Integrity, Objectivity, and Ethics at the Hershey Company

You are the CFO at Hershey Company, Hershey, PA. You need union concessions in order to stay in business. You must determine if the management of The Hershey Company should asked union workers in two of its highest cost Pennsylvania plants to accept higher health insurance premiumsandtake a wage cut. The workers' portion of the insurance cost would double from 6% of the premium to 12%. In addition, workers hired after January 2000 would have their hourly wages cut by $4, which would be partially offset by a 2% annual raise. Management says that the plants need to bemore cost competitive. Management has indicated that if the workers accept the proposal, the company would invest $30 million to modernize the plants and move future projects tothe plants.

Another issue is Hershey management has refused, however, to guarantee more work at the plants even if theworkers approve the proposal. If the workers reject the proposal, management implies that it would move future projects to other plants and that layoffs might be forthcoming.

Analyze the ethics of this case. Do you consider management's actions ethical? There are 2,700 union workers at these two plants.

a. Using as much of the information as possible, analysis what is being asked of the 2,700 workers.

b. Looking at the numbers, what would an incremental analysis look like.

c. Should the union be approached? How would the numbers justify a move either way?

d. What qualitative issues would be of a concern?

e.Is the choice an ethical choice?