Question

Question 2 Gluck Corporation Johan, now in his fourth year with Gluck Corporation, was made a factory manager three months ago after completing the company’s management-training program. Gluck owns pulpprocessing factory that produce various grades of paper from fast-growing, genetically altered trees. Johan’s factory, the smallest and oldest of Gluck’s, is located in upstate Georgetown, near a small town. It employs between 100 and 175 workers, mostly from the nearby town. In fact, the factory boasts about employees whose fathers and grandfathers have also worked there. Every year Gluck holds a Merdeka picnic for the entire town. Gluck’s policy is to give each manager a free hand in dealing with employees, the community, and the factory itself. Its main measure of performance is the bottom line, and the employees are keenly aware of this fact.Like all pulp-processing factories, Gluck is located near a river. Because of the factory’s age, much of its equipment is outdated. Consequently, it takes more time and money to produce paper at Johan’s factory than at Gluck’s newer factories. Gluck has a long-standing policy of breaking in new managers at this factory to see if they can manage a work force and a mill efficiently and effectively. The tradition is that a manager who does well with the upstate Georgetown factory will be transferred to a larger, more modern one. As a result, the factory’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 Johan. In his brief tenure as factory manager, Johan learned much from his workers about the business. Johan’s secretary, Ramona, made sure that reports were prepared correctly, that bills were paid, and that Johan learned how to perform his tasks. Ramona has been with the factory for so long that she has become a permanent fixture. Johan’s three foremen are all in their late 40s and keep things running smoothly. Johan’s wife, Irene, is having a difficult time adjusting to upstate Georgetown. 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 Johan came into the office, Ramona didn’t seem her usual happy self. “What’s up?” Johan asked her. “ You need to call the DOE,” she replied. “It’s not really important. Ali said he wanted you to call him.” When Johan made the call, Ali told him the mill’s waste disposal into the river exceeded Department of Environment (DOE) guidelines, and he would stop by next week to discuss the situation. Johan hung up the phone and asked Ramona for the water sample results for the last six months from upstream, from downstream, and at the factory. After inspecting the data and comparing them with DOE standards, he found no violations of any kind. He then ordered more tests to verify the original data. The next day Johan compared the previous day’s tests with the last six months’ worth of data and still found no significant differences and no DOE violations. As he continued to look at the data, however, something stood out on the printouts that he hadn’t noticed before. All the tests had been done on the first or second shifts. Johan called the foremen of the two shifts to his office and asked if they knew what was going on. Both men were extremely evasive in their answers and referred him to the third-shift foreman. When Johan phoned him, he, too, was evasive and said not to worry—that Ali would explain it to him. That night Johan decided to make a spot inspection of the mill and test the wastewater. When he arrived at the river, he knew by the smell that something was very wrong. Johan immediately went back to the mill and demanded to know what was happening. Lee, the third-shift foreman, took Johan down to the lowest level of the factory. In one of the many rooms stood four large storage tanks. Lee explained to Johan that when the pressure gauge reached a certain level, a third-shift worker opened the valve and allowed the waste to mix with everything else.“You see,” Lee told Johan, “the mill was never modernized to meet DOE standards, so we have to divert the bad waste here; twice a week it goes into the river.” “Who knows about this?” asked Johan. “Everyone who needs to,” answered Lee. When Johan got home, he told Irene about the situation. Irene’s reaction was, “Does this mean we’re stuck here? Because if we are, I don’t know what I’ll do!” Johan knew that all the managers before him must have had the same problem. He also knew that there would be no budget for installing DOE-approved equipment for at least another two years. The next morning Johan checked the DOE 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 Ali stopped by. Ali talked about the weather, hunting, fishing, and then he said, “Johan, 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?” Johan 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, Ali left. Johan asked Ramona about what Ali had said. She showed him a miscellaneous expense of $100 a month in the ledgers. “We do this every month,” she told him.“How long has this been going on?” asked Johan. “Since the new DOE rules,” Ramona replied. She went on to clarify Johan’s alternatives. Either he could continue paying Ali, which didn’t amount to much, or he could refuse to, which would mean paying DOE fines and a potential shutdown of the factory. 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 manager who bucked the system lost his job. The rule in this industry is that if you can’t manage Gluck’s upstate Georgetown factory, you can’t manage. That’s the way it is.

1. Identify FOUR (4) ethical and legal issues of which Johan needs to be aware

2. Discuss FOUR (4) possible decisions Johan could make in this situation. For each decision describe its advantages and disadvantages.

3. Identify the pressures that have brought about the ethical and legal issues.

Answer 1

1. The four ethical and legal issues are
a) Bribing Ali, to save the mill from closing and continuation of work.
b) Waste disposal not complying with DOE guidelines means that waste disposal in the river is contributing to water pollution. This pollution would later affect aquatic animals and people.
c) Hiding information from DOE and violating the rules can later bring legal charges if caught.
d) With more promotions and advancement of Johan at Gluck, he may expect to overexploit many more resources to satisfy the bottom line

2. The four decision can be
a) Leaving the corporation. The advantage is freedom from corruption and having the guilt of a deteriorating environment. While disadvantage would no livelihood and uncertainty of getting another one.

b) Pay Ali. The advantage is to continue his work and perhaps the promotion to a new, more modern mill. The disadvantage is the guilt of corruption and exposing oneself to more such practices in the future.

c) Dont Pay Ali. The advantage is to be free from the blame of exploiting resources and maybe putting a stop to such practices. The disadvantage is losing the job as it has been done with the previous employee.

d) Paying Ali and leaving the company as a new opportunity is found. The advantage is less risk for the livelihood and meanwhile getting time to search for another job.
Disadvantage - The corruption can be used as a legal charge if caught by DOE.

3. The pressure here is to sustain the job for Johan. He has recently completed the company's management training program and is working for the company for the last four years. Thus, not complying with the demands of Ali, would result in losing the job.

Also, it may lead to the closure of the mill that is a source of livelihood for many workers.

On the other side, he must be facing the pressure of saving the environment and run the business ethically. Thus, this new situation has brought pressures as now he needs to make a decision regarding a short term view of saving the job of himself and others or deny paying Ali and face the loss.

Additionally, there is little hope that this mill would meet DOE standards, and capital for modernizing the equipment may take at least 2 years.

Thus, the pressure is to make an immediate decision