339 RESOLVING ETHICAL BUSINESS CHALLENGES nrid Hannigan had come far since he st

Question

339 RESOLVING ETHICAL BUSINESS CHALLENGES nrid Hannigan had come far since he started working accounting and cost information to justify the decision. If et a subsidiary of Emper Corp., a manufacturer of auto- they see good, sound reasoning for the action, they'll be mobile parts. He began as a line manager after graduat less likely to resist and cause trouble. Weall need to main UCLA four years ago. His skills at maintaining tain productivity and efficiency until the new equipment -ficiency, his leadership, and his repartee with the factory is here. I want the accountants to work on a cost summary n gained the attention of management. Even we can release to the employees and the town newspaper the lowest factory workers seen ees. While he made it clear he expected hard work, David floor feel like their contributions mattered. He shot ed to respect David for his caring atitude and his ability to empathize with employ- Jane spoke up once more. "But Stan, I already told you. The net present value and other analyses I did earlier Stan countered, "Jane, when you were working on that shows why automation is a good idea had the ability to make every member of the factory show this plant would benefit from staying the way it is you The net present through the ranks and was recently promoted to Director the analyses, you said yourself that the benefits of auto- of Personnel of this subsidiary when the previous direc. mation are hard to identify and assign numbers to. You tor retired. In the entire history of the firm, nobody had had to make several assumptions in order to do those moved through the ranks so quickly. David even received analyses. If you change some of your assumptions, you a letter of congratulations from the CEO of Emper Corp. can make the numbers look better. Try a longer useful after his promotion was announced. David was confident that within a few more years, he would be able to secure a life for the new equipment, or change some of the pro- jected cost information. As soon as you have the new high-level job at the corporate headquarters in Chicago. numbers, bring them to me to look at. A few months into his new position, David had luncih with a few key personnel from the company. One of them included Vice President Stanley Martin. Stan began the lunch meeting by praising all of them for their success, Later into his talk, he said, "You all know Emper Corp. wants to He stood up and addressed each member at the table and said, "Remember, if you can pall thls off, your yearly bonuses will triple your annual salari walked out of the room. David felt uncomfortable about the situation. He increase revenues and give big bonuses to as many emplay could not understand why one of the company's top ees as possible, but we need to become more efficient. That leaders would advocate for such a massive change when said, corporate decided the amount of automation in some the numbers clearly stated that automating the factory of our factories, namely this one, needs to be increased would cause more harm than good. He remembered Jane Newton from the accounting department replied, hearing a rumor that Stan was under serious consid "But the cost and accounting analyses we sent to headquar eration as a candidate for a prestigious position at cor ters showed it wouldn't be profitable to make changes like porate headquarters He wondered if Stan was trving to that in this particular plant. Why did they pick this one?"gain favor with those at corporate. Then again, this was ied Stan, "Top management wants mere speculation on his part. What David really worried about was what he was going to tell the employees QUESTIONS | EXERCISES repli to test robots and all the high-tech gadgets at one factory product quality and pay for them- to see if they increase k that in the long run, stockholders will the decision has been on the decision. of people are going to lose their jobs, to make it work. Were going to have 1. Compare and contrast the leadership characteristics Even if the automation is successful at increasing pro Stan's decision that could negatively impact the firmi? nywa benefit from automation. A of Stan and David. 2. Discuss whether David has any alternatives other than implementing Stan's orders source of employment for this town. was pleasant, yet forceful. "Some of the ductivity, what might be some other consequences of will be able to stay on if they get additional can convince the workers and the people in This case is strictly bypothetical; any resemblance to real persons if we can show them companies, or situations is coimcidental trainling he decision wa

Explanation / Answer

1.

David has a participative leadership style where he takes all the employees along with himself and takes their feedback while making decisions. In contrast to it, Stan has autocratic leadership style where he wants to assert his decisions upon the whole lot of employees. In the given scenario also, Stan wants to implement automation even if the Accounts department, recommends that not to go with the automation as it will create more losses than the benefits. Here, David is more worried about the workers, but Stan is more worried about his implementation plan and subsequent ambitions. So, these two people have contrasting leadership style.

2.

David should take initiatives to discuss the automation plans with the top management to reconsider it once again. He can discuss its disadvantages and can take the inputs from account department to convince the management to not to go with the automation plan. In a scenario when the management reiterates to implement the automation plan, then David can convince them to take it as a pilot project and implement it to a particular section of the plant. If it is successful, then it can be expanded to the other section of the plant. It will buy some time as well as an opportunity to justify that automation is not a viable option for the plant. Further, there can be detailed counselling and training program for the employees who will be replaced or laid-off so that they can be absorbed in other positions. This is what, can be done by David.

3.

There are following consequences, even if the productivity increases:

A. Spreading of the negativity and demoralization among the employees in other plants as automation can be implemented in those plants also. It will decrease the productivity.

B. There will be a scenario, that some of the employees will be absorbed into other units, but it will create unemployment. It will attract litigation cases also against the company.

C. The benefits due to the productivity may be very less than the capital cost and it will not be a good idea.

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