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Ethical Dilemma Facing Robert Manning Robert Manning, the manager of a SportsMax retail store in Chicago, is confronted with an ethical dilemma rooted in the process of constructing and presenting the operational budget. This moral conflict centers around the potential temptation to manipulate or inflate budgeted profit figures in an attempt to increase his chances of securing a bonus. SportsMax employs a bonus structure that rewards store managers for surpassing budgeted profit targets, inadvertently introducing a challenging ethical predicament. Robert might feel compelled to overstate sales revenue or underestimate costs in his budget, all in the hopes of making it easier to exceed the budgeted profit threshold and claim the bonus Ethical practices and motivation As the president and CEO of SportsMax, there are several ethical strategies that can be adopted to encourage Robert Manning to present an accurate operating budget: Clear Ethical Standards : The establishment of explicit ethical guidelines for the budgeting process is imperative. The management should emphasize the significance of honesty, transparency, and integrity in all financial planning efforts (Gartenstein, 2016). Diversify and reassess Bonus Metrics : Reevaluate the bonus structure to incentivize managers beyond just surpassing budgeted profits. Emphasize rewards for other key performance indicators that reflect responsible management, including customer satisfaction, inventory control, and cost management (Freedman, 2019). Reassess the bonus structure to ensure it does not inadvertently encourage unethical actions. Bonuses should be based on holistic store performance, encompassing customer satisfaction, operational efficiency, and ethical conduct (Gartenstein, 2016). Training and Development: Investing in managerial training and development programs is essential. This prepares store managers to create budgets that are both pragmatic and precise. The management should stress the importance of budget accuracy and financial planning integrity (Sherman, 2019). Regular Auditing: Implement a robust audit mechanism to validate budgeted figures against actual performance. Regular audits act as a deterrent against unethical behavior and offer opportunities for process enhancement rather than punitive actions (Freedman, 2019).

Open Communication : Promote open and honest communication between the executive team and store managers, including Robert Manning. Encourage managers to express any challenges, constraints, or uncertainties in the budgeting process so that they can be addressed collectively (Sherman, 2017). Ethical Recognition : Recognize and reward ethical behavior alongside financial performance. The management should spotlight examples of managers, such as Robert Manning, who have displayed ethical conduct in budgeting. Acknowledgment and incentives should be offered for adhering to ethical standards and providing accurate budget submissions (Sherman, 2019). By implementing these measures, the president and CEO can cultivate a work environment where ethical budgeting is highly regarded and integral to the company’s success. This approach fosters a culture of integrity, transparency, and trust, ultimately benefiting SportsMax, its workforce, and stakeholders. References Gartenstein, D. (2016, October 26). Budgeting ethics. Small Business – Chron.com. https://smallbusiness.chron.com/budgeting-ethics- 47002.html Sherman, F. (2017, November 21). Accounting ethics & cash accounts. Small Business – Chron.com. https://smallbusiness.chron.com/accounting- ethics-cash-accounts-34964.html Sherman, F. (2019, November 5). Business ethics for a finance manager. Small Business – Chron.com. https://smallbusiness.chron.com/business-ethics- finance-manager-20490.html Freedman, J. (2019, January 28). What is an ethical issue in financial accounting? Small Business – Chron.com. https://smallbusiness.chron.com/ethical- issue-financial-accounting-57889.html

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