The Padding That Hurts - Case Study Example

Case Study: The Padding That Hurts Name: Institution: Date: Introduction In the current global market, market and industry competition has considerably increased. In this case, organisations have resulted into increased use and adoption of unique and innovative strategies to increase their overall competitiveness and market influence. In this regard, as Mandal (2010) argues, business managers and executives are tempted to adopt both ethical and unethical business practices. On one hand, ethical issues represent increased business practices that respect and abide by the existing societal values in the organizations respective environments. On the other hand, unethical business practices represent scenarios through which business organizations conduct businesses for their own gains. As such, the adopted strategies are beneficial to the organization but detrimental to the society. Consequently, such process implicates on the overall organizational reputation to both the internal and external stakeholders. As a result, organizations have resulted to the adoption of ethical processes allowing for increased market reputation and success (Singh, 2008). This essay reviews the case study on The Padding that Hurts. The essay reviews the ethical issues established in the case as well as the alternative options available for the Human resource manager in the industry. Ethical and Other Issues Management Agency A major issue in business management is fund misappropriation in the industry. In this regard, organizations are established with the sole aim of attaining increased profits in the market. Phelps (2010) conducted a study to evaluate the relevance and rationale of funds appropriation and proper management of funds in organizations. In this case, the study developed a hypothesis that appropriate funds management played a critical role in enhancing shareholders value maximization. In its analysis, the study established that the market organizations with proper funds in the industry faced an increased market success possibility. In this case, the case of funds management can be hedged on the management agency theory. Under this theory, Khan and Hildreth (2004) argued that the shareholders with the management of the organizational funds as their agents entrust managers. As such, ethics require that the managers act on the interest of the shareholders at all times. Therefore, any expenditure incurred should be in the best interests of the shareholders. Consequently, the ethical obligations under this principle for the managers demand that the managers should act honestly and prudently in managing the shareholders funds. Consequently, proper funds management and cost effective production and organizational processes are ethical and economic requirements under this approach. Excessive and inflated organizational funds spending are an ethical violation of this requirement. This theory can be verified and supported by the adoption of the deontological ethical perspective. According to Vibert (2004), the theory holds that the decision makers have obligations to the external stakeholders. In this case, under the deontological ethical perspective, organizational management has an obligation and responsibility to provide increased market success through increased shareholder value generation. Therefore, based on this approach, the management has an ethical responsibility of providing increased market returns to shareholders though prudent spending. This incorporates increased cost effective measures utilization and incorporation. Consequently, the theory holds that any management activities violating this provision are a contradiction of the ethical perspective. The case of Murphy in the case study is an ideal example of the violation of this ethical perspective. As a senior executive manager for the organization, Murphy was entrusted with conducting business transactions on behalf of the organization management and the shareholders at large. In this case, Murphy conducted increased business tours on behalf of the organizational management. In this case, under the agency theory and the deontological ethical perspective, he was under an obligation to exercise prudence and restrain in spending the organization funds. As such, he was ethically required to ensure cost efficiency in his spending. However, through increased spending and inflation rates, Murphy violated these requirements. As such, he can be held liable of ethical violation because of failing to honour his obligations in spending Nevertheless, an analysis of Murphy situation using the utilitarian ethical perspective reveals that he was in no ethical violation at all. McGee (2008) states that the utilitarian ethical perspective theory holds that the ethicality in issues is evaluated based on the extent and nature of outcomes in the market. In this case, the outcomes justify the adapted actions. In this perspective, the end justifies the means for any individual decisions in the society. As such, even if individual actions would be honest and geared towards overall gains, if the resultant outcomes do not reflect this objective, the utilitarian ethical perspective perceives these actions as unethical and unjustifiable. On the contrary, in the event that individual actions are perceived as inappropriate and negatively impacting on some members, but the resultant outcomes achieve the desired goals; such actions are considered justifiable under the utilitarian theoretical approach. Therefore, under this theory, the means through which resultant actions are achieved is disregarded as long as the expected outcomes are achieved. Therefore, in the case of Murphy, the major expected outcomes in his trips were an increased organizational profitability through increased market expansion and organizational profitability increase. In this case, Murphy’s actions are evaluated based on the achieved outcomes. As such, Murphy’s trips as evidenced by the confessions by the CEO and the board members have over the years increased the organizational success and profitability. As Fedler (2006) states, regarding the utilitarian theory any actions adopted in achieving this objective are justified. In this case, the actions by Murphy do not amount to an ethical violation. However, allowing such a trend in the organization reduces on the overall organizational productivity as demonstrated under the virtual ethics perspectives. Under this perspective, the long-term implications of both the means and outcomes play a crucial role in determining actions ethicality. Thus, the long-term implications of such actions would reduce overall profitability levels as well as lead to a dishonesty organizational culture that lacks transparency (Zack, 2013). Therefore, this demands the development of an ideal resolution strategy to the challenge and the misappropriation case. Whistle Blowing An emerging issue in the case study is the question of honesty and work responsibilities. In this case, the ethical question arises on the nature, extent, and obligations on respective organizational employees to their employer and the organizational at large. In this case, a dilemma arises on the boundary between employees’ responsibility and their job description roles. On one hand, an employee who disclosed Murphy’s funds misappropriation trend had been assigned several official roles alongside Murphy. However, the reporting of the misappropriation was not within the employees’ job description. Therefore, the employees’ actions can be classified as both ethical and unethical. On one hand, Susmanschi (2012) argued that employees have a social responsibility on the overall functioning of the organizations. In this case, once recruited and acknowledged as an organization's workforce, the employees have an unrestricted responsibility to their employers. Therefore, they commit their services and overall contributions into the employees’ welfare. As such, through this approach, it is argued that employees are obligated to act as organizational whistle blowers. Whistle blowing in this case includes the reporting of issues and practices that negate from the overall organizational strategic process. Consequently, as Susmanschi (2012) enumerated whistle blowing is an ideal approach through which organizations enhance ethical practices through transparency and accountability enhancement and propagation. Therefore, based on this approach, the employee’s actions as well as those of the Human resource Director, Sue Davenport, are justified. In this case, their decision to whistle blow Murphy’s actions to both the Auditor and the CEO respectively were ethically justified. However, according to Mader-Clark (2013), employees are required to stick to their job description. The author adopts the case study on the virtual ethics perspective approach in the society. In this case, the perspective requires a consideration of actions implications in the long run. In this case, though a particular issue would be inappropriate and demanding for whistle blowing, the implications of such would be negative and exceeding the implications of ignoring the issues. In the case study, Murphy was a crucial member in the organizational management as well as a major link between the organization and its investors. In this regard, whistle blowing on him in the public would not only implicate on the employees but also on the organizational reputation to its investors. However, as Sue Davenport argues, lack of disciplinary actions against him would encourage a culture of dishonesty and funds misappropriation in the organization. Therefore, it is imperative for an organization to establish alternative actions to deal and handle Murphy’s case to reduce on such organizational culture implications. Alternative HR Actions A situational analysis on a case study reveals that there emerge a number of ethical and moral issues arising because of the alleged Murphy funds misappropriation strategy. In this case, issues enumerated in the above analysis include the possible implications of disciplining or not disciplining him with respect to his subsequent confession on the alleged funds misappropriation on expenses inflation. In this regard, the analysis establishes that publicly disciplining him would negatively implicate on the overall organizational reputation (Fontana, 2007). However, lack of disciplining him, as a senior executive expected to serve as a role model, would increase the culture of dishonesty and lack of transparency and accountability in the organization. Therefore, as the Human resource director, I would adopt a resolution based on a blend of the virtual ethics approach as well as a utilitarian approach in dealing with these issues. On one hand, as already established in the case analysis, Murphy’s actions were justified under the utilitarian ethical perspective. However, it is apparent that the actions violated the rules and requirements under the agency theory in management that requires honesty, transparency, and prudence in organizational funds spending. In this case, under the utilitarian theory, the overall actions by Murphy are not justifiable. In this regard, the inflation of the overall spending rates decreased the overall organizational profitability. This is because organizational profitability s evaluated based on the expenses against avenues earned. Therefore, as the HR director, I would seek to develop a strategic plan to overcome a similar challenge in the future. In this case, I would seek to develop a strategy in which the obtained outcomes will reflect an acquisition of absolute utility on the spent values. In this case, I would use the merits obtained from the subsequent merger between the human resource and quality assurance department. In this regard, I would adopt an approach through which transparency could be established and encouraged. As Prins (2002) argues, I would establish an electronic system through which the department can track individual employees spending. In this case, I would liaise with the accounting and finance department. In this case, instead of allocating employees cash funds at their disposal, the organization would credit the employees’ electronic accounts with the established proposed spending budgets. In this case, the employees would be allocated electronic cards with which they can effect payments. Consequently, this would serve tow important factors. On one hand, it would reduce the amount of disposable cash at the employees’ disposal. Therefore, their spending would be restricted and regulated. Moreover, the electronic system would allow for auditing ease in the market. Consequently, through this process, the auditors would have increased access to the employees spending rates and nature. In this case, this would reduce the need for grapevine and employees informal reporting and grapevine in order to establish funds misappropriation and overspending. Through an electronic system, the auditors would have absolute access to the employees spending analysis, allowing for fraud detection well in advance. Therefore, the adoption of such a culture would allow for the establishment and development of a system through which spending transparency and accountability culture would be enhanced in the long run (Gangopadhyay, 2002). In the short run, I would use the virtual ethics perspective to ethics in resolving the Murphy case. As the board suggested, publicly condemning, exposing, and disciplining Murphy would result to increased harm on the organization in the long run, more than it would cause success. This is in congruence with the virtual ethics perspective theory. The theory, as already established argued that ethical issues are ones whose outcomes enhances overall satisfaction to all stakeholders in the long run. In this case, the perspective advocates for the development and establishment of a compromise in ethical resolutions. In this regard, ethical resolutions under this perspective are based on the concepts of mutual compromise. In this case, as the Human resource director I have an obligation to ensure that all employees abide by the organizational rules and that any errant employees are subjected to the appropriate disciplinary actions. In this regard, I have an ethical and regulatory role to ensure that Murphy is subjected to appropriate disciplinary measure (Greenberger & Heneman, 2002). However, I also have an ethical responsibility of safeguarding the organizational reputation both internally and externally. In this regard, I have to consider the implications of publicly disciplining Murphy a senior executive and an instrumental executive member in the organizational success. In order to establish a truce, I would adopt the virtual ethics perspective approach. In this case, I would use confidential warning system for Murphy. In this regard, I would send a warning notification to Murphy with copies to the CEO and other respective stakeholders such as the organizational board. In such a case, a warning note contents would be and remain privy to the authorized and designated members. As a result, this approach would achieve two significant objectives simultaneously. On one hand, the notice would serve as a disciplinary measure to Murphy as it would form part of his reference in case of future recommendations needs. Moreover, it would ensure that he is warned against possible disciplinary measures in the future. In this case, I would recommend to the board that, as part of the disciplinary action against Murphy, he should be required to compensate for the confessed inflated amounts. On the other, the resolution would ensure that the organizational reputation remains intact. Moreover, in case the case details are exposed to the public in the future, the organizational management would be exonerated against any claims on disciplinary actions bias (Bendix, 2000). Conclusion In summary, this essay reveals that increased market competition on a global platform has increased business operations and unique strategies formulation. In this case, it establishes that, in the process of developing appropriate management strategies and business strategic approaches, organizations engage in issues whose resolution cause ethical dilemmas. In order to expound on the topic, the essay evaluated the ethical dilemma in the case study The Padding That Hurts. In the case analysis, the study establishes that the case study presents the question of agency theory in management and employees obligation. Consequently, based on both accounts, the analysis reveals that Murphy violates his responsibilities and work ethics. Consequently, it recommends meting out disciplinary measures on him. However, the analysis is cognizant of the possible negative implications of executing such disciplinary measures openly. Consequently, it is based on the analysis that, as the Human resource director offer, alternative recommendations and action plan. In this case, I offer resolutions both in the short term and the long run. In this regard, in the short run, I recommend a warning letter and requirement for compensation of misappropriated funds for Murphy. On the other hand, for the long-term period, I recommend the institution of electronic management system. Consequently, this would reduce financial misappropriations in the organization. References Bendix, S. (2000). The basics of labour relations. Cape Town: Juta. Fedler, K. D. (2006). Exploring Christian ethics: Biblical foundations for morality. Louisville, Ky: Westminster John Knox Press. Fontana, V. R. (2007). Municipal liability: Law and practice. New York, NY: Aspen Publishers. Gangopadhyay, A. (2002). Managing business with electronic commerce: Issues and trends. Hershey, PA: Idea Group Publishers Greenberger, D. B., & Heneman, R. L. (2002). Human resource management in virtual organizations. Greenwich, Conn: IAP, Information Age Publishers. Khan, A., & Hildreth, W. B. (2004). Financial management theory in the public sector. Westport, Conn: Praeger. Mader-Clark, M. (2013). The job description handbook. Berkeley, CA: Nolo. Mandal, S. K. (2010). 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