The CEO of a mid-size urban hospital was late one Friday evening, so he took a short cut that caused him to walk by the employee lounge. He walked inside and shook his head. With all the problems of budget cuts and trying to make ends meet, he realized that little money had been available for upkeep of nonpatient areas such as the employee lounge. The carpet was dirty and worn, the coffee mugs were chipped, the wallpaper was torn, and the refrigerator groaned as it cycled on and off. The CEO decided enough was enough. The employees had worked hard and should, at minimum, have an employee lounge that was inviting and pleasant.

He marched back to his office and called the COO to instruct her to create a weekend miracle by calling in the work crews to update and refurbish the employee lounge. He ordered new carpets, new wallpaper, and new appliances, and he wanted it all done by Monday. The CEO told the COO,

“I keep telling the employees how much I appreciate their help, especially in these financially tight times, but now I am going to show them. And be sure to replace those old, chipped coffee mugs.” Early on Monday morning, the CEO walked by the employee lounge. It looked terrific, and someone had already made coffee. He made a note to himself to tell the COO what a great job she had done.

When he got to his office, he found the union steward sitting on the couch. “I need to have a word with you,” the union steward said. He had several words, as it turned out: He said that the CEO had violated the collective bargaining contract and that refurbishing the employee lounge should have been, at minimum, discussed with the union. The union steward spent 20 minutes complaining about violations and procedures. After he left, the CEO called the COO and told her to put the lounge back the way it was, including the chipped coffee mugs. Then the CEO muttered to himself, “That is the last time I try to do anything nice for anyone around here. I have learned my lesson.”

Case Questions
1. What is the problem in this case?
2. Would you respond in the same way? Why, or why not?
3. What, if anything, can be done at this point?