Facts about the Case
The scenario involves sales personnel Jim Snelling who works at Spectro Electronics. He joined the company in 1992 working as a vice president for Global Strategy and Operations. Spectro Electronics is a supply chain manager and distributor of electronic components to the manufacturers. The company has an annual turnover of $6 billion and a projected turnover of $10 billion in the next three years. It has a global presence operating in more than 40 countries. The supply chain is organized into various regional operational hubs. The sales personnel source for bids from manufacturers and in turn source for suppliers of different components. The company acquired five sales staffs from ElectroSource; a competitor following an antitrust ruling by the U.S. Department of Commerce. The new employees have managed to get a major order which has boosted the company performance. However, later scrutiny into the bidding process revealed that the sales people had used a price list that was obtained from ElectroSource. This evokes a discussion within the management to determine the best course of action in regards to the matter. The key players include the Ethics Committee including the CEO, Jim (VP Strategy), Vice President-Operations, President of North America region, and the regional manager for the unit in question.
Issues at Hand
There was the issue of the integration of the employees into the company operation practice and cultures as they brought in the culture from ElectroSource. ElectroSource operated without strict adherence to the ethical conduct while Spectro worked strictly by the laid ethical standards. A team from ElectrSource had won a $100 million supply contract. However, the bidding process was marred by irregularities with the sales people using inside information from their previous employee to underbid all the other competitors. Thus, the management was in a dilemma as it was faced with a decision as to whether to disclose the irregularity and lose the contract, or conceal an illegal bid and profit from it. The company management influenced the behavior of the company through the decisions and as well campaigns. Thus, the decision, in this case, will shape how sales people will behave in future and set the standard that needs to be followed.
Alternative Course of Actions
Following the realization that the sales people had engaged in an unethical behavior to gain an edge over the competitors, the company could take the following course of actions.
Recognize the obligation to the client
As soon as the management realizes that there was an irregularity in the company bidding process, the first consideration will be to evaluate the company its obligation to the client. One of the fundamental laws that govern the bidding process requires that the process is carried out in a fair and open manner and all the bidders be given an equal opportunity. The competition for the bidders will be based on the available guidelines and regulations. In this case, the manufacturing companies are looking for the lowest bidder since the prices are standardized. Thu, they are supposed to outbid each other regarding the prices and negotiate with their suppliers. The fact that Spectro Electronics had some information on the prices was an indication that the bidding was not competitive as the company used the information to place the winning bid. Thus, Spectro could inform the client on the noted irregularity and negotiate on the way forward.
Consider the obligations to the competitors
Bidding is an open and competitive process where all the players are supposed to be on level ground. Spectro acquisition of ElectroSource price list gave them undue advantage over their main competitor and subsequently they won the bid. Thus, the company management could decide to inform the competitor that they used their information to gain an advantage over them and agree on a way to resolve the issue. This can be done through mediation by the competition authorities or other relevant bodies. Informing the competitor will lead to demands from them and may eventually result in loss of the contract.
Deal with the employees silently
Alternatively, Spectro could keep quiet about the matter as it has already happened. The company has already recognized the income from the tender and even paid the bonus to the employees. Since the management action shapes the company ethical behaviors, it could punish the sales employees silently within the organization. This can be in the form of a demotion or ask them to pay back the bonuses that they received in regards to the contract. This will be followed by a rigorous training on the company operational practice and culture and as well the ethical lessons. This decision will demonstrate tolerance and promote unethical behaviors to other employees. Thus, all of the above actions will lead to a financial loss to the company. The loss is not much as compared to the potential loss that a company can incur in future if the employees continue to engage in such illegal practices. Thus, the management should assume the responsibility and take measures to ensure that such actions are not repeated in the future.
Recommended Course of Action
Of the three options, the management having relaxed in the introduction of the management culture and ethical lessons to the new employees should take the responsibilities. Thus, they should take the responsibility, and the company as a whole should incur the loss associated with the irregularity. The management should inform the client on the irregularity and then the client having already agreed to the contract could decide as to whether they will float the bid again or reinforce the contract. On the part of the competitors, having hired the employee from ElectroSource, the responsibility to the former employee should be defined by the contract and termination details. Thus, Spectro has no obligation in regards to the competitors and thus not obliged to report the irregularity to them. As a lesson to the other employees, the company should punish them by asking them to pay back that already paid bonuses and attend a mandatory ethical training (Does it Matter How We Get There, 2005).
Conclusion
Employees act on behalf of the company. Errors and irregularities that are committed by them employees put the entire company at risk. Thus, the company's management should take up the responsibility of ensuring that such errors do not happen again in future. In this case, the management had failed to offer training on the company operational cultures and ethical guidance and thus giving room for the employees to explore the behaviors that they were accustomed to from the previous employer. The company should thus take full responsibility for the error, suffer the losses involved and decide on te appropriate course of action to the employees involved.
References
Does it Matter How We Get There (Really)? A Case of Ethics in Bidding (2005). Journal of Behavioral and Applied Management.
