A large American corporation participates in a highly competitive industry. To meet the competition and achieve profit goals the company has chosen the de¬ centralized form of organization. Each manager of a decentralized center is measured on the basis of profit contribution, market penetration, and return on investment. Failure to meet the objectives established by corporate management for these measures is not accepted and usually results in demotion or dismissal of a center manager.

An anonymous survey of managers in the company revealed that the man¬ agers felt pressure to compromise their personal ethical standards to achieve the corporate objectives. For example, certain plant locations felt pressure to reduce quality control to a level that could not ensure that all unsafe products would be rejected. Also, sales personnel were encouraged to use questionable sales tac¬ tics to obtain orders, including offering gifts and other incentives to purchasing agents.

The chief executive officer is disturbed by the survey findings. In her opin¬ ion, such behavior cannot be condoned by the company. She concludes that the company should do something about this problem.

a. Discuss what might be the causes for the ethical problems described.

b. Oudine a program that could be instituted by the company to help reduce die pressures on managers to compromise personal ethical standards in their work.
(CMA)