An Organizational Ethical Dilemma

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  • Topic: Sears Holdings Corporation, Kmart, Craftsman
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An Organizational Ethical Dilemma
Assignment 5-2
Sharon L. Wise
Franklin University
BSAD 460-E1FF
Professor Jerome Council
September 11, 2012

Background
“Kmart buys Sears”, were the headlines in November of 2004 (Bhatnagar, 2004) on several money and market watch news channels as well as in the papers. The sale was finalized by March of 2005. Sears was attempting to enter the big box retail market with its Sears Grand store concept. Kmart had the real estate to do it and was looking for a savior from the results of its earlier bankruptcy in 2002. One of the goals of merging these two large retailers was to streamline the logistical operations of both. The decision was made to close the soft line distributions centers for Sears and incorporate into the Kmart distribution channel.

The Federal law (WARN act; Workers Adjustment and Retraining Notification) required a 60 day notice be issued to affected employees as well as state agencies of any business with over 50 employees and an expected layoff greater than 90 days. The only states to be impacted, with separate facility closure laws, were Ohio and Texas. Ohio requires a 90 day notice to begin instituting assistance programs, etc. and Texas has no provision for time requirements on closure notice only for assistance with displace workers. Five facilities were closed affecting over 2000 employees across 5 states. Where the law specified Sears Holding Corporation made efforts to realign employees with existing jobs within the business, where there were no laws in place only severance packages were offered. State agencies were brought in to inform all employees of the training programs available and where or how the state would be able to assist. Suppliers were given 30 days to reconcile their accounts and remove any equipment located on the premises of these facilities. The facilities closed on time and 1600 plus people were out of work, shareholders took a hit to stock value to cover...
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