What are the economic outcomes of your potential decisions?

You are in charge of a 310-bed hospital and have an excellent management team that has won many awards. Aside from the high operating margins, as high as 40 percent, your hospital has won consistent awards for public relations, television, and newspaper ads. You believe the hospital’s public image has improved substantially in the past three years, largely thanks to your director of marketing and development, Fred Halso. Fred is about 35, single, and a real go-getter. He is not a close friend of yours, but he is a close friend of your hospital’s regional chief financial officer (CFO). They have been drinking buddies for several years and previously worked with each other. Clearly, the corporation that owns your hospital and the hospital advisory board are pleased with your performance.

However, recently three women have come to you individually to report that Fred has made inappropriate remarks about their bodies and has tried to pursue a sexual relationship with them. His remarks and actions continued far beyond what was comfortable for the women. The last woman to come to you was Fred’s assistant, who told you that he had been consistently inviting her to go out for drinks after work. She said that she made the mistake of going once, and he then pushed her to go home with him, which she refused to do. Since then, Fred has been very cold toward her and, even though she feels her performance has not changed, he has belittled her work and threatened to “have a reckoning” when her annual performance review occurs in two months.

After the third report, you call Fred in to discuss the accusations. As you expect, he denies everything. He states that he is just friendly and that perhaps they misunderstood his friendliness for abuse. He asks to know who made the accusations. You keep the identities of the first two accusers confidential, but you do talk about his assistant. Fred says that she has been going through a divorce and he only was trying to listen to her and help her adjust.

However, the additional stress of the divorce has affected her work and he is concerned that she is not meeting deadlines and her work has become sloppy.

He agrees to be more careful, and you are relieved that this might not be such a big issue after all.