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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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  •  Caught in the Middle: Where Does Your Loyalty Lie?

    Cindy recently graduated from Santa Clara University and was working in a sales position in a growing tech company. She worked very closely with her team and had a good rapport with them. She was the only woman on the team, but she still felt at ease with her colleagues. Part of her job involved traveling across the country and going to meetings and events outside of work with her team and other sales people from different organizations.

    During certain non-customer, internal events, she noticed that some of her married co-workers were bringing women other than their wives. Although she was uncomfortable with the situation, she wanted to keep her distance so as not to become too directly involved with her co-workers and their personal decisions. She had knowledge of what was going on but didn't think it was her place to intervene.

    One day, at an office party, the wife of one of her co-workers approached her. She wanted to know exactly what was going on during these trips. Cindy was frustrated to be put in this situation by her co-workers and she didn't know what to say. Should she put herself in the middle of a coworker's marriage and tell the truth about the situation? Is there another option? She didn't want to damage the team and be looked at as an outsider. She knew that she was not involved at all in these behaviors, but she still felt very uneasy about the situation.

    How should Cindy react in this situation? Is it Cindy's place to step in and say anything, or should she stay out of the situation all together? With so many different loyalties, between her co-worker, her own values, her co-worker's wife, and her job, what is most important in this situation?

    Posted June 2013

  •  Protected Class: Externalities of Age Discrimination Safeguards

    Lindsey worked as a top manager at a struggling technology company in Silicon Valley. As part of a company wide initiative, she had the task of downsizing her department by a considerable margin. Among the most troubling decisions involved eliminating a position within her department's most productive teams: eight people for seven jobs. As she considered each team members'; contributions and merits, there were two employees whose performance reviews were far behind the rest of the team.

    Dianne was a 38-year-old woman, an employee at the company for 12 years, and an average performer. She worked hard and did a decent job overall, but failed to thrive at the company. She worked for a mediocre manager and Lindsey thought Diane's performance would improve if she worked for a more competent manager. Lindsey felt that Diane had more potential than Ron, but up until now it had not been realized.

    Ron was a 42-year-old male with tenure and experience in the firm similar to Diane. Like Diane, he was an average performer but was not a rising star in the organization. He did not show as much potential as Dianne. However, because Ron was over 40, he was considered a member of a "protected class," giving him special protections against discrimination based on age. If Lindsey fired him, he could, and most certainly would, sue the company with a claim that he was being let go because of age discrimination.

    Lindsey felt that Dianne was the slightly better candidate, given her potential to grow into a top contributor. On the other hand, eliminating Ron's position would expose the company to a lawsuit and the expenses associated with it, perhaps outweighing any benefit the company would gain by choosing Diane over Ron.

    What should Lindsey do?

  •  An Intern’s Dilemma: When You Disagree with Your Supervisor

    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

  •  Quality or Quantity: When Incentives Don’t Match Your Values

    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

  •  Startup Management: Friend or Liability?

    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

  •  Fraudulent Reporting: A Case in Accounting Ethics

    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

  •  Job Promotion: At What Cost?

    Dan is an up-and-coming district manager at Tradewell Bank, one of the largest commercial banks in the country. Dan reports directly to Robert, the regional manager, who also happens to be a close friend from high school. Robert has been at the company longer than Dan, but there is some talk within the company that his region's numbers have been falling behind.

    One afternoon, the bank's VP of Sales offers Dan a promotion to regional manager—Robert's job. To his dismay, Dan is told that Robert has not been similarly promoted, and instead Dan would be replacing Robert outright.

    Dan's been working ridiculous hours in surpassing expectations for his district, and certainly feels deserving of the promotion, but replacing his friend is the last thing he wants to do.

    What should Dan do?

    Posted June 2013