uses. Also, sometimes flies would land on burgers that were then served to
customers. Obviously, such practices were against company policies and, if reported, the
supervisors in charge could get in trouble and the restaurant would face investigations from
the health department. There was
no one watching the employees, and the shift supervisor also engaged in these activities.
Steven felt it was the company’s responsibility to hire good people, so they were to blame if
these things happened.

One day, Steven approached Julie and asked, “Why do so many people here serve food that
has fallen on the floor to customers?”

Julie thought about it briefly as though she had never considered it before and replied, “I
guess it’s because it would take too much time to get another beef patty out of the freezer,
cook it, and serve it to the customer. This is a fast-food restaurant, after all, and I’m not
interested in hearing customers complain about how long it took for them to get their food.
Besides, the restaurants with the fastest service get a bonus from corporate headquarters. Last
year, the supervisors rewarded us with bonuses for being so fast.”

Steven was somewhat taken aback by the honest reply and asked, “Wouldn’t you be
disgusted if you were served dirty food at a restaurant?”

This time Julie’s response was quick. She said, “What I don’t know won’t hurt me,” and she
walked off. Several weeks went by, and the same practices continued. Steven became more
and more concerned about the consequences that could happen in an environment so laid
back and unconcerned about safety and health. It seemed like the more time passed, the
worse everyone’s attitude became.

5
One day, at the beginning of his shift, Steven noticed the walk-in freezer had been left open.
As he went to shut the door, he smelled spoiled meat and discovered that the meat had gone
bad. “How could this happen?” he wondered. He threw away the spoiled meat without asking
anyone because he was afraid of what his supervisors might ask him to do.

After Steven threw out the spoiled meat, he began to wonder how the culture of the restaurant
got to be so poor that it supported such practices. He realized the seemingly minor unsanitary
practices allowed major issues to arise that could possibly hurt someone. Steven felt he
should take action. He sat down and pondered what he should do.

Questions

1. Describe the nature of the organizational culture in the restaurant. What kind of
opportunities are there for unethical behavior to occur? Are there any opportunities for ethical
behavior?

2. What are some of the incentives employees might have to engage in this type of behavior?

3. When most employees ignore policies, is it hard for one employee to question existing
rules being broken? Why?

6
Case 4

When Mohammed began working in the human resources department at KR Electronics, he

was impressed with the number of advancement opportunities the job offered. His first task
was to monitor reports that came in from employees through the company’s ethics hotline. It
was a simple job but one Mohammed felt would lead him to a higher position in the HR
department. He spent two days learning about the company’s ethical policies and values, such
as the importance of integrity and confidentiality. Mohammed felt reassured he chose a great
company in which to start his career.

KR Electronics was a competitive company, and every six months, employees were evaluated
for performance. While the highest performers received substantial bonuses, the lowest 15
percent were consistently fired within the year. This didn’t bother Mohammed too much. He
knew many other well-known companies had a similar system in place. What bothered
Mohammed was the way supervisors treated employees who did not perform well. Several
employees approached Mohammed and told him of an abusive manager who often yelled at
employees in front of other coworkers. Mohammed heard reports that the supervisor would
make comments such as “I can’t wait till the year is up and I can tell you to get lost. It’ll be
nice to actually get someone in this job with half a brain.”

When Mohammed approached Emma, the human resources manager of his department, about
what he heard, Emma shrugged off Mohammed’s concerns. “You’ve got to understand,
Mohammed,” she explained. “We operate in a highly competitive field. Employees have
to work quickly and efficiently in order to maintain our competitive advantage. This often
requires supervisors to get tough. Besides, this supervisor’s unit is one of our best performers.
Apparently, whatever he’s doing is working.” This remark made Mohammed feel
uncomfortable, but he did not want to argue with his boss about it.

One day Mohammed got a call from a woman in the company’s sales department. She
informed him that many of the firm’s salespeople made exaggerated claims about the quality
of their electronics. He also learned salespeople were making guarantees about products that
were not true, such as how long the product would last.

“The salespeople are given substantial bonuses for exceeding their quotas, so many people
promise whatever it takes to increase their sales,” the woman explained.

Although it was not required to provide a name when reporting, the person talking to
Mohammed gave her name as Sarah. She asked Mohammed to make sure her sales manager
Rick did not find out she called the hotline. Mohammed gave the report to his supervisor for
further investigation.

Two weeks later, Mohammed heard that Sarah had been fired for poor performance. He
approached Emma to ask about the situation and was horrified to find out the sales manager
of Sarah’s division had been told about her report.

“But Emma, this is a violation of our confidentiality code! I promised Sarah we would keep
her name anonymous when investigating this matter. What if Rick fired her out of
retaliation?” Mohammed asked.

Emma looked at Mohammed in exasperation. “Mohammed, you are making too big of a deal
out of this. Nobody forced Sarah to give her name to us over the hotline. And trust me, Rick’s

7
a good man. He wouldn’t fire someone simply to get back at them for reporting something. It
seems to me that these reports don’t have credibility, anyway. It’s likely that Sarah made up
these allegations to hide her poor performance.”

Mohammed left Emma’s office upset. Even if Sarah was a poor performer, he did not feel
that it was right that her sales manager was told about her report when she expressly
requested otherwise. As he went back to his desk, he remembered hearing that the sales
manager and Emma were good friends and often went out together for lunch.

Questions

1. How does the company’s organizational culture appear to conflict with its ethical policies?

2. What are the options for Sarah if this was retaliation?

3. What should Mohammed do next?

8
Case 5

Imani always tried to do the right thing but did not know what to do in this dilemma. She
knew someone would get hurt. All because of an overzealous supervisor, she thought sadly.

Two years ago, Imani took a job at ABCO Corporation in its public relations division.
Although new to the corporate world, Imani quickly learned the ropes of the highly
bureaucratic organization and excelled at many of her projects. As a result, her bosses
assigned her more lucrative responsibilities. The only downside to the job Imani could see
was many people appeared to be promoted based more upon their relationships with their
superiors than their merit. While Imani knew her work was excellent, she could not help but
wonder whether her friendly repartee with her immediate supervisors had anything to do with
her success so far.

A few months ago, Imani learned her division would be getting a new supervisor, Sophie.
Sophie transferred to the division from a similar position in another subsidiary of the
company because of her proven talent for organizing and improving the efficiency of
operations there. A no-nonsense type of manager, Sophie was experienced and determined to
be successful in this assignment as well. Imani knew from Sophie’s reputation that her
success had everything to do with hard work and a commitment to make sure everyone else
was working just as hard.

On the day Sophie assumed her responsibilities as the new division manager, the company
held a reception for her to meet the employees. At the reception, Sophie circulated throughout
the room, introducing herself to people and asking each of them if they had any suggestions
that would make the section a better place to work. When she approached Imani, Imani
decided to let her know what was bothering her.

“I don’t want to make waves or anything, but one thing I’ve noticed happening recently is
some people seem to gain promotions and are given opportunities to work overtime based on
who likes them and not on the quality of their work,” Imani told her. She quickly continued.
“It’s not that people here don’t work hard or anything. It’s just that I noticed there might be
some favoritism going on in some of the major personnel decisions.”

Sophie looked concerned but smiled at Imani. “Thank you for telling me, Imani. I assure you
I will do everything in my power to make sure this problem does not continue. This kind of
thing has no place in the team I’m going to lead.”

The next day, Sophie requested Imani meet with her. As Imani entered the conference room,
Sophie looked her straight in the face and said, “I will not tolerate individuals in this
organization who are not team players. Yesterday afternoon you led me to believe there are
people in this office who are not acting in the best interests of the company, and I want to
know who they are. These people have no place in this division.”

Imani was stunned. She did not want to hurt anyone. She just wanted to express her concerns
in the hopes cerain practices would change.

When she did not answer right away, Sophie looked at her with annoyance. “Look,” she said,
“I want you to tell me the names of the managers you were referring to now, and keep me
informed if you see anyone hurting this company. If you don’t, then I have to assume maybe
you’re part of the problems around here.”

9
Imani tried to explain. “I’m sorry,” she said. “I didn’t want to implicate anyone in particular.
I just wanted to alert you to some concerns I’ve been having.”

Sophie cut Imani off before she could continue. “Imani, you seem like a smart person. I’m
trying to create an example here. There are no shortcuts in this job. You work hard, or you
get out. I’ve got no room for slackers. Now once again, who are the managers you were
talking about?”

Imani’s heart raced in her chest and she felt close to tears. Sophie noticed because she sighed
exasperatedly, “Fine. Here’s what I’ll do. We’ll set up another meeting tomorrow and talk.
That’ll give you time to think about where your priorities lie.”

Imani sat at her desk, her work forgotten. She could not believe the mess she had gotten
herself into. If she told Sophie what she wanted to tell her, certain managers would get
disciplined or perhaps even fired. Of course, it would be her word against theirs, so Imani
knew she faced the risk of being thought of as someone who was just trying to make trouble.
At the very least, the managers she named would dislike her for reporting them. But if she
refused Sophie, she risked the ire of her new boss.

Questions

1. Describe the organizational structure of ABCO Corporation.

2. Do you feel Sophie’s leadership is effective in this situation?
3. Does Imani have any other alternatives than the two that she is considering?

10
Case 6

Stacy, a recently hired employee of a growing local CPA firm called Dewey, Cheatume, and
Howe, just passed all four parts of the CPA exam. The partners had high expectations for
Stacy because she scored near the top of her graduating class. As a result, Stacy was fast-
tracked and performed at an advanced level on some jobs. This was due, in part, to her
excellent skill set and also because of heavy firm turnover at the senior level.

Because of the long hours and her inexperience, Stacy started to make simple errors such as
not meeting time budgets. She began working off the clock because she did not want
management to know she had a hard time handling the workload. After a few months, she
casually mentioned the extra hours to a coworker, who told her working off the clock is
considered unethical, and the company has strict policies against it. Stacy was not only
embarrassed but also upset that the company never made this known to her—particularly
since she knew her immediate supervisor was aware of what she was doing. Stacy stopped
working off the clock and began to work more quickly to get things done in the expected time
frame.

A few weeks ago, Stacy learned her recent work on a tax return had to be redone because she
mistakenly charged the wrong client for the return. Enzo, one of the partners, publicly
reprimanded her by saying, “Next time it’s coming out of your paycheck.”

Later that same week, as Stacy helped interview a candidate for one of the open accounting
positions, she accidentally chipped the glass table in the conference room. When Enzo heard
about it, he said, “You’ll need to speak to the secretary and get this repaired on your dime.”

Over the following months, the firm continued to experience high turnover rates. It became
so problematic that the senior board requested a psychologist interview all staff members.
When Stacy was interviewed, she described the poor treatment of employees and
unreasonable expectations. Apparently, other employees had the same complaint. The
resulting report from
the consultant pointed toward numerous management problems at the company. Shortly
thereafter, the partners responded in a way the staff did not expect: They took the report
personally. As a result, rumors began to surface that the firm was going to go up for sale.
Still, the interviews for staff positions continued. One Monday morning, a memo surfaced
stating that all staff doing interviews for new hires were to “present the firm in a positive and
favorable manner.” Stacy was one of those staff members conducting the interviews.

Stacy did not know how to portray the firm in a positive manner when she was so miserable.
She particularly disliked Enzo. It seemed to Stacy that Enzo made it his mission to torment
her by criticizing her every move. He hovered around her desk and made comments about
making sure not to mess up again.

After getting advice from one of her coworkers, Stacy decided to approach Enzo about his
behavior. He did not take it well.

“Look, if you think I’m being too hard on you, then maybe you should just leave,” Enzo
responded. “It’s obvious you are not cut out for this business.” Enzo continued to berate
Stacy for her “shoddy” work.

11
“If you want to make it in this business, you have to know when to pick your fights. Me, I’m
not in the habit of losing,” Enzo said as he walked off in a huff.

The next day, Stacy was to interview someone for a lower-level accounting position. As she
walked down the hallway, Enzo approached her.

“I hear you’re going to be interviewing a new candidate today. Just remember, make this
company look good. No whining about your bad work experience.”

Stacy contained her anger when she entered the room and sat down in front of the candidate.
She did her best to act professional and stifle her emotions. The real dilemma came when the
candidate asked about the firm’s culture and how Stacy personally liked working there. She
swallowed. She did not know how to sugarcoat her answer without making it an outright lie.

Questions

1. Describe the deficiencies in ethical leadership at Stacy’s firm.

2. What type of conflict management style does Enzo have? Are there more constructive
ways for him to handle conflicts with employees?

3. Describe the alternatives Stacy has in order to answer the candidate’s question and list the
advantages and disadvantages of each.

12