The Difficulty with Management Or When Do Tradeoffs Work

The Difficulty with Management or When do Tradeoffs Work?

Business Ethics, PHIL 373

Illinois Institute of Technology

25 March 1999

Jeffrey Absher

3

The Difficulty with Management or When do Tradeoffs Work?

A hypothetical moral dilemma is presented to a manager at a major international corporation followed by some interview questions regarding his reactions and his reasons for his reactions to the case presented.

The Dilemma:

You work in a corporation that measures productivity by looking at a certain set of statistical data. You are a young (first-time) manager for a division working on a portion of a relatively new (2-year-old) project at that corporation. This project is pivotal in determining the long-term direction of the corporation. The corporation has "bet the farm" on the success of this project. Failure would mean a reduction in work force and a movement for the company from a growth mode to a survival mode; the corporation would no longer be the sweetheart of small-cap/mid-cap investors, and would exist only to service it's current products. Success would maintain the company's growth-rate, and would trigger an influx of investment toward future growth. The forecasters in the corporation were grossly optimistically incorrect in their sales volume predictions for the product that this project created, sales have been sluggish, but many other corporations have entered the market with similar-but-inferior (inferior implies less likely to sell) products, indicating the general belief of business that this product class will sell and will be a high-profit item.

You are a working manger and you work closely on a day-to-day basis with the people who report to you. You know them and their families by name, you have met the spouses and children, and have a good working relationship with most of them. You have struggled alongside these people and shared in their successes and in their failures over the past two years. The product that you have built has matured into a viable product. You and your employees all have a certain amount of pride in delivering the best available product on time and under budget.

You took this management position because you knew that it would be a nightmare. The corporation has a habit of "crunching" its MBAs for a few years to see their mettle before promoting them to an undemanding partner position, but the company also has a habit of dragging their feet on reward-based promotions. If a manager takes a difficult job, and succeeds at it, the company will leave him/her in that position for a time to squeeze the productivity out of him/her. This position was handed to you by a partner who is one of your best friends and personal confidants. This man has been in this company and this business for over thirty years, and you look upon him as a friend. You have seen him go to bat for his employees. Everything he has ever told you has come true. He knows how to play the corporate game and survive it. As well, everyone in the company trusts this man because he not only treats you that way, but he treats all people that way. You have never heard him say anything negative about anyone. He is a shrewd man, yet filled with integrity. He is the one that the corporation rolls out to talk to clients to sell the company and its products, because he never lies to make a sale, and he always makes the customers feel good about what they have purchased. Let us name this man Ernest.

This company is still small enough so that you see all of the employees at the holiday party. In the smoking room, Ernest pulls you aside and notifies you that he needs to see you first thing Monday morning; he has some news about the project that you are working on. He then excuses himself for a few more dances with the ladies as the perfect gentleman.

Monday arrives; you show up in Ernest's mahogany-lined office, hoping someday to have something like this for yourself, yet lamenting the fact that in today's business world, working in the same vein as Ernest will get you thirty years of hard labor, but not a mahogany office. Instead, labor like that is likely to get you a pink slip during a reduction in workforce. Ernest closes the door, and sits you down. His words are, "We have a problem."

Ernest explains that though sales of your product have been sluggish, they are picking up, and that by the third quarter (this is the first quarter, remember the holiday party), he (not the forecasters) expects those sales to be on-track. You trust his prediction. He then tells you that in the third quarter, the company cannot expect to realize those sales with the current statistics that your group is submitting because the board of directors is looking at discontinuing the project. On Wednesday, they would like to see the statistics from your group, and these statistics will be the determining factor in the decision to continue or to discontinue the project. You and Ernest both know that these statistics are measuring factors that are totally unrelated to your team's productivity. You and Ernest also know that these statistics do not inspire the confidence in your team that either of you feel, but the company's policy is to measure these particular statistics. In the past, many others have tried to convince the board that these numbers were unrelated to reality, and have failed. By the third quarter of course, your group can hit these numbers in statistics, and more importantly, they can actually hit the sales predictions. Ernest flat out asks you to provide him with false numbers to give to the board. He says that though these numbers will decide the future of the project and the company, they are misleading if you submit the actual numbers. He also says that his job is in doubt if you present the actual numbers, his job would be given to you, but most of your employees will lose theirs. You would have your comfortable management position if you present the correct numbers, but many hard workers would be laid off. If you present false numbers, your maintain the status quo, but the opportunity for extreme profit is greatly increased, as is your opportunity for advancement. Everyone wins more if you present the false numbers, but only you win and everyone else loses if you present the true numbers.

The interviewee

Don Hince is the manager of a Customer Care division at IBM Global Services. He has been with the company through its various incarnations (Sears, Advantis, and IBM) for the past twenty-seven years. His formal education is a bachelor of business followed by many short training-style courses from his employer. He has an intermediate technical background in programming and application development, and has been managing off and on throughout his career. He has been both a technical and a non-technical manager. Don is also well versed in the corporate mentality present at Sears and at IBM.

The corporate policy

Dishonest reporting within IBM, for example to IBM management or IBM auditors, or to organizations and people outside the company, is strictly prohibited. This includes not only reporting information inaccurately but also organizing it in a way that is intended to mislead or misinform those who receive it. Employees must ensure that they do not make false or misleading statements in external financial reports, environmental monitoring reports and other documents submitted to or maintained for

government agencies, or status reports on contracts, particularly in situations where IBM is selling goods or providing services to a government customer. Dishonest reporting can lead to civil or even criminal liability for you or IBM.[i]

Questions and Responses

1)  Does the implied promotion to Ernest’s position for not lying make a difference in your decision?

No, being a man of integrity and looking up to Ernest for his honesty, the potential for promotion is based on doing a good job and is not based on an implied promotion. Promotions recognize individuals who perform well and are skilled. A promotion allows a person to continue to prove worth and a chance to continue to succeed. This does not say that others might secure promotions through other means.

2)  Taken alone, does the unquestioned integrity of Ernest play a part in your decision (i.e. does a trustworthy person requesting a morally questionable action have more of a chance of getting it from you than simply a manager)?

No, what will result from Ernest’s request is a loss of respect in my eyes for someone who I have looked toward with admiration. He was that shining light that had allowed me too work hard in spite of all odds, as I knew he would always be [present] to support what was right.

3)  Taken alone, does the ability of Ernest to “play the game” sway your decision? Does Ernest’s experience in playing the game lead you toward performing his requested action?

I have always had a great deal of admiration for Ernest and his ability to handle situations that were delicate and he was always able to tell the truth in such a manner that it was always palatable and acceptable to management. I always hoped to be as good as he in playing the game so now is not the time to cave in and honor his request, therefore I would want to attempt to play the game as well as if not better than my mentor.

4)  Taken together does the integrity and Ernest’s ability to “play the game” sway your decision; Is it possible that he has a benevolent plan and is asking you to be an unthinking player on his chessboard to complete his plan, asking you to lose this small battle for your morals, but to win the overall war that will benefit the most people.

Knowing Ernest as I do, and his ability to “play the game”, I would not think that I would be excluded in his explanation of his plan. If anything, he would take me into his confidence when strategizing as I pose no threat to him or to his career. Only his superiors can impose that threat. I might unwittingly be used as a pawn in his chess match but would not feel that Ernest would need to exercise this option in his attempt to once again perform “smoke and mirrors” in front of management and have them make the correct decision.

5)  If you were instead promoted for lying and lost your job for telling the truth would you sway your decision?

No, I would be willing to risk the loss of my job for the truth. I have no desire to work with people who find it necessary to lie. I would lose confidence in my peers and superiors if I believed that decisions being made were based on false pretense known to them and serving their benefit. Lying will never provide a strong base to grow and will ultimately be one’s downfall.

6)  Does the product matter, if the product were a cure for AIDS would it make a difference? Would it make a difference if the product were weapons?

No, the product in this case is secondary. If telling the truth doesn’t work along with “playing the game” then the right approach was not used to sway management. A new strategy, a new game would be required to convince management. A single failure should not cause one to give up, but only try a different ethical approach.

6.5)  What if the product would still be produced, but your team would lose their jobs (i.e. outsourced to a far away place)?

I would have no regrets if I knew that I had made every effort to convince management that while the numbers showed we were not profitable, that the numbers were not measuring relevant information. I would feel disappointed with management and would sympathize with the rest of those losing their jobs. It would not be a pleasant situation but I would know that I had tried all that I could do to prevent the outsourcing. I would move on to a new job in hopes of finding other professionals that had my values and outlook.

7)  If the company were a large company rather than a medium-sized company would that make a difference?

No, I am sure that decisions are posed to all levels of management that could be compared to this scenario. The levels of management or the size of the company would be immaterial. The loss of a job or several jobs within any company should be treated as an individual event rather than part of a larger wave. A corporation may appear more callous but it is made up of individuals who must make difficult personal choices every day regardless of the level of management.

8)  What would you do if you knew that Ernest had a tendency to test people, and he valued loyalty above all else? Honesty above all else (but you didn’t know if this was real or was a test)?

One should always find comfort within. If loyalty to others at all costs is what is personally believed as a the prime ethical stance, then lie. If honesty is what is believed to be most important, then tell the truth. As an individual, you must live with your decisions every day. You will never be at ease with your emotions unless you exercise what you believe to be the best answer. In my case, I would not lie.

9)  Would Ernest signing his name to the numbers (implying that he gathered them) instead of you make a difference?

It would only make a difference to Ernest. I would know the value of the numbers regardless of who gathered the information. The one value in Ernest signing his name would be the added credibility in the numbers and this fact could possibly be used to highlight an opportunity to stress the irrelevance of the numbers. This would be a chance for Ernest to stress that while he obediently gathered the numbers and signed them as a trusted employee that the numbers had no merit. He would have this platform available to him to attempt to refute the value of the information and establish an impassioned plea to weigh other factors that would stress the importance of lasting through the third quarter.

10)  If you wanted no part of the deception, and told Ernest, yet he went ahead and presented false numbers, would you stay quiet passively (not speak up), would you actively agree with Ernest’s numbers if asked?