Ethics Case Studies

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Ethics Case Studies Answer Guide

LEE  –  P ART  1  

Lee  has  been  with  XYZ  Property  Casualty  Company  for  twelve  years,  all  in  a  large  regional  
office  in  the  Midwest.  He  established  an  impressive  track  record  of  getting  results,  and  was  
well-­‐respected  by  his  staff  and  senior  field  management  alike.  Anxious  to  further  his  career,  
he  applied  for  and  was  hired  into  a  Strategic  Business  Consultant  position  at  the  company’s  
headquarters.    This  is  a  developmental  role  intended  for  high  potential  employees  such  as  
Lee,  intended  to  engage  employees  with  insurance  field  experience  to  work  on  long-­‐term  
strategic  issues  facing  the  company.    

A  critical  capability  for  success  in  this  position  is  the  creation  of  clear,  concise  reports  and  
presentation  of  issues  and  recommendations.    Lee  attended  a  class  and  received  coaching  
in  these  areas  as  part  of  his  early  training  for  the  job.    After  a  recent  presentation,  he  
received  feedback  that  although  his  analysis  was  good,  his  report  and  presentation  
materials  were  rambling  and  confusing.    The  clear  message  from  his  boss  was:  “…fix  this  
problem,  for  future  success  depends  upon  your  ability  to  communicate  clearly  and  
convincingly.”  

Another  presentation  is  scheduled  for  next  week.  Lee  feels  helpless  to  improve  in  so  short  a  
time,  so  he  hires  his  neighbor  Sheila  to  write  the  report  and  presentation  for  him.    He  uses  
company  funds  to  pay  Sheila,  calling  the  expense  ‘skill  development’.    

Was  Lee  doing  anything  unethical?  Why  or  why  not?    

If  Lee  claims  Sheila’s  work  as  his  own,  he’s  misleading  his  employer.  Sheila  has  been  paid,  
and  likely  has  no  qualms  about  Lee  using  the  material  however  he  chooses.  However,  Lee’s  
company  in  effect  is  paying  twice  for  the  work:  through  Lee’s  salary  (they  compensate  him  
to  perform  this  task)  and  again  through  the  fee  paid  to  Sheila.  He  is  also  misleading  the  
company  into  believing  that  he  is  taking  steps  to  develop  these  critical  skills.  

Which  of  Lee’s  values  might  be  at  odds  with  one  another?      

Honesty  vs.  recognition;  integrity  vs.  advancement;  short-­‐term  vs.  long-­‐term  

What  are  the  risks  to  his  reputation:    by  hiring  Sheila  to  do  the  work?    by  not  hiring  Sheila  
to  do  the  work?  Which  in  your  opinion  poses  the  more  serious  risk?  

Risk  in  hiring  Sheila:  he  is  being  duplicitous  and  untrustworthy,  if  he  claims  Sheila’s  work  
as  his  own.  Risk  in  not  hiring  Sheila:  he  looks  incompetent  and  unprepared.    
Most  participants  agree  that  the  risk  to  reputation  in  hiring  Sheila  is  greater,  since  it  is  far  
more  difficult  to  overcome  the  belief  that  one  is  untrustworthy  ,  than  to  overcome  a  
perception  of  lack  of  skill.  
LEE  –  PART  2  

Lee  uses  Sheila’s  report  and  presentation  as  his  own,  and  he  receives  rave  reviews  from  
senior  management.    He  continues  to  hire  Sheila  on  the  side  to  prepare  his  materials.  Not  
only  does  Lee  look  good,  but  so  does  Marcia,  his  boss.    She’s  credited  with  turning  Lee’s  
performance  around  in  a  short  period  of  time,  and  with  accurately  evaluating  Lee  as  a  quick  
study  and  someone  worthy  of  future  advancement.      

After  several  weeks,  quite  by  accident,  Marcia  meets  Sheila  at  a  party  and  learns  of  her  role  
in  Lee’s  success.  Not  only  is  Marcia  disturbed  by  Lee’s  duplicity,  but  does  not  know  what  
she’ll  do  with  this  new  information  at  Monday  morning’s  Talent  Review  meeting.  If  she’s  
honest  with  her  boss  and  peers  about  what  she’s  learned,  her  reputation  as  an  astute  
leader  will  suffer  along  with  Lee’s  reputation.    

Is  this  an  ethical  dilemma?    

Yes.  Marcia  must  choose  between  covering  up  Lee’s  duplicity,  to  the  detriment  of  the  
company,  and  being  honest  and  forthcoming,  which  will  jeopardize  Lee’s  career  and  
perhaps  her  own.        

Which  of  Marcia’s  values  might  be  at  odds  with  one  another?    

Honesty  vs.  desire  to  be  seen  as  a  capable,  informed  manager  

If  you  were  Marcia,  what  would  you  do?  In  formulating  your  answer,  consider  each  of  the  
resolution  principles:  end-­‐based  (i.e.,  what  produces  the  greatest  good  for  the  greatest  
number?),  rule-­‐based  (follow  the  rule,  or  the  principle  that  you  want  everyone  else  to  
follow),  and  care-­‐based  (do  to  others  what  you  would  want  them  to  do  for  you  –  but  note:  
there  may  be  several  ‘others’  to  consider).  

Participants  should  consider  various  options,  using  Kidder’s  three  resolution  principles  
(from  How  Good  People  Make  Tough  Choices;  Resolving  the  Dilemmas  of  Ethical  Living  by  Rushworth  
M.  Kidder,  ©1995,  featured  i n  the  CPCU  Society  Center  for  Leadership’s  Leadership  and  Ethics  
course)  

 Marcia  should,  in  some  fashion,  bring  Lee’s  actions  to  the  attention  of  her  management,  
given  the  fact  that  he  is  considered  a  high-­‐potential  performer.  She  may  or  may  not  choose  
to  do  so  publicly  at  the  Talent  Review  meeting,  but  could  simply  say  at  the  meeting  that  
she’s  come  upon  new  information,  and  would  like  to  postpone  discussion  of  Lee’s  potential  
until  she’s  had  a  chance  to  investigate  further.    She  should  immediately  fill  her  boss  in  off-­‐
line,  preferably  before  the  meeting.  

 
TOO  MUCH  INFORMATION  

Saad  was  Bernie’s  supervisor  in  the  marketing  department  of  Regressive  Insurance  up  until  
about  five  years  ago.    Saad  was  aware  that  Bernie  enjoyed  going  to  the  track  and  visiting  
casinos,  and  began  to  be  concerned  that  Bernie’s  gambling  was  becoming  excessive.    
Knowing  that  his  performance  was  suffering  because  of  frequent  absences  (all  due  to  
extended  gambling  trips),  Bernie  got  out  of  Regressive  before  he  was  disciplined,  and  he  
and  Saad  have  remained  friendly.      

Both  Saad  and  Bernie  have  since  taken  jobs  at  other  companies,  and  Bernie  is  out  
interviewing  again,  this  time  for  a  job  at  Gibbs  Mutual.    Saad’s  neighbor  is  the  interviewing  
manager  at  Gibbs  and  learns  that  Bernie  and  Saad  worked  together  at  Regressive.  The  
neighbor  has  asked  Saad,  off  the  record,  if  he  would  recommend  Bernie  for  the  open  
position.  Saad  is  concerned  when  he  learns  that  the  position  has  financial  and  fiduciary  
responsibilities,  for  he  knows  that  Bernie  continues  to  gamble,  and  sometimes  gets  in  over  
his  head.    

Does  Saad  face  an  ethical  dilemma?    

Yes.  Saad  has  information  that  could  affect  Bernie’s  chances  of  obtaining  the  job.    If  he  tells  
the  truth,  Bernie  will  likely  not  get  the  job.  If  he  omits  important  information,  he’ll  be  
unfairly  misleading  the  company  that’s  considering  Bernie  as  a  candidate.    

If  so,  which  of  Saad’s  values  might  be  at  odds  with  one  another?      

Honesty  vs.  loyalty;  integrity  vs.  mercy/care  for  Bernie’s  career  

What  should  he  do  to  resolve  the  matter?  In  formulating  your  answer,  consider  each  of  the  
resolution  principles:  end-­‐based  (i.e.,  what  produces  the  greatest  good  for  the  greatest  
number?),  rule-­‐based  (follow  the  rule,  or  the  principle  that  you  want  everyone  else  to  
follow),  and  care-­‐based  (do  to  others  what  you  would  want  them  to  do  for  you  –  but  note:  
there  may  be  several  ‘others’  to  consider).  

Participants  should  consider  various  options,  using  Kidder’s  three  resolution  principles  
(from  How  Good  People  Make  Tough  Choices;  Resolving  the  Dilemmas  of  Ethical  Living  by  Rushworth  
M.  Kidder,  ©1995,  featured  i n  the  CPCU  Society  Center  for  Leadership’s  Leadership  and  Ethics  
course).  

One  option  would  be  for  Saad  to  speak  to  Bernie  and  be  honest  with  him  about  his  
reluctance  to  speak  with  his  prospective  employer.    Saad  may  tell  the  neighbor  that  he  
makes  it  a  practice  not  to  provide    an    ‘off-­‐the-­‐record’  reference,  and  refer  the  neighbor  
back  to  Bernie.    

 
CULTURE  SHOCK  

The  Specialty  Large  Loss  Unit  of  ACME  Casualty  has  suffered  a  large  loss  of  its  own.  A  senior  claim  
consultant  has  been  caught  in  an  embezzlement  scheme  with  a  plaintiff  and  the  plaintiff’s  attorney,  
and  i t’s  been  discovered  that  this  is  just  the  latest  i n  a  series  of  fraudulent  activities  which  the  
consultant  has  orchestrated  against  ACME.    Her  long-­‐time  boyfriend,  who  has  an  administrative  
role  in  the  department,  also  participated  in  the  fraud  which  took  place  over  the  course  of  eighteen  
months.  Several  fellow  employees  had  been  suspicious  of  the  pair,  but  they  never  r aised  concerns  
to  management  because  they  didn’t  trust  that  their  suspicions  would  be  k ept  confidential.    

The  manager  of  the  department  had  no  knowledge  of  the  fraud,  but  the  stress  of  the  aftermath  and  
fallout  from  the  discovery  prompted  him  to  leave  the  company  and  get  a  job  elsewhere.  Maria  is  the  
successful  leader  of  another  unit  in  the  company’s  claim  organization,  and  she’s  been  selected  to  
take  the  departing  manager’s  place  as  head  of  the  Specialty  Large  Loss  Unit.    

Although  I nternal  Audit  has  confirmed  that  the  fraudulent  activity  was  confined  to  the  one  claim  
consultant  and  her  boyfriend  (both  of  whom  have  b een  fired  and  prosecuted),  Maria  faces  several  
problems.  The  department’s  r eputation  with  other  ACME  units,  i ts  i ndependent  agents,  and  with  
defense  and  plaintiff  attorneys  alike  i s  suffering.  Staff  morale  is  low,  and  there’s  an  unspoken  b elief  
on  the  part  of  many  that  the  department’s  culture  may  in  some  way  have  contributed  to  the  
occurrence  of  the  fraud,  and  to  the  fact  that  it  continued  for  so  long.  What  should  Maria  do  to  turn  
around  the  unit’s  r eputation,  and  to  create  a  culture  that  embraces  high  ethical  standards?  

Maria  can  do  the  following:  

• Create  a  compelling  vision  for  the  department,  with  ethics  as  a  central  value  

• Set  clear  expectations  about  ethical  b ehavior  

• Be  a  role  model  herself  for  honest,  ethical  b ehavior  

• Use  every  opportunity  to  encourage  open  communication  

• Take  steps  to  i mprove  employee  morale  and  teamwork  

• Incorporate  ethical  behavior  and  practices  i nto  performance  objectives  

• Provide  positive  consequences,  reward,  and  recognition  for  open,  honest  dealings  

• Take  prompt  action  against  wrong-­‐doers    

• Publicize  the  company’s  ombudsmen  (or  ‘whistleblower’)  hotline  

• Provide  ethics  training  

                             Etc.  

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