Unit 05: When Faced with a Crises

I’ve worked for the same company since I was 20 years old (I’m 28 now) and during this time I have seen a significant amount of leadership turnover. In 2016, the fourth CEO that company has ever had in its 60+ years retired, and a man I will refer to as Jon was promoted. Jon had worked his way up the ranks in his 28 years with the company and it was clear he had an understanding of the business and his employees. Jon immediately put different programs in place to create a more engaged employee base, increase employee incentives, and increase job satisfaction. I swear when he would talk I couldn’t help but stop and listen. He took command of a room, but not in a way that was condescending, but in a way that you bought into the vision he was selling you. He could probably sell sand to the beach honestly. He not only had motivational speeches prepared but he was able to answer tough questions during the Q&A of his town hall meetings with ease and compassion. I was sold.

Fast forward a few years and a lot of organizational changes, innovation, and a push for progress later and one day the entire company is asked to shut down at 1:00PM for an important announcement. My building was in complete chaos from the moment the meeting invite went out at 7AM trying to find out why in the world they were going to shut the entire company down for this announcement but no one would say why. Naturally, the anxious person I am thought lay offs, closures, and lawsuits and stressed for the next few hours. When we were finally called in to the conference rooms to hear the news, it was heartbreaking. I was left so incredibly disappointed and confused. Jon had been caught having an affair with a subordinate and failed to report the relationship per is contract. How could he be so stupid? How could he have made a choice so reckless and to put his reputation at risk when we all followed his vision for the company?

This was going to lead to a crisis for the company. A crisis is defined as “critical event or point of decision which, if not handled in an appropriate and timely manner (or if not handled at all), may turn into a disaster or catastrophe” (Crisis, n.d.). The critical event is Jon getting caught having an affair with a subordinate and getting caught. This forced the Board of Directors to make a decision; they could either sweep it under the rug or pursue action. The Board needed to make a decision by weighing multiple different factors. Jon was a great leader, bringing the company more success year after year under his control, and his staff loved him. If terminated, it would be an embarrassment for the company, forcing the Board to call clients and explain to them why Jon would no longer be the CEO and a public announcement would need to be issued. On the flip side, Jon broke his contract and opened him and the company up for multiple lawsuits based on the relationship. Not acting would also show that the rules do not apply to everyone, potentially encourage others to do the same since they know they would not be punished, and does not portray the high standards the company has put on its employees.

Following Deontological ethics, by not holding Jon accountable, the Board would not be following the professional code of conduct the company has created. Ultimately, the Board and the senior leadership team terminated Jon immediately, which is why the last minute meeting was scheduled. By doing so, their quick actions helped to avoid a potential catastrophe as they were able to get ahead of any bad publicity, negative reactions from employees, and spin the narrative how they wanted to. If they chose to ignore the situation, they would not be acting ethically. This action could have gone against the policies put in place but also impacted thousands of employees if it were to have gotten out in a different way. Lawsuits could have cost the company thousands, maybe even millions, resulting in potential cutbacks and layoffs. It would also not protect the subordinate if they felt pressured at any time to continue the relationship, currently or in the future. It was not disclosed, however, personal relationships such as this could have resulted in unfair compensation due to the favoritism. There really is all different scenarios that could have spawned off how this was handled.

A crisis is composed of a critical event, point of decision, appropriate, timely, and disaster/catastrophe (PSU, 2019). The crisis was the affair; the point of decision was what the Board of Directors were going to do with the information once presented with the evidence; the appropriate was the action taken to address the situation; the timely was how quickly the Board addressed the situation; and a complete disaster was avoided because of the decisions they made which could have been lawsuits and loss of customers.

Although I was initially upset by the decision the board made, ultimately I think it was the right call. Without doing so, the organization could have been opened to lawsuits and more individuals pursuing similar relationships when it was against company policy. Jon made an unethical decision by starting the relationship and hiding it, which snowballed into others having to be presented with ethical dilemmas of their own. I’m glad that the decisions were made following their moral compass and the company’s guidelines against fraternization with subordinates. A new CEO has recently stepped into Jon’s role and has hopefully learned from his mistakes.

 

Reference:

Crisis. (n.d.). In Business dictionary. Retrieved from http://www.businessdictionary.com/definition/crisis.html

 

PSU. (2019). PSY 833: L03 Ethical Theories. Retrieved from https://psu.instructure.com/courses/1963919/pages/l03-overview?module_item_id=25808385

2 Comments

  1. Matthew Ultsch April 21, 2019 at 11:28 PM #

    In the #metoo era, these scenarios are coming to light with more regularity.  We have seen television personalities, actors, and athletes who were super stars and entertaining to watch, have their careers cut short because of their unethical behavior.  The fact they are being held accountable for their unethical behavior is a good thing.  I always thought it was interesting in a court of law, where a judge would show leniency for someone because of their years of service to the community.  If they were of service to the community, such as a member of congress, wouldn’t that mean they should have a harsher sentence?  They were trusted with more and we should expect more.  Someone can be both good and bad at the same time.  For example, sexual misconduct and the subsequent cover up, like the scenario you spelled out, doesn’t mean everything else he did was a bad thing.  In fact, you pointed out the positive side early in your post.  Clearly, both can coexist and one does not negate the other. 
    I suppose I ventured off topic in that this unit is about organizational and ethical climates versus societal climates, if there is a such thing.  But it is interesting to think of how #metoo has influenced organizational and ethical climates.  Employees may feel emboldened to report sexual misconduct whereas, in a different time were not.  When looking at the four dimensions of ethical work climate, there is research to support the same components that exist at the individual level, also exist at the organizational level (Arnaud, 2012).  Is it also possible they exist in the same way at the societal level?  

    Reference:
    Arnaud, A. (2010). Conceptualizing and measuring ethical work climate: Development and validation of the ethical climate index. Business & Society, 49(2), 345-358.

  2. Kelsey Taylor Farrar April 18, 2019 at 1:47 AM #

    Hi Jessica,

    Thank you for sharing your personal experience. You did an excellent job describing this crisis and how it relates to ethics. I agree that the leadership team made the correct decision in this situation. By not firing Jon it would have been setting an example for other employees that this kind of behavior was acceptable. It would have also been unethical to let Jon have this type of relationship, but not allow other employees to as well.

    One point that stood out to me was the concept of conflict. Conflicts are at the core of all ethical decisions and actions because values come into play in several aspects of a crisis (PSU, 2019). Conflicts can be described as “situations that bring these values to the forefront and put them in direct competition with each other because a decision must be made” (PSU, 2019). As a leader, it is extremely important to consider everyone involved in the situation, as well as the results. Anytime that values are at stake, there will be conflict, even if the values are all good ones (PSU, 2019). In this situation, the company had to weigh the results of firing Jon vs keeping him on board at the organization. The value of respecting Jon and keeping him at the company comes into conflict with the value of maintaining a successful and fair organization, as well as employee satisfaction. It would definitely upset the employees if they felt that Jon was receiving special treatment, which can then in turn have a negative effect on their work performance.

    Thank you,
    Kelsey

    References:

    PSU (2019). L10: Crisis. PSY 833. Retrieved from https://psu.instructure.com/courses/1963919

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