Ethics in the Workplace – Sears Auto Center
Ethics in the workplace and sometimes the lack thereof can significantly influence the success of an organization. Effective leaders often approach ethical dilemmas by identifying alternative actions and their consequences on stakeholders. The aftermath of the disasters caused by Enron, WorldCom, and other businesses, once prominent companies, resulted in a significant loss of confidence in business leader’s conduct. Organizations in today’s highly competitive business environment must develop an ethical culture to withstand the ever increasing scrutiny by customers, governmental regulatory agencies, and their competition. In order for companies effectively to navigate through the ethical minefields, a strong code of ethics must be developed, implemented and enforced. This Ethics in the Workplace paper is going to evaluate a case study regarding the Sears, Roebuck and Company’s ethical dilemmas regarding the questionable business practices of their Auto Service Centers. Symptoms of the problems were evident for Sears. There were actions that were needed to be taken that would have prevented the company from obtaining a negative reputation. The CEO and Chairman Edward A. Brennan held a news conference to defend the company, from being perceived as being involved in fraudulent activities. He pointed to possible solutions for any mistakes that had occurred. These solutions included, eliminating the incentive compensation program for service advisors, substituting commissions based on customer satisfaction, eliminating sales quotas for specific parts and repairs, and substituting sales volume quotas. Sears has two main root problems that created issues for in this case. First, the company began facing stiff competition from the retail giant Wal-Mart. “Discount retailers such as Wal-Mart were pulling ahead in market share, leaving Sears lagging. Sears responded by adding non-Sears name brands and an "everyday low price" policy (p. 186, ¶ 2).” Like many other retail stores, Sears was faced with stepping up its programs concerning making profits. Wal-Mart proved to be a strong force to be reckoned with, and the competition was intense. Secondly, the company had a strong accusation placed against it. “In June 1992, the California Department of Consumer Affairs accused Sears, Roebuck, and Co. of violating the state's Auto Repair Act and sought to revoke the licenses of all Sears’ auto centers in California (p. 187, ¶ 2).” The problem was linked to repairs of brake systems. Customers were complaining a great deal about the services they received for repairing their brakes. There were also undercover investigations that led to this accusation. The result of the investigations showed that Sears was charging its customers for unnecessary brake repairs. This charge put the company on the defensive in an attempt to protecting itself and saving its stature in the public’s eyes. Sears like other companies failed to resolve all the issues in the auto service center. When Sears corrected the commission plan they left an unethical loophole in place. Sears continued to place aggressive goals on mechanics and left in place a bonus system allowing mechanics to receive more pay by increasing productivity. In addition, the same mechanics were still providing repair quotes. Sears failed to remove the potential for future unethical behavior on the part of its mechanics. In response to the unethical behavior Chuck Fabbri, an employee of Sears, reported his concerns to a senator outlining the unethical approaches Sears were still using in the auto service centers (Nelson & Trevino, 2004). According to Trevino and Nelson (2004), “Roles are strong forces for guiding behavior, and workers are assigned roles that can powerfully influence their behavior in ethical dilemma situations. Roles can reduce a person’s sense of his or her individuality by focusing attention on the role and the expectations that...
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