Case Study: Engineering Ethics in a Technology Startup

Introduction

A business’s reputation and brand name depend upon the behavior and values of that
business. Businesses should be socially responsive, fair and just, with a positive
reputation for business conduct. Engineering entrepreneurs must confront ethical
challenges such as engineering design reliability and salespeople’s ethical standards.
Ethical decisions in sales include: intentionally misrepresenting a faulty product,
economic tradeoffs, short-term v. long-term gain. In general, a company’s beliefs and
values matter, along with business conduct and the representation of facts to customers
and investors.
This case study attempts to identify the specific ethical issues and obligations of an
entrepreneur and his employees in making decisions for his startup company.
The Case
Tina is a new hire at a startup company that produces very expensive security cameras
primarily for large organizations. Tina is hired to engineer and troubleshoot
malfunctioning cameras.
One day, one of its Fortune 500 customers reported to Tina that a number of the cameras
out of its last big shipment were not functioning properly. The customer also informed
Tina that the serial and revision numbers on these units were different from the rest of the
units.
Tina’s technicians inspected the cameras. Based on the results of their inspection, Tina
realized that her company sold units that were from a bad batch. Tina wanted to tell the
customer why the units failed but recognized that if she disclosed this information, the
customer would be eligible to receive replacement units at no additional cost. On the
other hand, if she blamed the failing units on something else, such as improper care, her
company would be able to charge the customer for replacement units.

As a recent hire, Tina decided to discuss the case with David, the owner of the startup.
David told her that she should minimize his company’s losses. Tina is concerned with her
job security. But she also wanted to be honest with this major customer.

Questions:
1. What are the ethical issues in this case?
2. Who are the actors and what is their obligation in this case?
3. Would the issue in the case have occurred if the actors followed the IEEE code of
ethics (https://www.ieee.org/about/corporate/governance/p7-8.html)?
4. What sections of the IEEE code of ethics would have been relevant in this case?
5. Should Tina’s personal beliefs play a role in this case? What about the personal beliefs
of David?
6. What should Tina do? Does she have a moral obligation to obey or disobey the owner?
Why?

Which of the following is a startup resource? (Select all that apply.) a. People b. Value chains c. Financial resources d. Business processes e. Intellectual resources f. Physical assets

Which of the following is a startup resource? (Select all that apply.) a. People b. Value chains c. Financial resources d. Business processes e. Intellectual resources f. Physical assets Choose the best answer to complete the following sentence.

The purpose of a business process map is to: a. map the business process. b. detail how information flows through the business. c. understand your business activities.

Which of the following is determined by where your business lies in the value chain? (Select all that apply.)

What are the three broad types of risk that an entrepreneur faces and can manage? (Select all three.)

Which of the following metrics would be important to a startup business that produces self-improvement videos for sale direct to consumers online? (Select all that apply.)

Case Study: Engineering Ethics in a Technology Startup

Introduction

A business’s reputation and brand name depend upon the behavior and values of that
business. Businesses should be socially responsive, fair and just, with a positive
reputation for business conduct. Engineering entrepreneurs must confront ethical
challenges such as engineering design reliability and salespeople’s ethical standards.
Ethical decisions in sales include: intentionally misrepresenting a faulty product,
economic tradeoffs, short-term v. long-term gain. In general, a company’s beliefs and
values matter, along with business conduct and the representation of facts to customers
and investors.
This case study attempts to identify the specific ethical issues and obligations of an
entrepreneur and his employees in making decisions for his startup company.
The Case
Tina is a new hire at a startup company that produces very expensive security cameras
primarily for large organizations. Tina is hired to engineer and troubleshoot
malfunctioning cameras.
One day, one of its Fortune 500 customers reported to Tina that a number of the cameras
out of its last big shipment were not functioning properly. The customer also informed
Tina that the serial and revision numbers on these units were different from the rest of the
units.
Tina’s technicians inspected the cameras. Based on the results of their inspection, Tina
realized that her company sold units that were from a bad batch. Tina wanted to tell the
customer why the units failed but recognized that if she disclosed this information, the
customer would be eligible to receive replacement units at no additional cost. On the
other hand, if she blamed the failing units on something else, such as improper care, her
company would be able to charge the customer for replacement units.

As a recent hire, Tina decided to discuss the case with David, the owner of the startup.
David told her that she should minimize his company’s losses. Tina is concerned with her
job security. But she also wanted to be honest with this major customer.

Questions:
1. What are the ethical issues in this case?
2. Who are the actors and what is their obligation in this case?
3. Would the issue in the case have occurred if the actors followed the IEEE code of
ethics (https://www.ieee.org/about/corporate/governance/p7-8.html)?
4. What sections of the IEEE code of ethics would have been relevant in this case?
5. Should Tina’s personal beliefs play a role in this case? What about the personal beliefs
of David?
6. What should Tina do? Does she have a moral obligation to obey or disobey the owner?
Why?

The debate regarding the legalization of drugs, particularly that of soft drugs like cannabis (or marijuana) is capable of being characterized as one which pits the concept of freedom of the individual against the concept of a paternalistic State. Advocates of legalization argue, amongst other things, that cannabis is not only less harmful than legal substances like alcohol and tobacco, but as a matter of fact has been proven to possess certain medicinal properties. In stark contrast, those opposed to legalization argue that the legalization of cannabis will act as a precursor to increased addiction to hard drugs, and will necessarily lead to an increase in the crime rate itself.

In 1937, the Marijuana (Marijuana) Tax Act was introduced by Henry Anslinger and passed, levying taxes on anyone who was associated with cannabis, hemp, or marijuana. These types of association include possession, use, sale, and many other acts which would be considered illegal today. In addition to the taxes provisioned by the bill, penal codes for the procedural use and possession of marijuana were also outlined - violators could face five years in prison in up to a $2,000 fine. In 1951, an act that superseded the Marijuana Tax Act was passed criminalizing the possession and use of cannabis, hemp, and/or marijuana. In 1969, in the case of Leary v. United States, the Marijuana Tax Act of 1937 was overturned on the grounds of the 5th Amendment because those seeking a tax stamp would have to incriminate themselves. In 1970, Congress passed the Controlled Substances Act listing cannabis as a Schedule I drug. Despite the Controlled Substances Act of 1970, many states and local cities began to decriminalize marijuana citing possession/use/sale/etc. as low priority offenses. Although many attempts have been made to reschedule cannabis off Schedule I, the Supreme Court ruled in a 2005 decision in the case of United States v. Raich, the federal government has jurisdiction over the legal status of marijuana.

Today, States are debating, and in some cases, bringing to their voters, the legalization of Marijuana.

What are the characteristics of absolute and relative moral theories? What is the relationship between the two?

Using the information above about marijuana legalization, what arguments can be made both "for" and "against" using these moral theories?

500 WORD MINIMUM

At 30 June 2019, the financial statements of McMaster Ltd showed a building with a cost (net of GST) of $372,000 and accumulated depreciation of $188,000. The business uses the straight-line method to depreciate the building. When acquired, the building's useful life was estimated at 30 years and its residual value at $74,000. On 1 January 2020, McMaster Ltd made structural improvements to the building costing $117,000 (net of GST). Although the capacity of the building was unchanged, it is estimated that the improvements will extend the useful life of the building to 40 years, rather than the 30 years originally estimated. No change is expected in the residual value. Calculate the number of years the building had been depreciated to 30 June 2019.

On January 1, 2016, SugarBear Company acquired equipment costing $150,000, which will be depreciated on the assumption that the equipment will be useful for five years and have a residual value of $12,000. The estimated output from this equipment is as follows: 2016 - 15,000 units; 2017 - 24,000 units; 2018 - 30,000 units; 2019 - 28,000 units; 2020 - 18,000 units. The company is now considering possible methods of depreciation for this asset.

Required:

a.) Calculate what the depreciation expense would be for each year of the asset's life, if the company chooses:

i.) The straight-line method

ii.) The units-of-production method

iii.) The double-diminishing-balance method

b.) Briefly discuss the criteria that a company should consider when selecting a depreciation method.

Kaizen Automotive, a Japanese automaker, has a production facility in Ohio that employees over 600 workers. In December 2013, it announces an executive position has opened at the facility and solicits applications. Among the finalists for the position is June, a Japanese citizen and graduate of MIT with four year's experience in automotive production. Another candidate is John, an African American who is also an MIT graduate and holds an MBA from Harvard. John has over ten year's automotive manufacturing experience. In very short order, Kaizen announces that June is the successful candidate and offers her the position. John files a charge with the EEOC alleging that he was not selected for the position because of his race and national origin. Kaizen states that it lawfully considered June's Japanese citizenship pursuant to a treaty permitting it to favor Japanese applicants. The subsequent EEOC investigation reveals that a Treaty of Friendship, Commerce and Navigation exists and that Kaizen has never promoted an American citizen to an executive level position in its U.S operations.

a. Does John have a viable Title VII complaint? Why or why not?

b. If June had been a U.S. citizen of Japanese ancestry, would the outeome be changed?

c. If June had been a Chinese citizen, would the outeome be changed?

What does it mean biologically to be human? How can evolution explain both the unity and diversity of human phenotypes? Use specific examples of evidence and some version of the following terms in your answer: neutral genetic variation, evolution, natural selection, drift/bottleneck/founder effect, migration, mutation, and species/population/lineage.

Question:

Temple Insurance Company Temple Insurance Company (TIC) provides automobile insurance throughout the United States. Last year, a new president was hired by TIC's board of directors to improve the company's competitiveness and customer service. After spending months assessing the situation, the new president introduced a strategic plan to strengthen TIC's competitive position. He also replaced three vice presidents. Jim Leon was hired as vice president of Claims (TIC's largest division) with 1500 employees, 50 claims centre managers, and 5 regional directors.

Jim immediately met with all of the claims managers and directors, and he visited the employees at TIC's 50 claims centers. As an outside, this was a big task but his strong interpersonal skills and ability to remember names and ideas helped him through the process. Through these visits and discussions, Jim discovered that the claims division had been previously managed in a relatively authoritarian, top-down manner. He could also see that morale was very low and employee-management relations were guarded. High workloads and isolation were two other common problems since claims adjusters worked in tiny cubicles. Several managers acknowledged that the high turnover among claims adjusters was partly due to these conditions.

Following discussions with TIC's president, Jim decided to make morale and supervisory leadership his top priority. He initiated a division newsletter with a tear-off feedback form for employees to return with their comments. He announced an open-door policy in which any claims division employee could speak to him directly and confidentially without first going to the immediate supervisor. Jim also initiated a flex-time program so that employees could design their work schedules around their needs. This program became a model for other divisions of TIC.

One of Jim's most pronounced symbols of change was the "Claims Management Credo" outlining the philosophy that every claims manager would be required to follow. At his first meeting with the complete claims management team, he presented a list of what he thought were important philosophies and actions of effective managers. The management group was asked to select and prioritize items from the list. The final list would be the division's management philosophy and all managers would be held accountable for abiding by its principles. Most claims managers were uneasy about this process but understood that the company was under competitive pressure and that Jim was using this exercise to demonstrate his leadership.

The claims managers developed a list of 10 items, such as encouraging teamwork, fostering a trusting work environment, and so on. The list was circulated to senior management for their comments and approval and then sent back to the claims managers for their endorsement. Once this was done, a final copy was sent to every claims division employee. Jim also announced plans to follow up with an annual survey to evaluate each of the claims manager's performance. This concerned the managers but most of them believed that this was a result of his initial enthusiasm and that he would be too busy to implement the survey later.

A year later, Jim announced that the first annual survey would be conducted. All claims employees were asked to complete the survey and return it confidentially to the human resource department where the results would be compiled for each claims center manager. The survey asked employees to indicate the extent to which their manager had lived up to each of the 10 items in the credo provided an opportunity to give written comments. Claim center managers were surprised that the survey would be conducted and were even more worried when Jim indicated that the results would be shared with employees. What results would employees see? Who would distribute these results? What happens if a manager gets poor ratings from his or her employees? "We'll work out the details later" said Jim in response to these questions. "Even if the results are not great, it will give us a good baseline for next year's survey".

The survey had a high response rate, with most employees completing it. Each report showed the claim center manager's average score for each of the 10 items, as well as how many employees rated the manager at each level of the 5-point scale. Comments made by the employees were included in the report as well. No one was prepared for the results of the survey. Most managers received moderate or poor ratings on the 10 items. Very few managers averaged above 3.0 (out of 5 points) on more than a couple of items. The comments were even more devastating than the ratings, ranging from mildly disappointed to extremely critical of the claims managers. Employees also expressed their frustration with the company, its high workloads, and their isolated working conditions. In their comments, several employees stated that they were skeptical about the changes that Jim had promised.

The survey results were sent to each claims manager, the regional director, and employees at the claims center. Jim instructed managers to discuss the survey results with their regional managers and directly with employees. The claim center managers, who thought that employees would only see the average scores, went into shock when they realized that the reports included individual comments. Some managers went to their regional directors, complaining that the comments would ruin their careers. Many directors sympathized but the results were already available to employees. When Jim heard about the concerns, he agreed that the results were lower than expected and that the comments should not have been shown to employees. After discussing the situation with his directors, he decided that the discussion meetings between managers and their employees should continue as planned. He believed that to delay or withdraw the reports would undermine the credibility and trust that Jim was trying to develop with employees. The regional managers were encouraged to attend the meetings held between claims managers and their employees to minimize direct conflict. Although these meetings went smoothly, a few of them resulted in harsh feelings between managers and their employees since the sources of the comments were easily identifiable.

A few months after the meetings, two claim center managers quit and three others asked for transfers back to non-management positions with TIC. Meanwhile, Jim wondered how to manage this process more effectively, particularly since employees expected another survey the following year.

1) What are the forces driving change and what are the forces resisting change in this situation? To what extent is this change effort as a challenge? For example, are the resisting forces stronger than the driving forces?

2) Was Jim Leon successful at bringing about change? Why or why not? Or in what ways "yes" and in what ways "no"?

3) What should Jim Leon do now?