Reference no: EM131524597

Question: A MATTER OF ETHICS

Paul Lambert was in a difficult situation. When he started his current job 5 years ago, he understood clearly that he would be working on sensitive defense contracts for the government. In fact, his firm was a subcontractor for some major defense contractors. What he did not realize at the time- indeed, he only discovered this gradually over the past 2 years-was that the firm was overcharging. And it was not just a matter of a few dollars. In some cases, the government was overcharged by as much as a factor of 10. Three weeks ago, he inadvertently came across an internal accounting memo that documented one particularly flagrant violation. He quietly made a copy and locked it in his desk. At the time, he was amazed, then righteously indignant. He resolved to take the evidence immediately to the appropriate authorities. But the more he thought about it, the more confused he became. Finally, he called his brother-in-law, Jim Grillich. Jim worked for another defense-related firm and agreed to have lunch with Paul. After exchanging stories about their families and comments on recent sporting events, Paul laid his cards on the table. "Looks as though you could really make some waves," Jim commented, after listening to Paul's story. "I guess I could. But I just don't know.

If I blow the whistle, I'd feel like I'd have to resign. And then it would be tough to find another job. Nancy and I don't have a lot of savings, you know." The thought of dipping into their savings made Paul shake his head. "I just don't know." The two men were silent for a long time. Then Paul continued, "To make matters worse, I really believe that the work that the company is doing, especially in the research labs, is important. It may have a substantial impact on our society over the next 20 years. The CEO is behind the research 100 percent, and I gather from the few comments I've overheard that he's essentially funding the research by overcharging on the subcontracts. So if I call foul, the research program goes down the drain." "I know what you mean." Jim went on to recount a similar dilemma that he faced a few years before. "So what did you do?" "The papers are still in my desk. I always wanted to talk to someone about it. I even thought about calling you up, but I never did. After a while, it seemed like it was pretty easy just to leave the papers in there, locked up, safe and sound."

1. What trade-offs is Paul trying to make? What appear to be his fundamental objectives?

2. Suppose that Paul's take-home pay is currently $5,000 per month. In talking to an employment company, he is told that it will probably take two months to find a similar job if he leaves his current one, and he had better expect 3 months if he wants a better job. In looking at his savings account of $25,000, he decides that he cannot justify leaving his job, even though this means keeping quiet about the overcharging incident. Can you say anything about an implicit trade-off rate between the fundamental objectives that you identified previously?

3. Have you ever been in a situation in which it was difficult for you to decide whether to take an ethically appropriate action? Describe the situation. What made the decision difficult? What trade-offs did you have to make? What did you finally do?