Management Chapter 2 Brand One Fact Uses Gifts Get Favors

Chapter Two

Ethics and the Law

A MANAGER’S DILEMMA: PUTTING IT INTO PRACTICE

Quantifying the Value of Life

Issue Presented: What factors should the CEO of a corporation consider in offering to pay

victims damages prior to the end of a trial?

This question is based on the dilemma faced by Swissair after one of its planes crashed

off the coast of Canada in 1998. See Margaret A. Jacobs, Swissair Crash Tests Relations with

Insurers, Wall St. J., Feb. 15, 2000, at B1. Despite the concerns of its insurers, Swissair offered

Questions and Case Problems

Question 1

Issue Presented: How should a female employee respond to her male boss’s insinuation that

he is inviting her to a client meeting for her sex appeal rather than her intelligence and

knowledge? Does this constitute illegal sex discrimination? How should the head of human

resources respond?

Allen Scot, Christine Bancroft’s boss, is clearly acting unethically by telling Christine

that he wants her to attend a client meeting for her sex appeal rather than her intelligence and

knowledge of advertising. His behavior, while disrespectful, probably is not sufficiently severe

This situation puts Christine Bancroft in the unfortunate position of having to decide

how to react to her boss’s behavior. If her boss knew how badly she wanted to work with

clients, maybe he was giving her the opportunity she seemed to want at any cost. There is no

Christine must, however, consider the long-term ramifications of condoning such

unethical behavior. If she knows her boss will behave like that to her, then he most certainly

will act the same way toward other female employees. If she can prevent other female

employees from experiencing such offensive behavior, she should probably report his behavior

to HR. Furthermore, there is a slippery slope argument here: if Christine shows her boss that

she is willing to accept this small, disrespectful situation is she inadvertently giving him the

okay to make further improper suggestions? He is not asking for sexual favors in return for a

promotion this time, but if he gets away with this behavior, will he be more likely to use female

employees in even more degrading ways in the future?

Christine has worked too hard to get her Northwestern MBA degree and her position at

Scot Wayne More to be degraded and used for her looks. If Christine does not stand up for

herself this time, it is likely that her boss will never respect her for her intelligence and

Alternatively, Christine could report the incident to HR, and perhaps ask to remain

anonymous if that will ease her mind about reporting her boss. HR can advise her on the best

course of action, encourage her to report future problems, and talk to her boss in her place. If

Christine’s boss makes any more comments like this one, she will have established a pattern of

behavior on the record by reporting this incident. HR should certainly speak with her boss and

remind him that this behavior is inappropriate and that it is illegal to retaliate against Christine

As a beautiful woman, Christine should also recognize her obligation to act responsibly

and professionally as well. If she does not want to be treated this way, and wants to be

sponsored functions, knowing that this type of situation could result.

This hypothetical is adapted from an example provided in Joseph L. Badaracco, Defining

Moments: When Managers Must Choose Between Right and Right (1997), that involved race, rather

than gender. A young African American investment banker named Lewis was invited to a

client meeting simply because of his skin color, and felt awkward about the situation. Lewis

was so conflicted that he made a list of pros and cons about whether or not to attend the

Question 2

Issue Presented: What are the ethical and economic factors that play into raising prices in

times of disaster?

Raising prices during a disaster is not always unethical – sometimes higher prices

provide an incentive for others to rush to send resources to disaster-stricken areas, and

sometimes higher prices give citizens an incentive to avoid overusing scarce resources.

When a store raises prices for certain goods before a storm, the store is essentially

predicting the need for disaster relief and profiting from the destruction a storm brings.

Although the practice may be frowned upon, is it necessarily wrong? Don’t insurance

companies operate the same way?

Question 3

Issue Presented: Is it ever ethical for an employee of a company to accept gifts from and

individual or firm that does business or wishes to do business with that company? If so,

under what circumstances?

Zandra Quartney should decline the tickets to the Super Bowl offered to her by the

makers of Brand One. Quartney is ethically obliged to decline any gift if her business judgment

might be affected by such a gift, or if there would even be the appearance that her judgment

might be affected. Even small gestures, such as dinner, should be accepted only if there are no

There is sometimes a fine line between business gifts and bribes. A bribe implies a clear-

cut intention to win someone’s favor. To decide whether the tickets are an out-and-out bribe, we

would have to know more about the specific motivations of and information possessed by

Brand One. If Brand One often showers significant gifts upon individuals who can make

decisions favorable to the company, then it may be fair to say that Brand One in fact uses gifts to

get favors. Such a policy would constitute a form of bribery.

Question 4

Issue Presented: Is it ethical for an employee of a company to accept a gift from a firm whose

brand she plans to cut from her company’s line of products?

Under no circumstances should Quartney accept the tickets to the Super Bowl. Even if

Brand One is clearly the line that she should cut, it is simply bad business and bad ethics to

Question 5

Issue Presented: Is it ethical for a consultant to gather information from a company without

revealing her association with its direct competitor?

Portoff clearly cannot lie about her employer when gathering data; to do so would be

fraud. She also should not solicit trade secrets or encourage others to violate any nondisclosure

agreements; otherwise, she might violate the Uniform Trade Secrets Act or be liable for

Question 6

Issues Presented: May an employee accept an expensive prize as a result of participation in a

company-sponsored event?

Although Wu was clearly meant to be the recipient of the prize under the terms of the

contest, she has an ethical obligation to inform her supervisor about the prize and offer it to her

employer. The gift is extremely valuable, and she went to the event as a company

Question 7

Issues Presented: (a) Would it be ethical (or legal) to send a “friend” or “follow” request to a

subordinate employee for the sole purpose of getting access to that person’s “private” page?

(b) Would it be ethical (or legal) to ask applicants to open their pages during a job interview?

(c) If a manger finds information on a social networking site that may warrant disciplinary

action, such as abusive comments about fellow employees or threats against the safety of the

workplace, should the manager act on it in his or her managerial capacity?

(a) An employer or manager certainly has the right to “friend” employees. Accepting an

employer’s “friend” request, may have some unintended consequences, however.

The Genetic Information Nondiscrimination Act of 2008 (GINA) protects job applicants

and employees against discrimination based on their genetic information. However, GINA

includes an inadvertent acquisition exception to the general prohibition when a “manager,

(b) Asking an applicant to open a personal social network page strikes many as a

violation of privacy. Although certain states protect private employees from privacy violations,

the U.S. Constitution only protects against violations by state actors, such as a government

employer. Even if asking applicants to open their social network pages does not violate

constitutional guarantees of privacy, it may cause ill will. For example,

(c) Under these circumstances, not firing an abusive employee may place the employer

at risk of being found that she negligently retained an employee. In Blakey v. Continental Airlines,

164 N.J. 38 (2000), the New Jersey Supreme Court found that an employer has the duty to

remedy a pattern of retaliatory harassment directed at an employee using a work-related forum,

if the employer has notice of it. In Blakey, an employee had filed a charge of sexual

Question 8

Issue Presented: What ethical and business issues should a corporation, its CEO, and directors

consider when setting the salaries for the different types of workers it employs?

This question raises the issue of what ethical obligation a company has to pay a livable

wage. In an article entitled “Silicon Valley’s Dirty Side” in the April 18, 2000 issue of The

Standard (self-described “Intelligence for the Internet Economy”), author Gary Rivlin noted that

contractors to pay a livable wage.

CEOs in the United States averaged annual compensation of $10.5 million in 2007, 344

times the pay of typical American workers. It is much lower in Japan. The average executive’s

pay increased 36 percent from 1997 to 2000 while the average factory employee’s salary