Ethical Issues: (LO 5)

Gross and Company ismajor consulting firm located in three provinces in Canada. In its Vancouver office, Reginald Shuttleworth is a senior manager, reporting to a partner who is in charge of a major project. Reginald has been with the firm for seven years and believes that he is in line for a promotion to partner based on his excellent performance over the past two years as a manager. One very significant performance measure for managers is their ability to bring projects to a conclusion on time and within budget.

In the very competitive consulting field, firms have a great deal of difficulty receiving payment from their clients for any amounts incurred for services above and beyond the amount quoted for the job, even though the quotes are clearly marked as being estimates. As a result, most firms are forced to absorb any cost overruns on jobs rather than billing and collecting from their clients. In evaluating performance of individuals, most firms look very closely at the recovery rate of the amount of costs incurred and the amount recovered from the client.

Reginald believes that he has an advantage over all other managers in the firm since he ensures that his budget overruns are minimized on every job because he insists that his team does not report any excess hours that they have to work to complete the job over and above the estimated number of hours. This has resulted in his being able to report excellent performance, but his team has become very disgruntled because they receive neither pay nor recognition for the extra hours that they work. Since Reginald is a very hands-on manager, he has been able to intimidate them to remain silent about his management style..

Required:

Discuss the ethical implications and the potential performance implications of the approach that Reginald is using to make himself look good to his superiors.