Business Ethics and HRM: Jet Airways Case Study — Presentation Transcript

 1. Coping with Turbulent Times in the Indian Aviation IndustryJet airways layoff- what kind of hrm?GROUP MEMBERS:AbhijitNaikAnuj JainHimadriSinghaManojJindalPrasad DeshpandeSanjeevBatraSuresh Babu  2. THE CASEThe case is about the retrenchment drama that unfolded in one of India‟s leading aviation companies, Jet Airways (India) Limited in Oct 2008.More than thousand employees were laid off.It was a part of major Cost-cutting exercise to tackle Global slowdown and price hike of Aviation fuel.  3. Largest Indian Aviation Industry ($6 billion).A fleet of 107 Domestic aircraft serving 1,009 daily flights.82 International routings.Total strength of 19000 employees.JET AIRWAYS AS ON OCT 2008  4. The retrenchment drama unfolds…..Oct 16, 2008, Jet announced that it would lay off nearly 1,100 of its staffs to streamline operation.A day after it had already laid off around 800 of its cabin crew members. Simultaneously announced second phase of lay-off of 1100 employees, mainly from departments like flight attendant, cockpit crew etc.  5. Retrenchment drama unfolds……Amidst great furor and opposition by various organizations and political parties, NareshGoyal , chairman of Jet, reinstated the employees a day later the great emotional drama.November 2008, Jet decided on a 20% cut in the salaries of its pilots, engineers, and some other staffs.  6. Some salient issues……Employees were FIRED with no PRIOR NOTICEThe entire force of unconfirmed staff was being laid off on a 30day compensation package Company took action only against lower staffs.

.  12.   10. its built over a period and there should not be any drastic decision which may endanger its employees.  9. Points to ponder No company would know of a risk over night.“SarojDatta (Exe Director)“It is a difficult decision but we had to take it. Protest against management…… 11. Ethical issues……Some most crucial questions unanswered…. 7. captain etc?  8."A total of 1. Employees are more than just-a-resource. make environment conducive to acceptance of decision.900 people are being served separation notice. Why did the Jet CEO enter the competitive market.Where would those 1900 employees go? Why took action only against lower grade staffs? Senior management was very less affected.. Ethical issues……. The very existence of any company is because of its employees.Before reaching to decision. Company keeps on focusing on customer satisfaction when its own people are so highly dissatisfied. THANK YOU . The role of HR executive is important to ascertain that people‟s interests are not left aside in the race for profitsThe HR executive to ensure no discrimination in pay cut and lay off.100 employees. 800 have already been served notice. instead of playing down after foreseeing risks? Some quotes made by higher officials…. Some observations…. What would be the future of those students currently taking courses in cabin crew.”Wolfgang Schaeur (CEO) It throws a serious question towards the accountability of an organization to its employees………. In the next few days the others will also be served notice. It is an attempt to save the jobs of remaining 11. More accountability from top management.

we need to have our faith back average businesses run by average people: That way. and often regulatory pressures are needed. the barriers they cite sound remarkably familiar. Indeed. such sales practice is unsustainable and this is the key reason they have landed in regulatory hot water. harsh immigration regime has come into force primarily because of the commission driven agencies that British colleges and universities use. but they encourage a negative one". there is Motivated Blindness. This is when we overlook other people's unethical behaviour when it pays to remain ignorant. Clinton administrations perfectly reasonable goal of increasing home ownership in America (which led to easy mortgages in a way. but we are to assume business to be a positive force in the society. Edward Demming talked about the role quantitative goal-setting plays in lowering quality standards decades ago. cowboy businesses and an eternal hide-and-seek with regulators. it is very difficult to challenge the practice as this will fly in the face of convention. every college follows the same practice. given the individual roles in the game). in the Private Education industry. [I know this sounds cynical and sometimes. with caution. In a way. In Britain. They are concerned about the sort of ethical problems that happen with perfectly good people. or in other words. but the officials may just pay no heed as unearthing such practices may undermine the game and drive spectators and sponsorship . the propensity to use a template which worked elsewhere. Bribery and match fixing may be common in Cricket (and it is easy to do so. do wrong things. but I shall agree that most organizations don't even try to do this. The same can be said. To quote. who are responsible family men and reasonable neighbours. To their credit. However. This sounds simple. the authors argue). The authors point to five barriers to an ethical organization: Shall we say five excuses. "we set goals to promote a desired behaviour. or a fad catches up. the new. and indeed. I shall argue this is one of consequences of 'Best Practice' thinking. The authors cite Baseball officials who failed to notice widespread steroid use. The authors also talk about the pressure to maximize billable hours in accounting. and this recession. It is worth recounting them here. as this leads to less than honest promises made to students. less consideration of academic ability of the students vis-a-vis courses chosen and other unethical behaviour. legal or consulting practices.] Next. though so far the regulators failed to pin down the problems to recruitment practices. about game-fixing in professional sports. as American For Profit players are finding out. we don't give enough credits to fads. industry practices change as a leading player changes the rules of the game. therefore: First. there are Ill-conceived Goals. For example. there will be corporate greed.Max H Bazerman and Ann E Tenbrunsel write about Ethical Breakdowns in organizations. However. and we all know how counterproductive simplistic sales targets can be. this is an interesting essay to read. The moot point is that changing the goals may need more than just brainstorming. rewarding sales teams for student recruitment has proved to be problematic. One possible remedy is to brainstorm such intended consequences while setting the goal. which can get us out of the current recession.

money away from them. following up and making sure that the practice is stopped is required at the same time. Too many organizations approach ethics as an objective to be met to satisfy external parties. regulators. Third. Then. there is the phenomena of Indirect Blindness. grow up in this way. customers . This is a key point. the recruitment agencies that the college employ. We are less able to detect unethical behaviour if it develops gradually. catching this early is only a part of the solution. employing agents in For Profit Education is an endeavour to allow. The authors cite a case of a drug company which sold the rights to another company. One can also talk about thousands of mortgage advisors who worked on behalf of banks etc handling the housing loans during the past boom. particularly business schools. regulatory pressures may be needed to sort things out. Businesses are not very good at doing this. unethical recruitment practices. A 'pre-mortem' of an outsourcing operation is a good place to start. Finally. the thinking that 'the end justifies the means' allows unethical behaviour. can and should play a role . and yet again.but they are intentionally turning a blind eye to the conflicts of interest and ethical problems this cause. as ethics is not a end of the year product to be shown in the balance sheet. I shall argue that the problem of plagiarism. making people feel committed to the broader goal of building a better society ahead of making money and staying safe should be a key goal of any business education. again. when the assessors let go of small transgressions noted in coursework and regular class assignments. In a way. And. Returning to my familiar territory.indeed. the Outcome Centricity. which is widespread in higher education these days. Again. but a matter of everyday responsibility. with our indirect involvement and sanction. For Profit colleges in Britain. or have a direct or indirect interest in. but keep a distance at the same time. the cases where the unethical practices are carried out through third parties. Regulatory pressure is often the only way to keep things in check. who encouraged the customers to apply for mortgages beyond their usual paying capacity. this is common sense for the college administrators . who imposed a price increase. There is always the small corner-cutting which the problem starts with. to deflect attention from itself.they are employing people with best relationships and knowledge of the market . and banks turned a blind eye as they did not think they can control the mortgage advisors without rocking the boat and losing business. which it usually does. I shall argue that the educational institutions. The college administrators often fail to accept the responsibility of wrong promises made to the students. But. The solution to this is rooting out conflicts of interest. However. I know that many of the college admission departments employ staff who are related to. there is the problem of Slippery Slope. This is the problem of 'Let Go' which we do all the time. institutional blindness and management by templates is likely to come in the way. though they were fully aware of the possibility and failed to ensure that the students were properly informed in the first place.

if the give-and-take balance isn't right. A constant vigil on ethical practices in the organization helps to keep the business on the ball. increased costs. though not in the scale of Deepwater Horizon that BP had to contend with last year. Often. if you have got to Balanced Scorecard) and usually have a narrow view of resources we consume. and preparing their organizations to mitigate and survive when such scandals break. four. taking proactive measures. and intend to do as much as they can get away with. We only measure one dimension of business (okay. For a business to function. unlike others. This is one area. family support. fraudulent financial acts. reputation and image damage. these things end up in disasters. data loss. health care. customer/client trust. What many are only now discovering is that integrity continuity planning is . Ethical misconduct disasters constitute serious costly risks to the continuity and survival of a business. However. holiday rushes are all examples of society paying for a business to work) and natural resources which we don't account for adequately. consumer awareness. media scrutiny and a more responsible business education can make an impact here. While all of us want to create organizations which last longer and turn profits over a longer period of time. Strategic Integrity Continuity Most organizations have long acknowledged that business continuity planning is an essential priority for effectively anticipating. the need for transparency about the process as much as the product. However. regulatory pressures are ineffective. and surviving natural disasters. Outcome centricity is life-blood of business and one can not legislate this out. busy traffic situation during the peak hours. Prudent businesses must plan to manage integrity continuity by assessing their vulnerability to ethical disasters. No company is immune from these threats. lost sales and recovery costs. and potentially land senior management in prison. fines. Regular headlines reveal that breakdowns of integrity collectively cost businesses billions of dollars in litigation. the businesses we build are likely to be unsustainable. and deliberate malevolent acts. The reason why ethics is so important is because we are usually bad at counting the costs when making business decisions. it consumes many social (people's time. This was one case where incremental negligence and a focus on outcome undermined all sorts of internal and external controls: The manager who let a less than optimal valve remain in its place because the end of year production targets were more important helped to cause the one of the biggest environmental damages in recent history. A business leader can only ignore this at his/her peril. mitigating. accidents. available methods of accounting and decision making are quite limited in scope. preventing.and suppliers as the case may be.

Common ethical and professional standards include assumptions that decisions and behaviors are conducted honestly and that employees and managers never knowingly harm or do damage to fellow employees. “I never thought this would happen to us. Neither does formulating a detailed written statement of ethics or specific documented policies provide fail-safe methods for preventing such disasters. Ethical issues must be on the strategic agenda. Managing integrity requires strategic planning and enactment beyond hiring “good. coercion. conflict of interest. Employees who perceive such activities as existing detached from an ethical context or who utilize an alternative (unethical) value paradigm (i. but because it is the right thing to do. basically moral people. customers. Integrity management is intertwined with managing the larger corporate culture and with the informal reward/motivation processes that impact employee decisions and behaviors in ways that transcend policies printed in a written code of conduct. behaviors.” The reality is that all of the common justifications for ignoring integrity continuity planning are based on misplaced trust in unmanaged human nature and ignoring the systemic factors that give rise to ethical disasters.” Those sentiments are intrinsically related to the aftermath statement. consider the scandals questioning conduct of some priests within the Roman Catholic Church. and processes exist in an ethically judged context are more aware and motivated to act ethically. Such planning must go beyond compliance issues and reactive disciplinary policies to actually manage integrity. or vendors by deception. Recognizing the Risk for Integrity Lapses Too frequently.” Even systematically hiring only employees with perceived high levels of morals and ethics is no sure-fire method for preventing a major scandal. top corporate executives think that ethical scandals “couldn’t happen to us.e. For example. misrepresentation.[1] Employees who know that particular workplace decisions. Photo: Steve Carboni Integrity management should be a priority not only because it is legally required. clients. or other acrimonious acts. fraudulent report. (The . financial or perceived performance) are less aware of ethical implications and more motivated to act unethically.also due diligence. stakeholders.

Qwest. regulatory violations. and cooperate with authorities. unexpected.”[2]) A false sense of security is a main factor that prevents companies from creating a plan of action to follow if a disaster occurs. such as those of the Uniform Federal Sentencing Guidelines for Organizations. bribery or improper influence. disciplinary actions. and not all scandals are of a company’s making. financial improprieties. Enron. Sears. The major categories of such disasters typically include instances of harassment or discrimination. criminal or illegal activities. and non-routine unethical events or a series of unethical events that create significant operational disruptions and threaten or are perceived to threaten an organization’s continuity of operations. . Because of the severity. and appropriately adjust to most breakdowns in conduct or decision-making. In fact. WorldCom. and public crisis management communication so that the lapses do not escalate into catastrophes. enact full-disclosure efforts. public scrutiny of an organization’s mishandling of such events and the resulting involvement of legal or regulatory structures may escalate so that the misconduct actually becomes a disaster for a business. Adelphia. Citigroup? Some cases of ethical scandals have resulted in senior executives facing prison sentences.com projection forecasts up to 20 “major” business ethical misconduct disasters every year. train. Sentencing guidelines.final 65-page Enron corporate Code of Ethics was written in 2000 and was intended to help guide employees for “conducting the business affairs…in accordance with all applicable laws and in a moral and honest manner. In a Sarbanes-Oxley world. communication to the workforce. United Way of America. Poor choices are made all the time. customer deception. Tyco. Global Crossing. The key is whether the organization has adequately planned to mitigate against lapses in ethical decision making through prompt response. persistence. Merrill Lynch. react to. appropriate disclosure. What do you think of when you hear the following corporate names: Martha Stewart. Ethical Misconduct Disasters Ethical misconduct disasters are specific. Andersen. No company is immune from scandals.[4] Ethical misconduct scandals can spring from any segment or level of a company’s operations. One study revealed that 62 percent of all companies experienced a “significant or major” integrity continuity disruption between 1986 and 1996. or undisclosed conflict of interest. Mitsubishi Motors.[3] Although predicting ethical scandals in American business is not an exact science. one CFO. Certainly disgruntled antagonists can and do spread false rumors and slander and distort the truth for their own self-interests. not every unethical decision that occurs is a crisis for the organization. However. and implement policies to mitigate. and lack of quick and appropriate response to misconduct. corruption. what prudent executive would ignore the risks of ethical scandals? Yet numerous recent revelations about ethical misconduct make the prospects of the “unthinkable ethical disaster” a realistic concern. increasingly hold executives and senior management accountable by instructing judges to consider the organization’s efforts to plan. businesses that effectively manage integrity can systemically absorb.

[5] The fewer than 50 percent of employees who believe their employers have high ethical integrity. M. unique temptations.pdf. According to a 2002 national study of 12.” (Josephson Institute of Ethics: Los Angeles. Times have changed since the days when one could uncritically assume that all employees are hired with a fundamental and rigid commitment to recognizing. http://www.org/Survey2002/Report-Card_data-tables. moral individuals may be influenced by reward systems. They fear “whistle-blower” retaliation and that existing policies won’t protect them.[8] 60 percent of employees who state that they know but have not reported instances of misconduct in their organizations.[6] 30 percent of all employees who currently report that they “know or suspect ethical violations such as falsifying records. 37 percent admitted that they would lie “in order to get a good job. Research has found that 60 percent of chief executives and boards of directors failed to engage in integrity continuity planning discussions or to include such considerations in strategic planning. unfair treatment of employees.(no longer accessible). Integrity Continuity Analysis Integrity continuity considerations are commonly ignored by senior management. “Report Card 2002: The Ethics of American Youth.[9] Furthermore:   57 percent of companies “have never” incorporated integrity continuity planning at the strategic executive or board level. In addition.[11] . 38 percent admitted shoplifting at least once in the past year. or unseen pressures that will affect their ethical decision-making in some situations. investors. and the public. and acting ethically in every possible situation.[10] More than half of all businesses fail to assess ethical misconduct risks and to ensure integrity continuity. Furthermore.Intrinsic Ethical Assumptions Ethical behavior is a growing concern across society in general. Most employees cite the lack of companies’ confidentiality policies as reasons for not coming forward about ethical misconduct. even good. particularly at the chief executive level.”[7] 41 percent of employees in the private sector and 57 percent of employees in the public/government sector who are aware of ethical misconduct or illegal activities. and lying to top management.josephsoninstitute.” Josephson.000 high school students: 74 percent admitted cheating on an exam at least once in the past year. understanding. 2002). the “inherent ethics” of the “good moral people” that a company hires include:      76 percent of MBA graduates who reported that they were willing to commit fraud to enhance profit reports to management.

opportunities. Far too many corporate scandals have occurred because the organization was an “enabler” of the employee’s unethical behavior.[12] 56 percent of companies have never conducted an ethical behavior compliance audit.[14] Ethical Conduct Audit© can:       Gather information Establish reporting channels Assess culture Examine perceived reward system Be alert to “warning signs” Identify patterns of potential misconduct Such an assessment can provide insight into both legal compliance behaviors as well as into the ethical reasoning and decision-making that is often difficult to see with unfocused or casual observation. and threats is the Ethical Conduct Audit©.   54 percent of companies do not have employee ethics compliance measurement among their performance appraisal criteria. ethical disasters involve employees who failed to follow their department’s internal corporate policies and guidelines.[13] It is imperative that companies carefully assess the integrity risks that are unique in their business by analyzing the following:   On what criteria does the company base confidence in its integrity continuity? Do all company personnel know how to act or behave ethically and appropriately in all situations and contexts?   Do employees know the rules for each situation that may arise? How does the company know that employees have this information? In most cases. One approach that has been used effectively to assess a company’s strengths. . weaknesses. 23 percent of companies have never engaged senior management in ethics/compliance training efforts.

Communicate Ethical Expectations and Train Workforce to Enact Ethical Goals and Criteria . the more such examples are descriptive of the types of choices and situations that employees might be expected to encounter during their work performance. Establish Explicit Ethical Goals and Criteria Every company should establish detailed codes of ethics and all applicable compliance expectations. Finally.” In addition. Criteria should include specific examples of common or routine situations as exemplars so that there are clear cut “models” of what criteria are expected to govern or guide decisions and behavior for employees regarding what is (or is not) considered consistent with the company’s expectations. Designating a corporate ethics officer or creating an ethics management team to manage a strategic integrity plan and to signal commitment helps employees readily see that any statements of ethical conduct expectations are not just “lip service. it is also important to demonstrate to your workforce that the organization is seriously committed to expecting employees to meet and exceed such standards. management must insure that a clear and efficient disciplinary process for lapses of integrity is in place. 2. Demonstrate Commitment to Ethical Goals and Criteria Executives must demonstrate top management’s commitment to integrity as a strategic goal of the corporation. the more powerfully such illustrations can serve as the basis for integrity ideals that are likely to be enacted.Five Key Steps to Reach Integrity Continuity Goals Photo: Denise Palhares Mooney Prudent executives can initiate the following five proactive steps that can move their organizations towards integrity continuity goals and objectives. Furthermore. While having a written code that explicitly defines ethical expectations is important. 3. Such standards can distinguish between legal and ethical conduct. 1. the organization’s expectations upon individuals should be defined and put in writing. In fact. The rewards system (including informal rules and rewards) must be consistent with integrity expectations. but in both cases. it is important to consistently reward integrity and to make sure that these instances are publicized throughout the organization. performance appraisal processes must tie rewards systems to indicators of integrity as well as to other measurements of productivity. All of these written ethical codes should be distributed and reinforced with all employees.

Reinforce written rules. . prudent company executives should also determine what sorts of on-going ethical training initiatives are underway at their accounting firms and among suppliers. vendors. policies. Train employees to recognize and make ethical decisions. Develop plans for reacting and responding to the discovery of unethical behavior. and procedures. Establish Corporate Ethics Officer/Team. Finally. Review ongoing extensive surveillance and collaborative participation efforts to ensure that all behaviors and decisions are being conducted ethically. Install surveillance and evaluative processes and foster collaborative participation. implementing ethics in action. and other “intertwined” entities. applying ethical criteria in “complex” situations. Start with a comprehensive Ethical Conduct Audit ©[15] to get an overview of the current enactment of integrity across your organization. 5. policies. distributors. Distribute written rules. understanding the company’s ethical expectations. and ensuring legal compliance are all part of an on-going integrated training program that should be in place in every organization. Tie performance rewards system to integrity conduct. and protections for those who report unethical conduct. Maintain On-going Proactive Integrity Continuity Management Create and maintain a supportive climate for ethical conduct by recognizing and rewarding acts of integrity and ethical decisions. Given the recent scandals. instituting ethical decision-making processes. manager. Create and maintain confidential “whistle-blower” channels. 4. such training cannot be “theoretical. Proactive Integrity Continuity Management Tactics           Set and maintain integrity goals at the strategic level. Review the various decision systems and critical points where your organization may be vulnerable to lapses in integrity.” It is imperative that everyone be thoroughly trained in transferring and applying ethical principles to the specific situations and decisions that they face in the performance of their jobs. policies. Abide by and enforce disciplinary policies in consistent and fair ways. and procedures. Assess and Monitor Employee Behavior and Decisions It is essential to monitor and audit employee conduct (formal and informal) to have a realistic picture of the types of behaviors and decisions that occur within your organization.Every employee. Prepare contingency plans for handling issues that might potentially become major scandals and disruptions to your ongoing operations. Demonstrate top management commitment to integrity. Recognizing ethical dimensions of various situations. and executive in your company should participate in ethical training programs as part of the strategic commitment to integrity continuity management. Designate Ethical Compliance Manager. Anticipate potential threats to integrity continuity. Monitor and audit conduct (formal and informal).

It is also important to document all aspects of your efforts for integrity management as well as all actions and steps followed in response to episodes of ethical misconduct followed by immediate action. and they direct the malfeasance from the top. Part of the problem.      Maintain “whistle-blower” channels and policies. Much more often. Tenbrunsel     Comments (4)  RELATED Executive Summary ALSO AVAILABLE Buy PDF The vast majority of managers mean to run ethical organizations. Ethical Breakdowns by Max H. Ensure supportive climate for ethical conduct. and review stakeholder agendas. Abide by and enforce disciplinary policy consistently and fairly. But that is rare. follow disciplinary policy consistently and swiftly. the response must be quick and decisive. It is always important to follow procedures consistently and fairly. Rest assured that every step taken (or not taken) will be closely watched by other employees and eventually by the media as well as the public at large. yet corporate corruption is widespread. contact and cooperate with law enforcement (when appropriate). Immediately respond to misconduct. . Summary: When Ethical Scandals Occur If an ethical scandal does occur. is that some leaders are out-and-out crooks. employees bend or break ethics rules because those in charge are blind to unethical behavior and may even unknowingly encourage it. follow procedures consistently and fairly. of course. If employees know the company’s internal procedures and policies as well as its legal and regulatory requirements. Bazerman and Ann E. Offer Organizational Transformation (OT) training and development programs. Reward acts of integrity and ethical decisions. we believe. then possibly the company may emerge gracefully from the disaster.

when it broke. We suspect that few if any of the executives involved in the Pinto decision believed that they were making an unethical choice. That methodical process colored how they viewed and made their choice.” a phenomenon first described by Ann Tenbrunsel and her colleague David Messick. they conducted a formal costbenefit analysis—putting dollar amounts on a redesign.‟” . The moral dimension was not part of the equation. potential lawsuits. according to a 1977 article in Mother Jones. and the company‟s leaders decided to proceed. then a Ford executive VP who was closely involved in the Pinto launch? When the potentially dangerous design flaw was first discovered. With Lee it was taboo. and mendacity of Ford‟s leaders—in short. Scrutiny of the decision process behind the model‟s launch revealed that under intense competition from Volkswagen and other small-car manufacturers. did anyone tell him? “Hell no. What about Lee Iacocca. takes ethics out of consideration and even increases unconscious unethical behavior. look out the window and say „Read the product objectives and get back to work. and even lives—and determined that it would be cheaper to pay off lawsuits than to make the repair. had all the earmarks of conscious top-down corruption. Safety wasn‟t a popular subject around Ford in those days. The Ford Pinto. but the assembly line was ready to go. Ford had rushed the Pinto into production. their deep unethicality. “That person would have been fired. a compact car produced during the 1970s. Why? Apparently because they thought of it as purely a business decision rather than an ethical one. Engineers had discovered the potential danger of ruptured fuel tanks in preproduction crash tests.” said one high company official who worked on the Pinto. Such “ethical fading. greed. More than two dozen people were killed or injured in Pinto fires before the company issued a recall to correct the problem.Consider an infamous case that. became notorious for its tendency in rear-end collisions to leak fuel and explode into flames. Whenever a problem was raised that meant a delay on the Pinto. But looking at their decision through a modern lens—one that takes into account a growing understanding of how cognitive biases distort ethical decision making—we come to a different conclusion. Lee would chomp on his cigar. Taking an approach heralded as rational in most business school curricula. Many saw the decision as evidence of the callousness.

The lesson is clear: When employees behave in undesirable ways. Only by understanding these influences can leaders create the ethical organizations they aspire to run. and law firms to maximize billable hours creates similarly perverse incentives. consulting. Roebuck in the 1990s. Sears is certainly not unique. We ask them what incentives they give their salespeople. increasingly aware that goals are driving . Five Barriers to an Ethical Organization Ill-Conceived Goals In our teaching we often deal with sales executives. Many law firms. By far the most common problem they report is that their sales forces maximize sales rather than profits. Consider what happened at Sears. few grasp how their own cognitive biases and the incentive systems they create can conspire to negatively skew behavior and obscure it from view. employees met the goal by overcharging for their services and “repairing” things that weren‟t broken. and they confess to actually rewarding sales rather than profits. We believe that the patterns evident there continue to recur in organizations. The decades since the Pinto case have allowed us to dissect Ford‟s decision-making process and apply the latest behavioral ethics theory to it.We don‟t believe that either Iacocca or the executives in charge of the Pinto were consciously unethical or that they intentionally sanctioned unethical behavior by people further down the chain of command. it‟s a good idea to look at what you‟re encouraging them to do. when management gave automotive mechanics a sales goal of $147 an hour—presumably to increase the speed of repairs. and executives today are swayed by similar forces. however. Rather than work faster. A host of psychological and organizational factors diverted the Ford executives‟ attention from the ethical dimensions of the problem. Employees engage in unnecessary and expensive projects and creative bookkeeping to reach their goals. However. The pressure at accounting.

overbilling is the outcome. A system designed to promote ethical behavior backfires. What is the effect? Deciding where in a multitude of categories an activity falls and assigning a precise number of minutes to it involves some guesswork—which becomes a component of the billable hour. Even without an intention to pad hours. Of course.some unethical billing practices. so some firms have assigned codes to hundreds of specific activities. have made billing more transparent to encourage honest reporting. Research shows that as the uncertainty involved in completing a task increases. the guesswork becomes more unconsciously self-serving. this requires a detailed allotment of time spent. .