Activity- Applying a decision model

This activity gives you the opportunity to practice applying a decision model for ethical decision making on the following case study. Discuss the case study in your teams working through the steps.

To get the maximum benefit out of this tutorial, you MUST read and attempt an analysis of the case before coming to the tutorial so that you can discuss your ideas with your team.

The case to be discussed revolves around the classic tension between rule based ethics and value judgments. For the purposes of analyzing the case, assume that you are Jim. Prepare a response to the case by applying each step of one of the decision making models given in the lecture notes. As part of your analysis you should identify what are the ethical issues Where possible also indicate whichprofessional values from the Code of Ethics for Professional Accountants arerelevant to this case and why. Even though this is not a financial/accounting issue you could find yourself in a management position where you have to make decisions about environmental and social issues.

As part of the process ensure you list the key stakeholders in the case and identity their main rights and Jims corresponding duties. A table to assist you with this is provided on the next page. Remember, most rights are not automatic. A person only has a right to something if someone else has a corresponding duty to either act, or refrain from acting, to satisfy the right (E.g., in a legal contract to supply goods from Person X to Person Y, Y has the right to receive the goods and X has a duty to supply them. Also, X has a right to receive payment for the goods andY has a duty to pay for them. In the absence of a contract, Y would have no right to receive the goods and X would have no duty to supply them).  A consideration of the key stakeholders an associated rights and duties is helpful in defining and understanding the problem(s).  

Jimand Cinco Corporation

You are Jim, the new manager at the pulp processing plant. Read the scenario below and by applying each sep of the DECIDE model for ethical decision making determine what are the ethical issues andwhat should do?

As part of your analysis you should list the key stakeholders in the case and identify their main rights and your responding duties. Where possible indicate which professional values from the Code of Ethics for Professional Accountants are relevant to this case and why.

 

Jim,now in his fourth year with Cinco Corporation, was made a plant manager three months ago after completing the management training program. Cinco owns pulp-processing plants that produce various grades of paper from fast -growing,genetically altered trees. Jims plant, the smallest and oldest of Cinco 's, is located in upstate New York, near a small town. It employs between 100 and 175 workers, mostly from the nearby town. In fact, the plant boasts about employees whose fathers and grandfathers have also worked there. Every year Cinco holds a Fourth of July picnic for the entire town.

Cinco's policy is to give each manager a free hand in dealing with employees, the community,and the plant itself. Its main measure of performance is the bottom line(profit)， and the employees are keenly aware of this fact.

Like all pulp-processing plants, Cinco is located near a river. Because of the plants age, much of its equipment is outdated. Consequently it takes more time,and money to produce paper at Jim's plant than Cinco's newer plants. Cinco has a long standing policy of breaking in new managers at this plant to see if they can manage a work force and a mill efficiently and effectively. The traditionis that a manager who does well with the upstate New York plant will betransferred to a larger, more modern one. As a result, the plant’s workers have had to deal with many managers and have become hardened and insensitive to change. In addition, most of the workers are older and more experienced than their managers, including Jim.

In his brief tenure as plant manager, Jim learned much from his workers about the business. Jims secretary, Ramona, made sure that reports were prepared correctly,that bills were paid, and that Jim learned how to perform his tasks. Ramona had been with the plant for so long that she had become a permanent fixture. Jim’s three foremen were all in their late 40s and kept things running smoothly.Jim's wife, Elaine, was having a difficult time adjusting to upstate New York. Speaking with other managers' wives, she learned that the "prison sentence", as she called it, typically lasted no longer than two years.She had a large calendar in the kitchen and crossed off each day they were there.

One morning as Jim came into the office, Ramona didn’t seem her usual happy self.

"What's up? "Jim asked her.

“You need to call the EPA, "she replied, “it’s not really important. Ralph Hoadsaid he wanted you to call him.”

When Jim made the call Ralph told him the mill's waste disposal into the river exceeded Environment protection Agency(EPA) guidelines, and he would stop by next week to discuss the situation. Jim hung up the phone and asked Ramona for the water sample results for the last six months from upstream and downstream,and at the plant. After inspecting the data and comparing them with EPA standards, he found no violations of any kind. He then ordered more tests to verify the original data. The next day Jim compared the previous day’s tests with the last six months’ worth of data and still found no significant differences and no EPA violations. As he continued to look at the data, however, something stood out on the print outs that he hadn’t noticed before. All the test had been done on the first or second shifts. Jim called the foremen of the two shifts to his office and asked if they knew what was going on. Both men were extremely evasive and said not to worry- that Ralph would explain it to him.

That night Jim decided to make a spot inspection of the mill and test the waste water. When he arrived at the river, he knew by the smell that something was very wrong. Jim immediately went back to the mill and demanded to know what was happening. Chuck, the third-shift foreman, took Jim down to the lowest level of the plant. In one of the many rooms stood four large storage tanks. Chuck explained to Jim that when the pressure gauge reached a certain level, a third-shift worker opened the value and allowed the waste to mix with everything else.

“You see,” Chuck told Jim, “the mill was never modernized to meet EPA standards,so we have to divert the bad waste here; twice a week it goes into the river.”

“Who knows about this?” asked Jim.

“Everyone who needs to,” answered Chuck.

When Jim got home, he told Elaine about this situation. Elaine’s reaction was, “Does this mean we’re stuck here? Because if we are, I don’t know what I’ll do! ” Jim knew that all the managers before him must have had the same problem. He also knew that there would be no budget for installing EPA approved equipment for at least another two years. The net morning Jim checked the EPA reports and was puzzled to find that the mill had always been in compliance. There should have been warning notices and fines affixed, but he found nothing.

That afternoon Ralph Hoad stopped by. Ralph talked about the weather, hunting, fishing, and then he said, “Jim, I realize you’re new. I apologize for not coming sooner, but I saw no reason to because your predecessor had taken care of me until this month.”

“what do you mean?” Jim asked.

“Ramona will fill you in. there’s nothing to worry about. I know no one in town wants to see the mill close down, and I don’t want it to either. There are lots of memories in this old place. I’ll stop by to see you in another couple of months.” With that, Ralph left.

Jim asked Ramona about what Ralph had said. She shoed him a miscellaneous expenseof $100 a month in the ledgers. “we do this every month,” she told him.

“How long has this been going on?” asked him.

“Sincethe new EPA rules,” Ramona replied. She went on to clarify Jim’s alternatives.Either he could continue paying Ralph, which didn’t amount to much, or he could refuse to, which would mean paying EPA fines and a potential shutdown of the planet. As Ramona put it, “Headquarters only cares about the bottom line. Now unless you want to live here the rest of your life, the first alternative is the best for your career. The last manage who bucked the system lost his job. The rule in this industry is that if you cant manage Cinco’s upstate New York plant, you can’t manage. “That’s the way it is.”