Case 1: Todd from National University and Jennings Department Store

1) Describe some of the weakness in Jenning’s ethics program.

One of the weakness in Jenning’s ethics program are the lack of action taken by the
upper management level in preventing unethical act conducted by Zara. Eventhough the upper
management were aware that Zara had been using the “keeping the change” money or cash
given by the customer as unrecorded paymnets to her retail staff, they still ignore it because it
is impossible for them to not noticed it before as they went over the financials with a
magnifying glass. Another weakness are regarding the company’s ethics code that was found
to be vague because the code itself only spanned two pages and did not provide any contact
information for Todd to ask questions. This indicate that the company does not emphasize
ethics as business practice to their employees, which provide a room for them to take
advantage to conduct unethical behaviour. Lastly, lack of platform and guideline given to
others to raise or report on any issues related to ethics. This can clearly been seen when Todd
started to questioning about why had nobody notice Zara’s misconduct before despite it had
been done for quite some time, and the reason for that might related to the lack of information
and guideline provided in the company’s ethics code.

2) Discuss the alternative for todd

The best alternative that can be taken by Todd is to report the misconduct done by
Zara to the human resources department. Supposedly, Todd should report it to the upper
management since they are responsible to monitor the overall business operations. But, due to
the fact that they were aware and still allowed such act to be conducted because they looked at
it as other way for what seems to be for financial gain, Todd does not have any other option
than to report it to HR and hopefully they are a separate division from where the upper
management team works to ensure that there will be no issue arise between them. In addition,
there will be a chance of retaliation against Todd from the upper management for disturbing
their corrupt business practice and when Zara’s misconduct are revealed by others, they will
have to bear some consequences for not reporting the issue. If Todd does not report it, he may
risk himself to face termination for hiding such crime and he also knew that nothing at a
company is secret for long and his questions would soon alert others to start asking questions.
Besides that, if other law authority discovered about this misconduct, the company would bear
significant financial implications espically since it involved tax liability related to unreported
cash income. Therefore, the best option is for Todd to inform human resources and leave it in
their hands.

3) How has Zara given the opportunity to engage misconduct?

Zara was given the opportunity to engage with misconduct through the lack of internal
control implemented within the company, whereby related to the upper management and code
of ethics. The upper management should realized that what was done by Zara was not
acceptable in the company and if they keep on allowing those misconduct to happen, then it
would create a bigger problem in the future. For example, other employees might think that it
is okay to steal some money or “keeping the change” from customer, as long as they making
more sales and provide good services to their customers. Moreover, if this misconduct is
being discovered during financial statement auditing process by the auditors, the upper
management may face a problem due to the fact that the auditors will start questioning about
the unrecorded payment made by Zara to her retail staff. Next, the company’s code of ethics
that was said to be vague and lack of contact information also create an opportunity for Zara
to engage with misconduct, because there is limited guideline provided to the employees
about ethicality. If Zara’s misconduct discovered by others, she could denied and defend
herself by saying that what she done is not consider unethical since she did not know that her
action is not allowed in the company and there is no policy or guideline given related to the
issue.