Scaffold Plank

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Dianne Estrada
Management Strategy
September 9, 2010
Bob Hopkins, a previous banker, accepted a “trader” position with White Lumber, who was one of the bank’s best accounts. John White, the owner of White Lumber, was a director at the bank Bob previously worked for and a leading citizen in the community. The “trader” position Bob accepted involved buying and selling lumber. Bob’s compensation was incentive-based without a salary cap.

The ethical dilemma Bob faces in this case is a transaction that makes Bob question his and the company’s ethics and legal obligations. It’s February, business was slow, the company was $5,000 below their breakeven point, and it appeared as if a recession was on the horizon. Bob receives a call from Stan Parrish, a buyer at Quality Lumber, for a large order of lumber. Bob has four additional inquiries for the same amount of lumber, but for scaffold plank. Bob becomes concerned whether the order that was called in by Stan is suppose to be for scaffold plank. Bob addresses his concerns with his partner, Mike Fayerweather, who doesn’t think there is a problem because Stan did not specifically ask for scaffold plank nor did Bob quote him for it. Mike also advises Bob that if Stan is bidding for a job he will win because his order is less expensive than scaffold plank. Bob suggests that he calls Stan to verify if the order needs to be for scaffold plank, but Mike advises against calling because it could harm the business relationship. It may also appear as if Bob is accusing Stan of being unethical. Mike also points out that if their company had knowledge that the material will be used for scaffolding then they would be legally liable as well.

Against Mike’s advice, Bob calls Stan and discovers that the lumber will be used as scaffold plank. Bob notifies Stan that the lumber does not meet the requirements and that he doesn’t feel comfortable with the situation. Stan states that he is selling it to the purchasing company as regular construction lumber, the company is protected because the invoice will reflect it that, informs Bob that the foreman will be using it for scaffolding in order to keep costs down, and that the extra inch in thickness will prevent the lumber from failing. After Stan’s explanations, Bob continued to express hesitation. Stan threatens to take his business elsewhere and reminds Bob that his job could be in jeopardy due to the economy.

The next day Bob is called in to John White’s office. Bob advised John of his and Stan’s conversation. John ordered the lumber and filled in Bob’s name on the sales order. Bob did not want any part of the transaction. John pokes at Bob’s ethics and makes it clear the he has the superior reputation. John insisted that they are not liable for the lumber after it leaves the yard, the invoice would be marked that the lumber is not to be used as scaffold plank, ethics and liability fall on the purchasing agent, and if they asked one client what the material was going to be used for then they would have to ask every client, which may seem as if they are trying to bypass the distribution channel. Bob’s rebuttal is although the chance that the lumber will fail is minimal he doesn’t want to take that chance, feels there is a responsibility to customers, and an obligation to do the right thing. At the end of the conversation, John preys on Bob’s feelings by saying he has to look out for the other people in the company such as Steve, who doesn’t have a high school diploma and would have limited job opportunities, or Janet, who has a disabled husband who needs the company insurance. Bob’s intentions when he first entered the office were quitting, but after John’s arguments he left his office confused and uncomfortable about the decision, but relying on the trust and respect he has for John.

Ethics and legal questions arise in this case because scaffold plank grading rules are restrictive....
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