Ethical Decision

As business owners or managers, we often have to make difficult ethical decisions, such as whether to keep its production work by hand or whether to use new technologies to increase productivity as well as to enhance profits. In this case, the manager of a privately held publishing firm was asked to implement new computer-base publishing process; this new technology caused the job loss of some employees. It may be a while until employees can learn and get used to the new technology, consequently the productivity has dropped drastically by 40%. Moreover, the manager was asked to prepare a presentation on the positive results of using the new technology to a group of people interested in buying this organization. Some of the questions to be answered in this dilemma are whether the proposed action is legal, does it maximize shareholder value, and is it ethical not to do the presentation.

First, the proposed action is considered legal because at this point it is just a presentation; the contractual process to buy the company is not in process at this time. If the purchase of the company was taking place at this time, then they would have to provide financial statements showing the results of the new technology. In addition, they would also have to show some facts about how the new technology could increase their productivity and enhance their profit. Besides, the owner has the right to be optimistic about the new system. As the founder’s son stated, the production loss was written off as a learning curve. Once the employees get more training and more experience with the new system they will feel more comfortable, thus productivity will probably pick up again. However, it is unethical to do the presentation focusing only on positive results that have not yet happened, and also because there is an absence of information which is misleading the potential buyers to believe that the new implemented technology is already successful.

Although, due to lack of information, it is undetermined whether the shareholder value maximizes or not in the future, at this moment the shareholder value will not maximize because the company is loosing money from taking the risk of trying a new system; the new system increased the costs, and dropped productivity by 40 percent. It is not good if the company puts a positive spin on the profits and at the end of the year they are far below the targeted profit point; that alone could have caused the shareholder value to minimize instead of maximizing. Another important point is that the value of the company also relies on the employees and how they work as a team. If the company does things that upsets the employees, that could cause them to rally; and as a result the company could have horrible loss and that might alert other buyers that this company is having troubles therefore causing them to loose interest in buying this company.

It is ethical not to do the presentation if the presentation is going to