What are the key ethical questions raised? What ethical principles apply in this case? What is your solution to the ethical dilemma? What is the right thing for Margo to do? 4. What ethical leadership lessons have you learned?
Please answer the four questions at the end of the case study.
Length: 2-3 complete paragraphs for each case study question.
Having advanced in finance departments of various large manufacturing companies, Margo Romano secured her dream job as CFO and executive committee member for a successful family-owned tool and die manufacturing company. She was worried about being the first nonfamily executive committee member, but the business was well-regarded in the sector and offered outstanding remuneration. She also worked hard to get along with the executive committee, notably the CEO. The CEO, the daughter of the company's founder, told Margo privately that she stood by her and that Margo was the “perfect match” for the executive committee position, even though some family members were initially hesitant. After Margo had been with the firm for a year, the CEO convened an executive committee meeting to announce that the company will shrink for the first time in its history due to rapid manufacturing industry developments. Margo and the CEO had met numerous times before the announcement to assess the financial position, and Margo agreed that downsizing, albeit difficult, was important for the 40-year-old company's long-term health. Margo was glad the CEO publicly declared that Margo would lead the entire reorganization process because she trusted Margo to act “in a thoughtful and an ethical manner.” After the meeting, the CEO informed Margo privately that she trusted her more than the head of her human resources department, who had “been around for quite some time now.” The corporation used yearly performance review ratings to lay off people at Margo's suggestion. Margo requested that each department manager rate personnel by average score from their past five yearly performance reviews. A fair performance management system was implemented by the organization some years ago. Each management and employee set five goals for the year at the start of the year. The boss and employee signed off on the targets after agreeing. After meeting again at the end of the year, the manager gave the employee a performance grade based on meeting targets. The management and employee approved the yearly score. It appeared preferable to approach layoffs after fair and unbiased performance reviews. GE and other big firms have employed this review process. Margo observed when examining performance assessments that three departments had personnel at the bottom of the list with “N/A” instead of a grade. The management said that these personnel were longtime employees who had worked with the firm since the inception. The prior CEO and founder of the firm, the current CEO's father, had agreed to these long-time workers' request that they continue receiving informal assessments “as they always had.” The formal performance-appraisal system had just been implemented 10 years earlier. Margo questioned the CEO in a private meeting, saying, “Yes, I am aware that some of our oldest employees haven’t been evaluated in a long time, but frankly, and just between you and me, it’s time for them to retire anyway. They're not performing as well. However, remember that the corporation has been fair to them; they will receive a generous retirement package and the severance you pushed me to grant. Letting them leave would cut our overhead and save for younger individuals with small kids and new families.” Margo contemplated. “Have these employees been told their performance is poor?” she inquired. “Well, good question,” said the CEO. I've attempted to communicate with each of them, or most of them, informally every year about when they would retire for years. Yes, some got the hint, others didn't. In any event, we must act in the company's best interests, right? Nobody will have a job in this competitive market if we don't.” CEO placed her arm over Margo's shoulder as they stood up. By the way, she remarked, “both the executive committee and I think you’ve really been doing a good job. She smiled, "This makes me feel good about hiring you." I appreciate your discussion regarding these employees today. It reminds me to keep all communication channels open with you!" Margo responded by smiling as she exited the CEO's office. As she proceeded down the corridor, she realized she had some crucial decisions to make.
Questions:
- What are the key ethical questions raised?
- What ethical principles apply in this case?
- What is your solution to the ethical dilemma? What is the right thing
for Margo to do?
4. What ethical leadership lessons have you learned?
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