using the given case answer the following: 1) what are the ethics and stakeholder concerns? are there legal, moral, or value based concerns. 2) local data and experimentation what evidence exists in the organization that is relevant to your deliberation? what is the quality of the evidence? what additional evidence is needed? how could you conduct a study to gather such evidence? 3) create conceptual models for the case

COMMUNICATING PAY CUTS IN GLENWOOD Case prepared by R. Blake Jelley and Tina Saksida, UPEI (last revised 2021-10-20). Adapted from J. Dietz (2013), University of Lausanne. Used with author permission. Introduction Dr. Gina Gallant, Assistant Professor of Organizational Behaviour, was thrilled. She had just finished a virtual meeting with Kent Auburn, CEO of Aerospace Inc., a manufacturing firm headquartered in Glenwood, Washington (near Seattle). Auburn had told Dr. Gallant that he would give her students the opportunity to conduct a field experiment to test aspects of organizational justice/fairness theory in exchange for helping the company with communicating a pay cut. Such opportunities were rare, and as an emerging researcher on workplace justice, Gallant could not help but be excited about this opportunity. Soon, however, Gallant's excitement turned to tension. Her Business 2880 student team now had to develop a design for a field experiment (or quasi-experiment) that satisfied both her high academic standards and the company's objectives. Employee Theft Employee theft is considered a serious problem among HR managers. While it is difficult to establish exact figures for employee theft (for example, in stores, it is not easy to distinguish between shrinkage due to employee theft versus customer shoplifting), losses attributed to employee theft have been estimated at $40 billion per year in the U.S.,' though other estimates range from $6 billion to $200 billion annually. The results of a 1997 study suggest that about 50% of all employees engage in some form of employee theft.? Aerospace Inc. Aerospace Inc. produces small mechanical parts mostly for the automotive and aerospace industries. The company has three manufacturing plants in the Northwestern United States, which are highly similar in terms of organizational features (size, physical layout, organizational design, operations) and employee profiles (gender, age, level of education, tenure with the company), but operate independently of each other. Each plant employs about the same number of people (i.e., 64, 53, and 66, respectively), most of whom are hourly-wage semiskilled and unskilled production workers. The remaining employees are low-level managers and hourly- wage clerical workers. For instance, in one plant, among the 64 employees, 47 are production workers, five are managers, and 12 are clerical workers. Equity Theory and Organizational Justice Theory The basic idea of equity theory is simple. The assumption is that people consistently judge whether the outcomes that they receive are fair in relation to their inputs (in comparison with others' outcomes and inputs). Organizational scholars have built on equity theory to develop organizational justice/fairness theory. According to this theory, organizational justice has three main components - distributive justice, procedural justice, and interactional justice. Assistant Professor Gallant Dr. Gallant has recently started a program of research in organizational justice theory. On the basis of this theory, she knows that the detrimental effects of a pay cut are not only a function of the size of the pay cut (i.e., the actual outcome), but also of the process through which the pay cut is implemented. For example, decision outcomes and procedures are better accepted when a) people are assured that higher authorities are sensitive to their viewpoints, b) the decision is made without bias, c) the decision is applied consistently, d) the decision is carefully justified on the basis of adequate information, e) the decision makers communicate their ideas honestly, and f) persons influenced by the decision are treated in a courteous and civil manner. In other words, if employees feel that they have been treated fairly, they will not react as negatively to a pay cut (e.g., engage in fewer counterproductive behaviours). The Situation Aerospace Inc. has lost two large manufacturing contracts that affect two of the three plants. Auburn has been forced to reduce the payroll. He considered two options for the two affected manufacturing plants; namely, a layoff of employees or a pay cut of 15%. Auburn decided that he would not lay off employees, because he wanted to implement a solution that would have the least devastating effects on the employees. He felt that if he lays off some employees, it will profoundly affect them and their families. This means that he must cut employee pay. He fears the employees will perceive the pay cuts as extremely unfair and might "get back at the company by, among other things, stealing inventory, tools, and supplies. He also fears they could withdraw their efforts in other ways that could hurt the company and its culture of helping one another. In his two-decades as a manager and senior executive, this is the first time that he has faced a situation where he has to reduce employees' pay. He's not sure how to go about it, but he expects that employees will not be happy. He decided to seek advice from Prof. Gallant and her students to execute the pay cuts and assess the impact of pay cuts on key metrics, including employee theft. The accounting department, which is located at the company headquarters, has kept records for computing plant-level shrinkage (i.e., the percentage of inventory, tools, and supplies unaccounted for by known waste, sales, use in the conduct of business, or normal depreciation). In other words, Auburn views shrinkage as an indicator of employee theft. The Task Professor Gallant knows that she has a unique opportunity. She cannot afford to mess up. Her 2880 students have a chance to demonstrate, in a field setting, that adequate explanations of a bad outcome (e.g., a pay cut) reduce negative reactions to it. Furthermore, she has to consider the concerns of Aerospace Inc. and its employees. Finally, as a scientist (and with an eye on producing a top-level research paper), she must try to draw defensible causal inferences, which is typically a challenge in field studies. Arsenault assigns her research team to learn about organizational justice and design an experiment or quasi-experiment with these thoughts in mind. Mr. Auburn is expecting the team's research proposal by the deadline. You are that team - good luck