Best Buy CEO Chairman Relationship - Research Paper Example

?The of the The of the The The “CEO probe forces Best Buy founder out as chairman” Brief Facts and Case Overview In an article written by Dorfman and Geller and published online in the Yahoo News, “CEO Probe Forces Best Buy Founder out as Chairman”, the author presented pertinent issues relative to the failure of the founder and CEO of Best Buy, Richard Schulze, to disclose an improper relationship. Apparently, the previous CEO, Brian Dunn, 51 years of age and married, was reported to have been observed and found to have had several social meetings, calls, text messages and other innuendos with a 29-year old female employee. As disclosed, Schulze was “notified about the allegations of inappropriate behavior in December and confronted Dunn, who denied any inappropriate conduct or romantic relationship with the employee” (Dorfman and Geller par. 17). As expounded, the reported improper relationship, despite the allegations being denied by both Dunn and the employee, has caused a damaged morale within the organization, supposed distractions, and speculations on the true nature of the relationship. Issues Being Addressed The issues being addressed in this case are violations of transparency, violations of conformity to ethical and moral standards, and failures to disclose critical information to the Board of Directors, which could assist in addressing the issues in a more professional manner consistent with the standards posed under corporate social responsibility. The World Business Council for Sustainable Development (WBCSD) has defined corporate social responsibility (CSR) as “the continuing commitment by business to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large" (WBCSD par. 4). Obviously, the violations and issues noted from the case at Best Buys undermined ‘improving the quality of life of the workforce’ due to causing apparent distractions and speculations. Likewise, the improper relationship of Dunn, a married man, with a 29-year old employee caused conflicts in the marital relationship with Dunn’s spouse and the relationship with his children. The relationship is deemed as violating the standards of ethics and moral codes. The situation was exacerbated by Schulze’s failure to disclose the investigations made by him to the Board based on previous reports, which was an apparent violation of the rules of transparency and the rules on partnering to stop misconduct (Best Buy, n.d.). Rules According to the report written by Clifford (2012) and published in The New York Times, the rules and company policies on adherence to ethical and moral codes of conduct have apparently been applied to all employees except the CEO. As cited, “the C.E.O.’s relationship with this employee led some employees to question senior management’s commitment to company policy and the ethical principles the company champions” (Clifford par. 17). Best Buy has a Code of Business Ethics that explicitly states rules on responsibility to each other, responsibility to shareholders, and responsibility to the company’s business associates – the areas where some violations have been noted. Analysis Upon closer examination of Best Buy Code of Business Ethics, the violations noted were on the rules pertaining to the following: (1) responsibility to each other, particularly honoring our differences; (2) responsibility to our business associates, particularly conflict of interest; (3) gift giving; (4) partnering to stop conduct. The Code of Business Ethics stipulated that “one of our values is to show respect, humility and integrity. Creating a positive work environment supports this value” (Best Buy 14). The actions of Dunn and the female employee have been reported to cause conflicts in the work environment that apparently led to low morale. Likewise, the inability of Schulze to disclose the information immediately was a weakness on his character, pursuant to the Virtue Approach. Being the founder of Best Buy, he, among others, should have the paramount ethical and social responsibility to partner with others to stop the noted misconduct. Under conflict of interest, the Code of Business Ethics stipulated that employees are required to disclose or avoid any activity or interest that may be regarded as a possible conflict with Best Buy’s interests (Best Buy 36). The conflict of interests in this situation falls under “forming social relationships that lead to a weakness, or the appearance of weakness, in the Company’s system of internal controls” (Best Buy 37), on the part of Dunn; and on the part of Schulz, the conflict of interest is protecting his CEO at the expense of the moral and adherence to the code of ethics of the entire organization. Rules of Fairness and Justice, as well as Virtues should have prevailed. On the part of Schulze, he failed to disclose these pieces of information to the Board, which is a violation of partnering to stop misconduct. His action also violates the rules on virtues, fairness and justice, as abovementioned. As explicitly noted, “report illegal or unethical conduct to an appropriate Best Buy representative. If you do not do so, the unreported activity could harm you, Best Buy, and other employees. Failure to report suspected violations may also lead to disciplinary action” (Best Buy 7). Conclusions Facts of the Decisions Made The news report has already revealed that both Dunn and Schulze resigned from their positions as a result of the internal investigations of the allegations. It was revealed that Schulze “understands and accepts the findings of the Audit Committee” (Dorfman and Geller par. 3). In this regard, the company has identified a replacement for Schulze in the person of Hatim Tyabji, 67, reportedly the chairman and CEO of a wireless network technology company, Bytemobile, and the head of Best Buy's audit committee (Dorfman and Geller). Likewise, board member G. Mike Mikan was reported to be acting as interim CEO, replacing Dunn. Personal Opinion One strongly believes that the decisions were consistent with the CURFV approaches, specifically the Fairness and Justice Approach, as well as the Virtue Approach. The Fairness and Justice Approach was manifested in arriving at the decision that considers fairness to the employees and stakeholders in the organization and justice to those who were grossly affected (the family of Dunn, most especially). This approach is most effective in the situation since the organization, especially through the decision of the directors, have evaluated that the policies and procedures that have been presented under the organization’s Code of Business Ethics apply to all members, including the CEO and even the directors. As such, the action of Schulz is also appropriate since he exhibited that he is really a good man and his character requires that he should also follow the rules indicated in their organization’s Code of Business Ethics. His inability to disclose the incident could be unintentional given that he exerted to find out directly from Dunn if the allegations were true. And, since he believed Dunn that nothing was indeed going on between them and the female employee, he must have believed, in good faith, that there is no need to reveal the matter to the board. The Virtue Approach was likewise applied in terms of Schulze deciding to resign and accept that his actions were erroneous based on the code of ethics and his character, experience and responsibilities as founder of the organization. As explained, the very nature of his character was good and just, as evident from the Code of Busines Ethics that he has set to be designed and followed in his organization. His actions of resigning is thus an example of being honorable and consistent with the moral and ethical standards expected of him as the founder. Through being a role model, his action would set the example for all that anyone, even the founder or the CEO, should be subject to the policies, procedures and rules set by the Code of Business Ethics so that their behavior would be governed by these standards and no one would be exempt from them. Overall Summary and Conclusions These are the most appropriate courses of action given the violations noted and what has transpired. The Code of Business Ethics of Best Buy is clear and explicit as regards rules, regulations, policies and procedures governing ethics and social responsibilty. As emphasized, “Morningstar analyst R.J. Hottovy said, "Taking a clean slate and beginning with not only a new director, chairman but also with a new CEO is just what the company needed"” (Dorfman and Geller par. 13). The decision taken by the Board of Directors on the case is crucial to regain the confidence and morale of the workers and various stakeholders within the organization (including customers, investors, and shareholders). The action take would indicate that this organization does not conform to unethical behavior and those improper action that is detrimental to the stakeholders, including the image that is exudes to the society. Works Cited Best Buy. “Code of Business Ethics.” phx.corporate. n.d. Web. 26 July 2012. < phx.corporate-ir.net/External.File?item...t=1> Clifford, S. “Chairman of Best Buy Resigns After an Internal Audit”. New Yourk Times. New York Times newspaper. 14 May 2012. Web. 26 July 2012. Dorfman, B., and M. Geller. “CEO Probe Forces Best Buy Founder out as Chairman.” News.Yahoo. 14 May 2012. Web. 26 July 2012. World Business Council for Sustainable Development (WBCSD). “Corporate Social Responsibility (CSR).” wbcsd.org. n.d. Web. 26 July 2012. Read More