Please answer the following questions:
- What is the major problem in which the case study focused on?
- What are weakness and strength of the organization culture in the management?
- What are the possible solutions/Recommendations to avert untheatrical behaviors?
Executive Ethics: Inflating the Numbers -- Case Guide
Stephen Duarte
Background Statement
A senior executive of a for-profit hospital falsely reports information to the CEO while protecting his son’s job.
Major Problem and Secondary Issues
The primary issue, in this case, is that the CEO built an organizational culture based on trust, and high autonomy. Unfortunately, that situation was taken advantage of, and the employees used the culture for self-preservation.
Role
The ideal role for this case is the CEO. The CEO built a culture that led to deceptive business practices. The advantage of this role is that the CEO can change the culture and establish checks and balances to assure that the practice of falsifying reports is eliminated. The disadvantages of this role are that the CEO reports to the Board of Directors, who will want to know why the problem went on for as long as it did, and how she is going to rectify the problem. Her ability to do her job may comes into question. The CEO is responsible for the outcomes of the organization and must address the situation with full accountability, despite her best intentions to create an organization that gives her employees a high level of autonomy to make decisions.
Organizational Strengths and Weaknesses
This for-profit hospital has the following strengths:
The senior management and the hospital have an excellent reputation in the industry. This position can be used as leverage when creating solutions.
The employees are committed to the organization and believe their CEO has done all the right things to make the organization successful.
This for-profit hospital has the following weaknesses:
With new pressures to reduce cost, the ability of the current executive team may be in question.
The unethical behavior and the subsequent closure of the lab may cause the employees to be leery of plans laid out by the executive team to move the organization forward.
Solutions and Recommendations
Here is a list of potential solutions:
The CEO must report the situation to the Board of Directors, accept responsibility and provide a course of action that may include the firing of the COO for falsely reporting information.
Hold a meeting with all the employees, be transparent about the situation, and assure that going forward the executive team will be held accountable for all their actions.
Establish a checks and balances system so that there are multiple sources of information for cross-referencing organizational data.
Improve communication with employees to ease any concerns that they too will lose their job.
The literature provides useful strategies for rebuilding stakeholders trust after corporate corruption scandals have occurred. As stated by Bandsuch, Pate and Thies (2008) the guiding principles to restore trust are:
Principle-centered leadership
Transparency
Stakeholder's voice
Ethical Culture
This article provides a causal model of corporate governance, leadership, and transparency, as well as the Transparency Measurement Tool (TMT) that will provide students guidance on how transparency can be measured and acted upon for trust restoration.
Evaluation
The following steps should be considered as corrective measures:
The first step is to discuss what to do with the COO who reported the false information used to make decisions. At this point, all trust is assumed broken, and the termination of the COO is an option.
Second, and in conjunction with the first step, the Board of Directors must be notified of the situation and provided a history of the false reports and its impact on the organization. Board approval on the termination of the COO may be required. The CEO should realize that her creditability is also in question, and separation or resignation may be inevitable.
Provided the opportunity, the CEO should put in place a corrective measure plan that assures such falsifications do not occur in the future. Also, the incorporation of transparency measurement tools will assist in keeping the corrective measure on track.
An opportunity for the employees to express their concerns will be crucial in rebuilding trust. A regular update on the status of any actions taken will assist in restoring the confidence lost.