Case Study
Read the case then answer the three questions below:
Frank became chief financial officer and a member of theExecutive Committee of a medium-sized and moderately successfulfamily-owned contracting business six months ago. The firstnonfamily member to hold such a position and to be included in theExecutive Committee, he took the job despite a lunch-time remark bythe company's CEO that some members of the family were concernedabout Frank's "fit with the company culture." But the CEO (who ismarried to the daughter of the founder of the company) said he waswilling to "take a chance" on Frank.
Soon after Frank started, the company decided for the first timeto "right-size" (a euphemism for downsize) to respond to rapidchanges in its business. Frank, who had been through this beforewhen he was a senior manager in his previous company, agreed thiswas good for the long-term health of the 20-year-old company. Hedecided not to worry that family members seemed more concernedabout their own short-term financial interests.
Besides, the CEO was relying on Frank to help him determine howto downsize in an ethical manner; the CEO said he trusted Frankmore on this than he did the head of his personnel department, whohad "been around a little too long."
On Frank's recommendation, the company decided to make itslay-off decisions based on the annual performance appraisal scoresof the employees. Each department manager would submit a list ofemployees ranked by the average score of their last threeappraisals.
If the employee had been with the company less than three years,if the score for two employees was identical, or if there was someextraordinary circumstance, the manager would note it and make adecision about where to rank the person. At some point, Frank andthe Executive Committee would draw a line, and those below the linewould be laid off.
As Frank was reviewing the evaluations, he was puzzled to findthree departments in which the employee at the bottom of the listhad "N/A" where the evaluation score should have been written. Whenhe asked the managers to explain, they told him these employees hadbeen with the company almost since the beginning. When performanceappraisals had been instituted six years earlier, the CEO agreed tothe longtime employees' request that they keep receiving informalevaluations "as they always had."
The managers told Frank they'd questioned this decision, and theCEO had told them it wasn't their problem.
When Frank raised this issue with the CEO, he responded, "Oh, Iknow. I haven't really evaluated them in a long time, but it's timefor them to retire anyway. They just aren't performing the way theyused to. The company's been very good to them. They've got plentyof retirement stored away, not to mention the severance you'veconvinced me to offer. They're making pretty good money, so cuttingthem should let us lower the line a little and save jobs for someof the younger people – you know, young kids with families juststarting out. And don't worry about a lawsuit. No way they'd dothat."
"Do they know they're not performing well?" Frank asked.
"I don't know," the CEO responded. "They should. Everybody elsein the company does."
As they walked to the door, the CEO put his arm around Frank'sshoulder. "By the way," he said, "you should know that you've wonover the Executive Committee. They think you are a terrific fitwith this company. I'm glad you talked with me today about thesethree employees. You got it right: This is a company that cares forits employees – as long as it can and as long as they're producing.Always has, always will."
Frank left the CEO's office with the vague feeling that he hadsome moral choices to make.
Answer the questions below:
1. Does he have an ethical dilemma? If yes, what isit?
2. What options are open to him? How would you assessthese options using utilitarian and Kantianperspectives?
3. How should Frank proceed (what should he do)? Justifyyour answer.
