Cases in Business Ethics
Preparing SCU students for the ethical challenges of a career in business and fostering a broad community of ethical support both on campus and in the working world. These cases were written by Santa Clara University seniors Alexis Babb, Saayeli Mukherji, Amanda Nelson, and Noah Rickling as part of their work as Hackworth Fellows in Business Ethics at the Markkula Center for Applied Ethics.
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Jenny recently completed her master’s degree and was extremely excited to be hired for her dream job working for the local county government. During her first year, she began to notice that funds from grants were being mismanaged and misallocated. Some of her coworkers were also using county-owned materials, including cars, for personal business.
However, Jenny was most shocked by the hiring practices she witnessed at the office. Prospective applicants were supposed to take exams that were proctored by government employees. The results of these exams determined whether or not the applicants were hired and what they were hired for. Jenny began to notice that the proctors were allowing applicants to cheat on the tests because the applicants had already been chosen for the job. Many of these pre-chosen applicants were friends of current employees.
Jenny reported what she witnessed to Matt, the department’s business manager, who was second-in-command to the department head. Matt told her, “You heard nothing, you saw nothing, you say nothing.” Jenny was absolutely shocked; not only by the corruption, but that it was deliberately being swept under the rug.
Jenny felt trapped. She really needed the job to pay off loans from graduate school, and she loved the actual content of the work she was doing. She was also concerned that it would look bad to leave her first job out of school in less than a year, as well as tarnish future chances to work in government. On the other hand, she felt extremely uncomfortable in her work environment due to the culture of corruption.
What should Jenny do?
Will is an intern at a government engineering office where he works within a team of four other interns; they all report to one primary boss, Jim. Will notices that Jim has drastically different approaches in dealing with male and female interns. He often sends Will and his fellow male interns on faraway projects or tedious tasks that he never assigns to the only female intern, Meghan. On her part, Meghan is also unhappy with this extra attention as she only gets in-office engineering projects working alone with Jim and no experience of being in the field. As a prestigious conference approaches, Jim predictably selects Meghan as a representative for the office without even informing the other interns about the opportunity.
The interns collectively get a little more curious about Jim's background and realize that numerous sexual harassment cases have been filed against Jim in the past, though he has never been prosecuted. They are informed that these types of charges in government offices have to be followed with strict adherence to state policies including having an investigator ask the whole office specifics regarding the situation.
Despite the urgings of her teammates, Meghan is reluctant to file her own report as she does not want to confront Jim directly and an anonymous report would easily be traced to her. Fearing that the report will compromise her prospects at full-time employment at the office, she tells Will that she will just deal with it for the rest of the internship: “It's only another three months anyways.”
What should Will do?
Posted June 2013
Annie has been recently hired full time at a major tech company where she interned for two summers during her college career. Annie loves her job and has established many strong relationships with her co-workers over the time she has worked there. The company encourages the interns and new hires to interact with VPs and upper management in order to create an open and friendly atmosphere.
During her time as an intern, Annie began to notice that one of the VPs paid her extra attention. When he was around he would always make an extra effort to stop by Annie's cubicle and chat: something he did not do with any of the other interns. He reached out to her over social networking sites and even invited her to a gathering at his house. Some of her co-workers began to make offhand comments to Annie about the extra attention.
Now that she was in a full time position, Annie began to dread that she would soon have to work with this VP directly. While he has not done or said anything explicitly inappropriate, the extra attention—and the fact that her co-workers noticed it—made her very uncomfortable and undermined her concentration on work. When she was hired, she was told that she should always speak to her manager if she was uncomfortable or had issues with the work environment. While at the same time, she is afraid to come across like a tattletale since the VP hasn't explicitly done anything wrong.
What course of action should Annie take?
Posted June 2013
Lauren's first job after graduation from Santa Clara University was working as a quality engineer with a highly respected technology company. She had to monitor the manufacturing process and make sure that all products met customer specifications. Just three months into her position, the company booked a very large deal with a strategic customer, helping establish the company's dominance in the industry.
Specifically, Lauren's company was designing a device that would be integrated into another company's product. The customer contracted out this work because they were experiencing rapid growth and cannot meet demand otherwise. They picked Lauren's company because of its good reputation and fast turnaround time. Lauren's role was to test the new device and make sure it met technical and environmental specifications, particularly functionality under extreme conditions, such as high humidity.
The test results showed that the products did not meet the quality standards agreed upon, but only by a very small margin. Her general manager instructed her to push it through anyway, stating that the risk of failure was not great enough to delay mass production. Moreover, the likelihood of the product ever being placed in such extreme situations was so small that the manager did not feel jeopardizing the contract was worth it.
Lauren spoke to her immediate boss, who worked under her general manager, and he also advocated pushing the product through to production. She was faced with the choice of ignoring company protocols or going against management. Sweeping the problem under the rug would require Lauren to sign off on a report that she knew to be fraudulent. She also knew that if she went to upper management her working relationships with her immediate bosses would be strained, maybe even preventing her success in the company. Not to mention, the company would have to delay production and possibly lose the contract.
What should Lauren Do?
Ian is Founder and CEO of a non-profit organization that helps low-income high school students prepare for higher education. He founded the organization shortly after college, and it is currently on the cusp of a major breakthrough. But like many nonprofits, the funding necessary to fuel that growth is lacking. Ian's organization is applying to a research foundation that could promise millions of dollars in funding. However, before Ian can apply, the foundation requires a formal evaluation of the group's organizational success, which must be conducted by a third party.
The foundation requires one of the following experiments:
1) Randomized control experiment: This type of experiment is the most scientifically valid because it allows the greatest reliability of statistical estimates of treatment effects. In the case of Ian's organization, half of a group of eligible students would be randomly selected to do the college prep program while the other half not do the program but would still be tracked. If Ian selects this method, his group would receive significantly more funding because the method is more "scientifically valid.” On the other hand, this poses an ethical dilemma because it would involve actively withholding services from half of the eligible students who would otherwise be selected.
2) Quasi experiment: This type of experiment is an observation-based study that measures the causal impact of an intervention on a target population. It does not require random assignment of students into treatment and control groups. All the students at a partner school would be admitted to the program, and the experiment results and statistics would be compared to historical averages of the school district, mitigating the ethical concerns raises in the randomized control experiment. However, if Ian selects this option, there will be less funding available for the program, negatively affecting the number of students that the program can reach in the future.
What should Ian do?
Megan was working as a summer intern at a small Silicon Valley company. She had interned at the company the year before and was happy to return. Her job was to review, revise, and create documents that outlined key department processes. Megan had worked in the department and reported to the same manager, Cindy, as the previous summer. Cindy was a "big-picture" manager, while Megan considered herself more detail-oriented. Despite this difference, Megan and Cindy got along well and had a good working relationship.
Towards the end of the summer, Megan was tasked with creating a document that described how the company renews client contracts and obtains quotes for customers. Although parts of the process had been documented elsewhere, Megan had to outline the extensive process in one document because various teams in the company referred to it on a frequent basis. For example, Megan's manager, Cindy, used this particular renewal process document as a training guide for new employees.
In order to successfully complete her assignment, Megan spent a significant amount of time communicating with Sarah, a company manager based in Ireland. In fact, Sarah's team managed the renewal process that Megan was working to document, so Sarah was quite familiar with how the process worked. During this phase of the project, Cindy made it clear to Megan that she did not work well with Sarah and did not appreciate her work style.
Megan began creating her report, once completed, sent it on to Cindy, Sarah, and other managers for feedback and revisions. Not before long, Megan found herself in the middle of each manager's differing opinion. Cindy felt the document should be written at a “higher level,” and did not want to confuse new trainees with “once in a blue moon” scenarios that could be handled on a case-by-case basis. Sarah, on the other hand, wanted every detail and discrepancy of the process included so her team could use it as a comprehensive reference guide. During the editing process, Cindy would visit Megan's desk, wanting to gossip about her experience working with Sarah and "how awful the project must be" for Megan.
Megan was conflicted: she wanted to remain on good terms with her manager, Cindy, and it was clear that there was a great deal of tension between her and Sarah. At the same time, she felt that Sarah's opinion was more representative of what the company actually needed from the final document.
What should Megan do?
posted June 2013
Frank, a recent Santa Clara University graduate, recently landed a sales job for a Silicon Valley tech company. He is part of a team that qualifies sales opportunities. After talking to potential customers, Frank decides whether or not they are quality leads. If they are, he refers them to an account executive (AE) to close the deal, saving the company precious time in money in avoiding low probability contracts. If not, he will not pass them on and the sales opportunity is not pursued. Account executives expect prescreening of potential leads in order to maximize their time. Each referral Frank passes to the AE is added to a tally that counts toward his target monthly total, and there is a monetary bonus for all sales staff members who reach their monthly quota.
This creates some controversy among Frank's team members, who are faced with conflicting incentives; pass on low quality leads to hit your quota, or focus on quality and risk missing the monthly target. The pressure to "hit your number" comes from both the monetary incentive and management, who benefit when their sales team hits their quotas. To further complicate matters, since each sales representative self-reports how many leads they passed along, they can inflate their numbers in order to reach the monthly target goal: a common occurrence among Frank's coworkers.
As Frank tries to adjust to his new job, he is finding it difficult to balance his own moral compass with the pressure of hitting his monthly number.
How would you handle the dilemma between hitting the quota and submitting quality work you stand behind? What factors would weigh into your decision? What solutions would best solve this dilemma?
posted June 2013
Ben is a recent Santa Clara University graduate who has just started his first job in the finance department of a publicly traded Silicon Valley company. One of his main responsibilities is to create and distribute extensive Microsoft Excel reports that analyze costs and revenues for different divisions. Ben sends completed reports to his direct supervisor and the CFO. The CFO then uses the information to create the company's financial reports, in addition to the strategy and forecasting formulation.
While Ben considers himself to be detailed-oriented, the complicated nature of and the sheer volume of data sometimes overwhelm him, which is exacerbated by their strict deadlines. While Ben works hard to prepare the reports as accurately as possible, he often finds errors after he has submitted his final report. When the errors are critical, he revises the reports and resends them. However, some of the errors are minor, in Ben's estimation, and he doubts that the CFO will use or look at these figures. Ben is ambitious and wants to be promoted, but worries that if he frequently sends out revised reports he will appear unreliable and unqualified. At the same time, the potential consequences from inaccurate financial reports put the company, the CFO and CEO, and Ben himself at risk.
What actions should Ben take when he catches a mistake? Is he obligated to report every error, particularly since he works for a publicly traded company? Is there such a thing as a small error in this context?
Posted June 2013
Edward is CEO of a nonprofit startup. He hired Charlie, a high school friend, last summer, to stabilize the company while Edward finished his degree. Charlie is from a prominent family, with a powerful network that has raised a large amount of money for Edward's nonprofit. Both Edward and Charlie are committed to the mission of helping low-income students go to college, and with this shared vision they get along well.
Although Charlie is great at strategy formulation, Edward finds that he is poor at executing plans and taking action. Now that Edward is graduating, he wants to take the nonprofit to the next level, but is concerned about Charlie's lack of execution will hold the company back. On the other hand, Charlie made a major contribution keeping the company afloat the past year, in addition to his family's contributions, not to mention the two have been friends for some time now.
What should Edward do?
Posted June 2013
After majoring in accounting at Santa Clara University, Scott was hired as an associate auditor for a Bay Area accounting firm. He is currently auditing a local company's financial statements, a project he's been working on for about two months. The senior associate responsible for tracking billable hours has been pressuring Scott and other associates to report fewer hours than they actually worked. The senior associate would appear more successful if his team reported fewer hours, and the firm would also be better positioned to win similar contracts in the future. Scott is salaried, so billable hours don't affect his compensation directly. However, he knows that underreporting billable hours is against company policy.
In accounting firms, offering low billable hours is attractive to potential customers, as the bid with the lowest overall cost will get the business. At the start of any bid, the client agrees to pay a fee for the company's services, including all staff time. If the employees report fewer hours, the company looks more attractive and will more likely get the contract.
Pressure to report fewer billable hours comes from the "utilization metric" used to determine how efficiently an employee is working. Employees who report fewer hours than their peers will be seen as more efficient, due to a higher utilization rate. Scott remembers a case where one of his colleagues was promoted, partially because of his extremely high utilization rate. He knows that if he were to clock all of his actual hours worked, he would be at a disadvantage for the year-end performance review.
If Scott decides to clock all his billable hours per company policy, he risks losing the competitive edge with his colleagues, nearly all of which participate in under billing. Scott is uncomfortable with the practice, but fears his options are limited.
What should Scott Do?
Posted June 2013