Question

Chapter 22 Lead Question Discussion Post

Super Security Co. offers a range of security services for athletes and entertainers. Each type of service is considered within a separate department. Marc Pincus, the overall manager, is compensated partly on the basis of departmental performance by staying within the quarterly cost budget. He often revises operations to make sure departments stay within budget. Says Pincus, “I will not go over budget even it means slightly compromising the level and quality of service. These are minor compromises that don’t significantly affect my clients, at least in the short term.”

Required:

1.    Is there an ethical concern in this situation? If so, which parties are affected? Explain.

2.    Can Pincus take action to eliminate or reduce any ethical concerns? Explain.

3.    What is Super Security’s ethical responsibility in offering professional services?

3.    Are there things outside Pincus' control that would cause costs to be over budget? If so, should his compensation plan be reevaluated? Explain.

Answer 1

SOLUTION

1.     There is an ethical concern in this situation. Pincus is taking actions he would not otherwise take. He believes that “minor compromises” in his behavior do not significantly affect clients. However, the problem is serious because it can have potential long-term implications for clients. Moreover, a consequence of minor compromises on service quality can potentially lead to lawsuits for services unfulfilled. Pincus could lose his job and the company its reputation. This means the company, its clients, Pincus, and his staff all risk serious consequences with slight compromises in the level and quality of service—due to the behavioral implications of responsibility performance budgets.

2.     Given that Pincus is aware of his behavior, its potential consequences, and the source of what’s behind his behavior (in this case the focus by management on meeting the quarterly responsibility performance budget), he can approach his superiors (at least one or two he trusts) and explain the situation to them. Pincus must clearly point out the potential negative implications of this “induced behavior” in terms of the inadequate service provided to clients. One must remember the potential consequence of this ‘honest’ acceptance of unethical behavior by Pincus. Namely, such disclosure could cost his job.

        Alternatively, he could stop his lower level and quality of service and explain to his superiors that it is impossible to both maintain good service and stay within the budget. His compensation might decline, which could prompt him to seek employment with another company that values integrity and service, and rewards employees for it.

3.     Super Security (the employer) is ultimately responsible for any action taken by its employees, including Pincus. Management must establish an ethical code of conduct to ensure that department managers do not engage in unethical behaviors that compromise the security of its clients. To facilitate the implementation of such a code of conduct, senior managers must periodically engage in honest dialogs with department managers to understand the pressures faced by these managers and the sources of these pressures. In the case of Super Security, the responsibility performance system (and its associated reward system) is a primary source of ethical concerns—which may suggest some revision in the system to mitigate this trade-off.