How Should Galvatrens Strengthen Its System for Uncovering Misconduct - Case Study Example

BUSINESS ETHICS-GALVATRENS CASE STUDY How should Galvatrens strengthen its system for uncovering misconduct - and what roles should the board and management play? Student’s name Course title Date In the article ‘Why Didn’t we Know’, Hasson (2007, 33) presents a hypothetical case in which a whistle-blower files a suit against a company, Galvatrens, owing to wrongful termination. Subsequently, the lawsuit elicits massive discussions pertaining to the procedure for revealing misconduct within the company. Hence, the principal dilemma revolves around determining the means that the company ought to adopt to strengthen the procedure as well as the roles that the management and board should play. Summary A company, Galvatrens, is taken to court by an employee who claims to have been wrongfully dismissed. The ex-divisional sales administrator, Mike Fields, alleges that he faced wrongful dismissal due to his attempt to report some unlawful scheme that a colleague had designed with the aim of inflating sales. Even though Mike had left a private voice mail to the company’s COO on the matter, the COO did not follow up on the issue but rather he had referred it to Mike’s boss, Terry Samples. Consequently, Mike’s boss that his performance was not as good as required, thus he had to either accept to be demoted and transferred to Indianapolis or leave the company. Terry knew that Mike was divorced and was assuming custody of his children, therefore it was hard for him to leave town. Hasson highlights the circumstances allied to the suspected incident by displaying the role assumed by Terry, the leading vice president of sales in dismissal of the employee as well as the failure of Harry Mart, the chief operations officer to commit adequate attention to the problem. Further, the article discusses the strategies that the present CEO employs in strengthening Galvatren’s channels endeavored at reporting misconduct. Galvatren’s CEO, Chip Chip Brownlee, had embarked on initiatives some time back to upgrade the procedures that Galvatren would use to solve conflicts and uncover misconduct. The CEOs decision emanated from the passage of the Sarbanes-Oxley Act as well as the subsequent opposition, which emerged from the long-standing leading vice president of HR who held back related training. In collaboration with the general counsel, Chip had set up various changes, which included a novel open-door policy aimed at airing workplace concerns. Even though the policy ascertained that employees were free to go to their immediate supervisors, it did emphasize that they had the freedom to seek assistance from any manager within any organizational level. Besides, the policy incorporated a prohibition on vengeance against whistle-blowers. Manifest in the article are commentaries on the significance of ombudsman in disclosing the concerns pertaining to illegal or unethical conducts whilst maintaining confidentiality. Moreover, the article talks about the participation of the board members, predominantly the autonomous directors, within the ensuing investigations pertaining to the breakdown in the processes initially set to anonymously report unethical behavior. Four autonomous experts engage in a debate deliberating whether the management or board ought to be the ultimate authority aimed at managing ethical conduct. Ultimately, the article indicates that failure of the company to modify the insight that the termination of the employee was as a result of whistle-blowing, other people are unlikely to raise concerns of anticipated wrongdoing. Hence, the general board and Chip have an obligation to understand why merely a single person revealed the info pertaining to the sales scheme as well as why this person filed a lawsuit against the company. How should Galvatrens strengthen its system for uncovering misconduct - and what roles should the board and management play? The Galvatren’s case study draws attention to a major jeopardy within the company. Since organizational directors are facing massive legal and regulatory pressure presently, they are prone to losing vision of the necessity of a suitable border between their tasks and those of the management. Therefore, the board is likely to cross the boundary by acting to solve emerging problems rather than holding the management accountable for prospective solutions. Boards ought to require senior managers to devise plans that will enable them comply with rules such as those emanating from Sarbanes-Oxley, which demand adherence to moral obligations such as cultivating ethical behaviors. However, if the board holds the management liable, the board ought not to assume the role of creation and execution of these policies. The Galvatren’s CEO, Chip Brownlee and the general counsel, Syd Baydown, portray their commitment to reform the best company’s best practices. Accordingly, they have explicitly acknowledged their responsibilities to handle the current situation. No evidence is manifest in regards to an invasive problem that is likely to rouse fundamental queries pertaining to their morals or the ethical culture of Galvatren. The channel-stuffing system remained limited in capacity, thus it never set in motion. The system’s architect, Greg Wilson and Terry Samples, his boss, who did not reveal the scheme are not within the company anymore. Even though the company’s COO, Harry Mart and the former senior vice president of sales, Terry did not behave properly, their actions seemed to be segregated management lapses as opposed to models of dreadful behavior. Besides, the autonomous directors ought not to interfere with issues of management that being addressed by the CEO. Instead, the board ought to assume responsibility in evaluating the manner in which the general counsel and the CEO are dealing with the collapse of the policies concerning whistle-blower complaints as well as how they are dealing with Mike’s lawsuit. The management ought to assume two principal priorities. To begin with, the CEO should ensure that the COO does not overlook complaints of this genre. Indeed, Chip informs Harry that incase of occurrence of another whistle-blower incidence, they should follow the processes outlined by the corporate policy (Hasson 2007, 36). Furthermore, the senior managers should embrace the responsibility of making appropriate decisions on how to deal with complaint that Mike, the genuine whistleblower filed. In spite of Terry’s justifications in demoting Mike owing to dwindle in performance, Mike is likely to receive compensation, as the entire affair was not handled appropriately. However, these comprise of management issues, and thus the board, although should not be directly involved, ought to monitor the manner in which they are handled. As deontological ethics ascertains, people should not be treated as means but they deserve respect (Mizzoni 2009, 5). In this perspective, Terry seems to have defiled the deontological ethics by demoting Mike on the basis of poor performance. Otherwise, Terry should have respected Mike by taking time to understand his situation. The concerns of the independent directors pertaining to the COO are understandable. In the contemporary business world, an organization is not allowed to appoint senior executives who do not totally commit to enhancing ethical practices (Quatro and Sims 2008, 133). As in the case of Galvatrens, the implications of improper conducts tend to be catastrophic. This is contrary to utilitarianism, which does judge the moral value emanating from an act (O’Donohue and Ferguson 2003, 5). Nevertheless, Arch Carter, the lead director seems to have crossed the line amid his responsibilities and those of the management by ordering a retreat without conferring with the CEO. A retreat represents an extraordinary occurrence, principally if the chief participants are outside directors. The major risk arises where the organization’s employees and stakeholders may wonder if the board has the confidence from the CEO. In this context, utilitarianism ethics applies. Utilitarianism ethics stipulates adoption of actions that create the utmost happiness for the greatest number (Gensler, Spurgin and Swindal 2004, 202). Hence, the retreat appeared unethical since it failed to produce utmost happiness to the majority. Moreover, major queries were likely to arise among the employees and the stakeholders, thus implying that the event did not cause pleasure. As opposed to embarking on the retreat, the directors would have asked Chip to ensure that all people abided by the code of conduct. Moreover, the directors would have endorsed the actions of the CEO to strengthen conformity to ethical practices. This is the only means to ensure all people within the company are satisfied, and thus attain utmost pleasure. The board of directors as well as the management at Galvatrens should form the definitive authority that administers ethics. In this context, the board and management should be aggressive toward ensuring that these three things are clear to every person within the company. To begin with, they should ensure that every individual in the company understands that ethics matter. Moreover, ensure that all managers and employees abide by the code of conduct of the company. Eventually, the board and management should assume responsibility of overseeing ethics inside the company. The strategies for overseeing ethics were not clearly spelled out in Galvatrens. However, for Galvatrens to uncover misconduct there is a prime requirement for the board and the management to form a special committee aimed at overseeing ethics. In this regard, the case of Mike Fields would have been easy to handle with such an ethics committee in place. For instance, the whistle-blowing actions needed not to be demeaned but rather valued. It is apparent that Mike needed to be rewarded as opposed to being punished for exposing unethical behaviors. According to deontological ethical theory, a person’s actions are judged based on their adherence to rules (Alavudeen, Rahman and Jayakumaran 2008, 43) as well as on the context of principle (Brinsfield 1998, 70). The chief concern is not the consequences but rather the actions. In respect to Mike, it is apparent that his actions did adhere to the ethical conducts. He made a rightful act by attempting to report some unlawful scheme that a colleague had designed with the aim of inflating sales. On the contrary, Terry seems to have breached deontological ethics since his conducts were not in consistent with ethical rules of behavior. Terry did threaten to Mike with a demotion as well as a transfer to Indianapolis alleging that his performance was not as good as required. On the contrary, Terry’s conduct was appropriate on the basis on utilitarian theory. Utilitarianism describes the rightfulness of an act based on its implications (Butler 2008, 5). Hence, from a utilitarianism point of view, Terry’s act was rightful as it was aimed at enhancing Mike’s performance. Indeed, continuity in poor performance would have resulted in reduced sales in the company. Similarly, Mike’s act appeared right as it aimed at rectifying a problem within the company’s sales. Galvatrens had embarked on measures to strengthen its system for uncovering misconduct. The company’s CEO, Chip Brownlee, had assumed efforts to upgrade Galvatren’s processes for solving conflicts and uncovering misconduct. In collaboration with the general counsel, they had launched various changes, which encompassed of a novel open-door policy aimed at airing workplace concerns. Whilst the policy persuaded employees to contact their direct supervisors, it stressed that they were free to contact any manager within any organizational level for aid. Furthermore, the policy incorporated a prohibition on reprisal against whistle-blowers. Nevertheless, with the channels in position, merely one individual stepped forward with info pertaining to the inflating sales, and even sued the company. In this context, it appears that the company failed to endow its employees with adequate training on the newly revised policy. Accordingly, this inadequate training and ineffective execution of the novel policy implied that the staff was not clear on their responsibilities and roles for handling as well as responding to alleged misconduct. The principal problems lay in virtue ethics, which deemed vital in the company. This theory defines what values are desired, whether they are right or wrong (Timmons 2002, 222). To embrace accepted values, an organization ought to change its culture. An appropriate culture enables an organization to devise means of revealing problems. However, Galvaterns lacked clear procedures that the management would embark on upon receiving complaints of misconduct. In regard to companies such as Galvatrens, line management is the most significant channel for elucidating problems. This form of management stresses the critical role played by an ombudsman. The ombudsman occurs as a neutral, informal, independent, and confidential contact point for managers and employees. The ombudsman would help maintain the virtue of openness within the company. This would be attainable via uncovering any organizational concerns whilst maintaining confidentiality. Furthermore, Galvatren’s fails to embrace a culture of free and open communication. This is manifest where the upper, middle, and lower managers appeared to communicate ineffectively as well as follow-up with suitable parties pertaining to misconduct complaint. For instance, it is perceptible that the whistle-blowers lack a formal means of communicating directly to independent directors. Moreover, the COO, Harry, did not partake in board discussions pertaining to the lawsuit. Therefore, the company ought to adopt a culture whereby they hold special board meetings subsequent to holding executive sessions of independent directors. This would make sure that all managers and board members are current on situations. Equally, this approach is likely to help Galvatrens reach a rational settlement with Mike without involving the court. To strengthen the system for uncovering misconduct, managers within an organization ought to learn about serious problems facing the organization. The principal means of learning about these problems is creating a culture that enables the organizational populace step forward and report any unacceptable conducts. However, many individuals are afraid of reporting misconducts due to fear of spoiling their affiliations outside and within the company, lack of convincing proof, and fear of retaliation. Nevertheless, a political arena of liberty, freedom, and voluntary association is likely to enhance freedom of reporting misconduct. In this context, libertarian ethics deems vital since it enhances justice. Libertarianism establishes that key moral conceptions are human rights requiring non-interference and respect (Smith 2002, 12). A vast majority of the employees and managers do not have the appropriate skills for coping with ethical dilemmas. This emanates where the organization has not laid down the right procedures for reporting or discussing unacceptable conducts. Line management proves to be the most significant approach for airing organizational problems. In this perspective, Galvatrens took an effectual step by raising an ethical CEO and instituting a code of conduct. Despite, of this great step, there emerged a need for the senior managers and the CEO to communicate openly and regularly the aspect of integrity with the people all through the company. By communicating the value of integrity to the people, the managers would ensure that individuals would not infringe on libertarian ethics by breaching other people’s right to liberty and freedom. Accordingly, Galvatrens ought to have an ombudsperson who adheres to the international organization’s principles of practice, and who has direct contact with the CEO and the board members. The employees would thus use this individual as an independent, informal, and confidential contact point. The ombudsman would aid in illuminating any concerns, predominantly those pertaining to illegal and unethical behaviors, without infringing on any persons rights. Bibliography Alavudeen, R., K. Rahman, and M. Jayakumaran. 2008. Professional Ethics and Human Values. New Delhi: Firewall Media. Brinsfield, J. (1998). 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