Sears Case Study

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Question 1) Identify the ethical issues using a consequentialist and a deontological perspective.
Using a consequentialist perspective, I can understand to a certain degree why Sears implemented their new productivity incentive plans in all of their auto centers. This approach focuses on the results, or consequences, of the action or decision. Upper management’s primary goal was to increase profits as much as possible after years of declining sales and profits. In order to achieve this result, they decided to develop more of a commission based pay for everyone involved in the auto center in order to motivate employees to achieve higher sales. Using this new approach would likely result in positive results for all stakeholders involved other than the customers. Mechanics and service advisors would have the opportunity to make more money if they were able to make more sales, and with that the company would be able to achieve higher profits. The problem with this approach is that the customers were likely to end up worse off than before if the mechanics and service advisors decided to take advantage of them for their own good. People will ultimately do what is rewarded in the workplace in order to receive praise and the rewards that come with it regardless of how they got there. So mechanics started to lie about problems with the vehicles that came in and would perform unnecessary repairs for no reason other than to help meet their daily or weekly quotas. This was a consequence of management’s new incentive program they installed which said nothing of being ethical or doing what is right for the customer. They simply told their employees they wanted higher sales, and by saying nothing about how to achieve those sales they were basically inferring that anything goes.

Using a deontological perspective, there are many problems that can be seen with Sears new incentive program. A deontologist focuses on doing what is right and bases their decisions off of what is right according to universal ethical principles or values. This is completely the opposite of what was happening at the auto centers for Sears. If they were concerned with doing what was right, there is no way they would be ordering and charging customers for unnecessary repairs to their vehicles. Instead, the mechanics and service providers were simply following orders to an extent because what they were doing had not been forbidden by management. If the mechanics, management, or anyone in the company for that matter had considered the “golden rule” when developing and implementing this new program, many of these problems could have been avoided. Question 2) Comment on what Edward A. Brennan (Sears CEO and Chairman) had to say at a news conference following the charges. Did he take enough responsibility?

When his company was investigated regarding unethical business practices in the auto centers, Sears CEO Edward A. Brennan claimed that no fraud occurred and he defended many of his company’s actions. He admitted that there were isolated errors, and said he took responsibility for creating an environment where “mistakes” had been made. He then outlined the actions that the company would take to fix them which included getting rid of commission for service advisors, substituting commission based on customer satisfaction, and eliminated sales quotas for specific parts and repairs by substituting them out for sales volume quotas. I do not believe that he took enough responsibility for this problem and wasn’t taking it as seriously as he should. He claimed they were isolated errors, even though there were an increasing number of complaints from many different states. He also took responsibility for creating an environment where mistakes were made when he should have admitted he was the one that made the mistake when he didn’t include any ethical aspects to the incentive program which likely would have prevented many of these problems. Question...
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