Super Security Co. offers a range of security services for athletes and entertai

Question

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 if 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

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

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

What is Super Security's ethical responsibility in offering professional services?

Explanation / Answer

The ethical concern here is that quality and service level may be compromised to control the costs. The most affected parties by lower quality levels and service are the clients.

Senior Security Co seems to using a responsibility accounting system to measure the performance of managers. Ms. Pincus is evaluating her ability to operate with responsibility accounting budget that sets objectives based on costs that are controlled by the manager.

Responsibility accounting systems focus on the goals of individual organizational units. These goals do not guarantee any level or quality of service. A process-oriented accounting system measures the output related to quality and level of service.

If performance depends only on responsibility accounting system with no balance scorecard types of objectives, Ms. Pincus is not ethically. It may not be fortunate that service level and quality are adjusted to meet the operating budgets; I would not go so far to say that Ms. Pincus is acting unethically.

The responsibility for setting the ethical responsibility lies within the company, its values and policies. One way for the company in promoting ethical responsibility is to include a balance scorecard approach to measure the performance of management. Quality and service level would correlate the customer view of the balance scorecard.

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