The Impact of Workplace Bullying

Review the Wiedmer article regarding workplace bullying (found in the reading section).

Develop a two- to three-page APA- formatted paper that responds to the following:

• Provide a review of the article. Describe the impact of workplace bullying on both the victims and the organization.
• Reflect on a time when you may have witnessed workplace bullying. Discuss at least two practices of workplace bullying addressed in the article that were applicable to your scenario.
• Recommend at least two techniques from the article that management should implement to provide a positive impact on workplace bullying. Support your response with additional information from the textbook or additional research.

Your paper must be two to three pages (not including title and reference pages) and must be formatted according to APA style as outlined in the approved APA style guide. You must cite two scholarly sources in addition to the textbook.

Workplace Bullying: Costly and Preventable

falseWiedmer, Terry L. Delta Kappa Gamma Bulletin77.2 (Winter 2011): 35-41.

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Workplace bullying is a pervasive practice by malicious individuals who seek power, control, domination, and subjugation. In businesses or schools, such bullying is an inefficient way of working that is both costly and preventable. Senior management and executives are ultimately responsible for creating and sustaining bully free workplaces. Workplace bullies can be stopped if employees and employers work together to establish and enforce appropriate workplace policies and practices. This article presents information about workplace bullying, including its prevalence, targeted individuals, bullying behaviors, employer practices, and steps to prevent bullying. In the end, leadership and an environment of respect provide the ultimate formula for stopping workplace bullying. [PUBLICATION ABSTRACT]

Workplace bullying is a pervasive practice by malicious individuals who seek power, control, domination, and subjugation. In businesses or schools, such bullying is an inefficient way of working that is both costly and preventable. Senior management and executives are ultimately responsible for creating and sustaining bully free workplaces. Workplace bullies can be stopped if employees and employers work together to establish and enforce appropriate workplace policies and practices. This article presents information about workplace bullying, including its prevalence, targeted individuals, bullying behaviors, employer practices, and steps to prevent bullying. In the end, leadership and an environment of respect provide the ultimate formula for stopping workplace bullying. [PUBLICATION ABSTRACT]

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Workplace bullying is a pervasive practice by malicious individuals who seek power, control, domination, and subjugation. In businesses or schools, such bullying is an inefficient way of working that is both costly and preventable. Senior management and executives are ultimately responsible for creating and sustaining bully free workplaces. Workplace bullies can be stopped if employees and employers work together to establish and enforce appropriate workplace policies and practices. This article presents information about workplace bullying, including its prevalence, targeted individuals, bullying behaviors, employer practices, and steps to prevent bullying. In the end, leadership and an environment of respect provide the ultimate formula for stopping workplace bullying.

Bullying occurs between and among people in all venues – in the home, community, and workplace. It is a pervasive, targeted, and planned effort that can be overtly obvious or can fly under the radar and is conducted by practiced and malicious individuals who seek power, control, domination, and subjugation. The impacts of such actions – in terms of finances, emotions, health, morale, and overall productivity – are destructive, and the ramifications are limitless (Mattice, 2009), Because no one is immune from the potential of being subjected to bullying in the workplace, this topic merits further review and analysis (Van Dusen, 2008).

To combat workplace bullying, often referred to as psychological harassment or violence (Workplace Bullying Institute [WBI], 2007), employers must have a full range of policies in place and means available to them to create and maintain a healthy workplace culture and climate. Although they are not generally for-profit endeavors, schools and school systems are purposeful businesses that share the same concerns and have the same responsibility to ensure that each employee works in a respectful environment and is not subjected to workplace bullies.

Workplace Bullying

According to the Workforce Bullying Institute (WBI), workplace bullying is

the repeated, health-harming mistreatment of one or more persons (the targets) by one or more perpetrators that takes one or more of the following forms: verbal abuse; offensive conduct/behaviors (including nonverbal) which are threatening, humiliating, or intimidating; and work interference – sabotage – which prevents work from getting done, (Definition of Workplace Bullying, para, 1)

Bullies seek to induce harm, jeopardize one’s career and job, and destroy interpersonal relationships. The behaviors of bullies harm people and ravage profits.

Prevalence of Workplace Bullying

Thirty-seven percent of U,S, workforce members report being bullied at work; this amounts to an estimated 54 million Americans, which translates to nearly the entire population of the states of Washington, Oregon, California, Nevada, Arizona, and Utah (Namie, 2007), These statistics are based on the August 2007 responses of 7,740 participants in the online WBI-Zogby U,S, Workplace Bullying Survey; the respondents comprised a sample representative of all American adults. The WBI-Zogby survey is the largest scientific study of bullying in the United States, Other key and depressing findings of the 2007 study included the following:

* Most bullies are bosses (72%);

* 60% of bullies are men;

* 57% of targets are women;

* Bullying is four times more prevalent than illegal forms of harassment;

* 62% of employers ignore or worsen the problem;

* 45% of targets suffer stress-related health problems;

* 40% of bullied individuals never tell their employers; and

* only 3% of bullied people file lawsuits, (WBI, Key Findings, para, 2)

These workplace bullying activities resulted in the targets reporting stress-related health problems such as debilitating anxiety, panic attacks, clinical depression, and even posttraumatic stress (WBI).

Another significant finding of the WBI-Zogby survey was that, in 72% of cases, bullies had control over the targets’ livelihood and consequently used this leverage to inflict pain or to block transfers, thus forcing employees to quit or lose their jobs (Namie, 2007), In addition to having to leave a job or a profession of choice, other reported economic impacts imposed by bullies included the target being forced to transfer (13%), being discharged without reasonable cause (24%), and quitting to address a decline in health and sanity (40%) (Namie, 2007), Controlling bullies seek to make targets resign, which results in unemployment, loss of health insurance, and the inability to seek medical attention. Accordingly, the bottom line is that all members of society pay for the consequences of unacceptable workplace behaviors and practices. According to the WBI, workplace bullying is thus a silent epidemic.

Profiles of Targets

The WBI (2007) reported that 61% of bullying occurs within the same gender, and 71% of female bullies target other women, In 2000, a WBI study found that veteran employees – often the best and brightest, not the weakest – are often selected to be targets (WBI, 2010), Bullies typically target individual(s) they perceive to pose a threat. Skilled targets are often sabotaged by insecure bully bosses who take credit for the work of the targets, who are thus not recognized or rewarded for their talents and contributions.

Based on findings from thousands of interviews in 2000, the WBI researchers confirmed workplace bullies typically target independent employees who refuse to be subservient. Furthermore, in 2010 WBI confirmed that targets were typically more technically skilled than the bullies and that they were the “go to” veteran employees from whom new workers sought guidance. Collectively, the targets were reportedly better liked, had more social skills, likely possessed higher emotional intelligence, and were appreciated by colleagues, customers, and management (bullies excluded) for the warmth and care they brought to the workplace (WBI, Who Gets Targeted), The principal weapons that bullying bosses and coworkers reportedly employed were alienating these targets from social interaction and withholding validation, As a result, coworkers often chose to separate themselves from the target out of fear of being the next victims (WBI, 2010).

Ethics and honesty are attributes often commonly possessed by targets, In particular, whistle blowers who expose illegal or fraudulent behaviors are most vulnerable to being bullied. Targets can be typified as morally superior to bullies due to their generally nonconfrontational, prosocial orientation focused on a desire to help, heal, teach, develop, and nurture others (Namie, 2007).

Practices of Employers and the Rights and Responsibilities of Targets

Employers have a moral and social responsibility to protect employees from bullying and to safeguard those who comprise their workforce. Employees need to be aware of bullying practices and knowledgeable about their rights and responsibilities, but ultimately managers and supervisors are the key players who are responsible for building and maintaining healthy and bully-free work cultures. When managers and supervisors commit time and effort to talk with their employees about the ecology of relationships in the workplace, employees better understand what factors foster the evolution of bullying. Such conversations can aid in policy refinement, improved employee guidance, and professional- development initiatives that contribute to a healthy and bully- free workplace.

Employees deserve and should be assured their place of employment is one where respect and civility prevail. Managers, supervisors, and other identified leaders of employees need to be foot soldiers to lead the fight against bullying – to identify bullies, to protect the bullied, and to intervene and stop bullying behaviors (Namie, 2007), Employees need to feel physically, emotionally, and socially safe and to believe they are valued and belong.

Practices of Bullies

Bullying is typically a series of calculated incidents that accumulate over time, carefully planned and executed by the bully to avoid legal grounds for grievance or disciplinary actions (Bully Online), Bullies may engage in some or all of the following behaviors toward their target(s):

* consciously undermine the position, status, worth, value, and potential;

* marginalize, ignore, overrule, and freeze out;

* set unrealistic (and even undesirable) goals, timelines, and expectations;

* distort, misrepresent, and twist anything said or done;

* single out, treat one differently from others, or ostracize;

* increase responsibility and simultaneously reduce authority;

* overload with work or have work taken away to trivialize existence;

* deny leave, even when provided for contractually;

* steal or plagiarize work and take credit for it;

* deny opportunities for training that are requisite for job performance; and

* coerce into leaving (constructive dismissal) through no fault of the target and activate early or ill-health retirement (Bully Online, para, 2).

Profile of the Typical Workplace Bully

Bullies engage in predictable and recurring practices to debase and debilitate their targets (Bully Online), Individuals who engage in such uncivil and amoral workplace bullying tactics demonstrate common elements and behaviors. Are any of these behaviors evident in your workplace? If so, you, too, may be subject to potentially being bullied. Workplace bullies often

* possess a Jekyll and Hyde nature (vindictive in private but charming in public);

* display self-assuredness and certitude to mask insecurity;

* portray self as wonderful, kind, caring, and compassionate, but actual behaviors contradict this self-crafted persona;

* cannot distinguish between leadership and bullying behaviors;

* counter attack and deny everything when asked to clarify;

* manipulate others through guilt;

* are obsessed with controlling others;

* use charm and behave in an appropriate manner when superiors or others are present;

* are convincing and compulsive liars in order to account for matters at hand; and

* excel at deception, lack a conscience, and are dysfunctional (Bully Online, para, 3),

At times every employee may demonstrate one or more of these behaviors. The key, however, is to monitor whether or not the behaviors are recurring and predictable with an intended outcome to cause harm. The target must document and record accurately when suspected bullying occurs should a need arise to stop bullying behaviors.

Stopping Bullying

To stop bullying in the workplace requires time, input, policy changes, and a company culture that does not tolerate bullies. To help managers and supervisors maintain a civilized workforce and handle bullying, Alsever (2008) outlined and recommended the following five-step process: (a) understand what constitutes bullying and recognize it in action, (b) act fast to show that the company will not tolerate bad behavior, (c) enforce a clear action plan, (d) devise a policy for a civilized workplace, and (e) screen for bullies in the recruiting process.

Serial violators need to be identified and stopped in their tracks. Policies, rules, and practices must be in place to make workplaces safe and conducive to workers producing at peak levels. Bullying hurts the bottom line through lost productivity, low morale, the departure of experienced workers, and higher health care costs for stressed-out victims (Ceridian Services, 2008, para, 12).

Chief executive officers, including school superintendents, can ill afford to mislead their supervisors, managers, and human resource personnel about the level of bullying in their workplaces. Efforts to cover up bullying may include no reporting, under-reporting, leveling no punishment, dismissal of the bullied, and promotion of the bully (WBI, How Bullying Happens), Left unaddressed, bullying can rapidly evolve into a serious workplace health issue.

Steps to Take

To reduce workplace bullying effectively, employees need to know that they are supported. The bottom line is that the employer’s return on investment is dependent on the work produced in the workplace. If work is not completed successfully in a business, finances will suffer and the losses will inspire management to make adjustments. If workers in schools and school systems cannot be productive because of workplace bullying, the bottom line of student achievement is impacted. Thus, employers and school leaders need to take positive steps to address bullying with commitment and intensity.

First, put a policy in place. Second, address directly any reported or suspected bullying – regardless of who is reported. Third, identify resources and solutions and make them available to remedy a suspected problem. Those who manage and supervise employees ultimately represent and enforce workplace policies. They need to be competent and proactive in employee rights, as well as engage in leadership behaviors that create and enforce bully-free environments.

Put a policy in place* Workplace policies and procedures for addressing bullying may include disciplinary and legal consequences, additional supervision and oversight, training or counseling, and relationship-building activities. An extremely important aspect of policy and procedure is to have clear, detailed, and accurate documentation. Once reported, bullying incidents should be monitored and tracked over time to chronicle the incident reportage, steps taken, outcomes realized, and effectiveness of strategies employed. By tracking instances of transgression, employers can use the information gained to formulate preventative measures, identify alternative interventions, and guide professional development for all employees.

Employees and supervisors need to be aware of the most up-to-date policies and practices to ensure report assessment and implementation of appropriate actions. Timely implementation of policies is critical to initiate intervention, alert the parties involved, bring attention to the matter, monitor the situation, and address underlying, contributing problems, In extreme cases, it may be necessary to involve law enforcement officials.

As part of policy, employers should incorporate regular and ongoing climate assessments for all employees in order to record their perceptions of workplace bullying, and the results of these assessments should be made public. Recognizing their responsibility to stop and prevent bullying, employers must ensure that policies are clearly outlined to mandate that managers and supervisors not only report bullying acts but also work quickly to protect bullied employee(s) from retaliation and further harm while resolving the situation.

Address reported or suspected bullying directly* A tremendous disconnect often occurs between what employees and employers believe to be the existence and degree of workplace bullying. To resolve this discrepancy, or at least narrow the divide, employers must encourage and enable all members of the workforce to report possible bullying incidents in a timely manner and, even more importantly, ensure an expeditious, fair, and ethical review and evaluation of suspected bullying incidences. They cannot allow a code of silence – often prevalent in bullying cases – to exist. Positive and trusting relationships among adults and the knowledge that a concern will be taken seriously are critical components to preventing and remedying bullying.

Employees must be able to go to a person(s) who can be trusted and who will respond to the matter in a concerned, proactive, and supportive way. Having such a trusted individual is key, because all too often the bully is the supervisor, In the case of schools, employee options may include going to a department chairperson, principal, human resource officer, or the superintendent. Multiple avenues are necessary if the bullying is endemic, or it will be nearly impossible to achieve recourse and resolution. Friends and coworkers of bullied individuals need to feel free and safe to speak up when they witness bullying behaviors, and employers have a responsibility to support employees in identifying and resolving troublesome behaviors without violence. Workplace cultural norms can either foster or eliminate bullying, depending on how superiors react to supported or suspected incidents, In short, unless actions are taken to address the underlying work culture and climate conditions that precipitated or allowed for bullying, such behaviors will continue.

Even more importantly, employers must carefully guard workplace climate by recognizing that bullying seldom occurs in isolation. Aggressive or bullying individuals typically seek out and befriend like individuals. When managers and supervisors model bullying behavior in the workplace, they unfortunately serve to normalize workplacebullying behaviors, In such settings, when the managers or supervisors are the perpetrators and when they ignore or minimize the situation, employees report a diminished allegiance to and effort expended in their workplaces. Similarly, managers and supervisors are often less proactive and persistent in addressing and resolving bullying behavior among employees when human resource managers and chief executive officers are less focused on enforcing policies.

Identify resources and solutions* Employee training and awareness of anti-bullying policies and procedures that comprehensively address the issue of workplace bullying are key. The message must be clear wherever bullying behavior may occur – the office, lunchroom, parking lot, classroom, assembly line, cell phone, or the Internet – it will not be tolerated. Employers must establish and publicize systems to support employees and to address bullying behaviors and interpersonal conflicts. For example, rather than fighting, shutting down, or giving in to a bully, targets need to stay engaged and do their work. They need to maintain a calm and professional demeanor, remain engaged and focused, and plan ahead to deescalate a situation before it occurs (Ross, 2007-2009), The success of the school or business depends on all employees knowing where they can go for assistance and on their learning and practicing necessary skills to address workplace bullying,

A Respectful Workplace

Cade (2010), a workplace-bullying expert, identified three things leaders can do to create a respectful workplace where bullying is not allowed to exist: (a) show appreciation, (b) treat employees like insiders, and (c) demonstrate empathy for problems. She further suggested that bullying rarely exists when all workers honor each other as valuable; treat one another with dignity; communicate to include, not exclude or control; are heard by another and respond with courtesy and curiosity; acknowledge thoughts and feelings; ask – do not order or yell or swear; provide clear and informative answers to questions that are legitimately their business; know the right to receive encouragement and support; speak of others positively; and seek to connect and build communication for all parties as opposed to positioning for control (Cade, 2010, para, 2),

Everyone’s Responsibility

Elimination of workplace bullying is the responsibility of all employees; however, senior management and executives are ultimately responsible for creating and sustaining bullyfree workplaces, In school settings, key leaders such as superintendents, human resource officers, principals, supervisors, and department heads must guide the educational workforce to recognize and report bullying within their ranks. By launching united efforts, defining and implementing clear policies, putting model practices in place, and having the courage to stand up against bullies, individuals in all lines of work can stop workplace bullying. The simple formula of combining leadership with an environment of respect will contribute to the well-being of all employees and make an improved and healthy work climate and culture a reality.

Sidebar

“Positive and trusting relationships among adults and the knowledge that a concern will be taken seriously are critical components to preventing and remedying bullying.”

Part I. These are questions pertaining to the assigned coursework. There are five questions in Part I. If information is used from text or outside resources, cite them using APA format. Please give a full citation of any sources used at the end of each answer. There is no length requirement for each answer. Please answer each question in its entirety. Part II. Please read the attached case study and answer the following questions. Part II has five questions. Please do outside research to support the answers. This case study requires the use of knowledge gained from this course and use it in a real world situation.

This is broken into two parts (I and II).

Part I. These are questions pertaining to the assigned coursework. There are five questions in Part I. If information is used from text or outside resources, cite them using APA format. Please give a full citation of any sources used at the end of each answer. There is no length requirement for each answer. Please answer each question in its entirety.

Part II.  Please read the attached case study and answer the following questions. Part II has five questions. Please do outside research to support the answers. This case study requires the use of knowledge gained from this course and use it in a real world situation.

Part I:

1. Explain the case of Stella Liebeck vs. MacDonald’s (refer to case 6.2 on p. 231 or the supplemental article). Could government regulation have prevented this accident? Why or why not? Consider issues of product liability, product safety, and legal paternalism in your answer.

1. Who should bear the burden of cleaning up pollution, those responsible for the pollution or those who would benefit? Support your answer using concepts from the text and class discussions.

1. Is Affirmative Action ethical? What are the two positions, for and against, affirmative action? Is it an outdated policy? Support your answer using concepts from the text and class discussions.

1. What does loyalty to the company mean, and how important is it, morally? Under what circumstances, if any, do employees owe loyalty to their employers? When, if ever, do they owe loyalty to their coworkers? Support your answer using concepts from the text and class discussions.

1. What complications does sexual harassment bring to the workplace? How should a manager handle a claim of sexual harassment by one of his/her employees? Support your answer using concepts from the text and class discussions.

Part II: Case Study (5 Questions at the bottom)

It was 9:30 in the evening of what had been a very long Friday when the phone rang in Chip Brownlee’s home study. On the line was Arch Carter, the lead director of Galvatrens, the

Houston-based consumer Products Company that Chip had led as chairman and CEO for the past ten years.

“I just got your voice mail,” Arch said. The parts about a lawsuit and accusations that we manipulated our sales numbers certainly got my attention. What’s going on?”

“At this point, I don’t know much,” Chip responded, “but I wanted to give you a heads-up. A former divisional sales manager has filed a lawsuit against the company, charging he was wrongfully terminated because he tried to report an illegal scheme to inflate sales.”

Chip had received a copy of the lawsuit that afternoon. As he’d read through the complaint, he’d gotten a whole new perspective on the multiple departures that had rocked Sales during the past four weeks. The plaintiff was Mike Fields, who had left Galvatrens three weeks earlier. He claimed that he’d come across a plan devised by Greg Wilson, another divisional sales manager. According to Mike, Greg had proposed shipping goods to a few of his bigger customers, billing them, and booking the sales – but with a side agreement that they wouldn’t have to take ownership, could return the shipments at any time, and would get a 2% discount on any goods they accepted and paid for in the following quarter. The purpose of the channel-stuffing scheme was to meet quarterly sales targets and trigger bonuses, Mike contended.

“So what’s the wrongful termination charge about?” Arch asked.

“Mike says he found out about the scheme by accident and, since he didn’t know who else might be involved, contacted Harry about it,” Chip said. In the lawsuit, Mike claimed that he had left a confidential voice mail for Harry Mart, Galvatrens’s COO, asking to speak with him about a matter of the utmost urgency involving possible misconduct by a company manager. He said Harry never followed up with him and instead referred the matter to Mike’s boss, Terry Samples. Until a week ago, when he left abruptly to take another job, Terry had been the senior vice president of sales.

“Mike alleges that Terry subsequently told him his performance was not up to snuff and that he’d have to accept a demotion and a transfer to Indianapolis if he wanted to stay with the company,”

Chip continued. “Mike says the demotion and transfer were in retaliation for exposing the channel-stuffing scheme–and Terry knew that Mike, as a divorced father with joint custody of his kids, couldn’t leave town.”

“Yikes! So Terry could have been involved in this?”

“We don’t know at this point,” Chip said. “At the very least, it looks like he found out from Mike about Greg’s plan. We don’t even know yet whether Greg followed through on it.”

“What about this Greg guy?” Arch asked.

“He resigned about a month ago. He took a job in California. When Terry left so suddenly last week, I was beginning to wonder if the turmoil in Sales was more than unhappy coincidence.”

“Oh, man,” Arch muttered.

“That’s not all,” Chip added. “Mike also says our channels for confidential reporting of misconduct don’t work very well. He claims that, as a company, we made it easier for Terry to retaliate.”

“How could that be? I thought we had everything in place,” Arch said.

“Well, as I’m sure you’ll agree, the board should know about this. Can you set something up?”

“I’m already working on it.”

Changing the Guard

The board, employees, and Wall Street had rejoiced when Chip agreed to become the chairman and CEO of Galvatrens in January 1997. He had previously led Paloreq, a pharmaceutical and  medical devices company, during a period of tremendous growth, building businesses in medical devices and diagnostics and broadening the firm’s pharmaceutical offerings through shrewd  acquisitions. He had attracted a team of stellar managers and scientists through the same sorts of “people” initiatives he would launch at Galvatrens.

The year before Galvatrens’s board hired Chip, it had reached an impasse with longtime CEO Walter Nikels over strategy and management style. Walter, who had taken the helm when Galvatrens was a midsize firm, had run it in an authoritarian, hierarchical fashion. As the company grew larger and more complex, the board urged him to delegate more and inject some fresh blood into the executive team, but he resisted. As a result, top-performing employees were defecting to the competition, and Galvatrens recruiters were having a hard time getting MBA students to sign up for interviews. The word was out that Galvatrens was not the place to be. With earnings deteriorating, the directors finally decided they had to act. Walter announced his plans to retire at the end of 1996, and Chip stepped right in.

Chip had lived up to his reputation. Expanding beyond Galvatrens’s core businesses in home health care and personal beauty, he took the company into nutritional and wellness products, medical diagnostics and devices, and products for infants and the home. Revenues, earnings, and the share price rose steadily.

So that Chip could focus on developing strategy and building relationships with customers and business partners, he had sought a COO who would concentrate on the company’s day-to-day operations. Harry Mart, whom Chip had lured away from a competitor, had fit the bill nicely. Once on board, he modernized the management of Galvatrens’s supply chain, greatly improved manufacturing efficiency, and increased capacity.

In addition to dramatically expanding Galvatrens’s product portfolio, Chip worked hard to change the company’s culture. Early in his tenure, he announced an ambitious initiative to make Galvatrens an organization that excelled in listening to and learning from its employees and its customers. He combined the initiative with a diversity campaign in an effort to achieve preferred-employer status in the consumer products industry. He replaced the general counsel, a member of the old guard, with Sydney Baydown. She had been Chip’s general counsel at Paloreq, where she had played a central role in a number of people initiatives that had enhanced the company’s ability to attract and retain talent.

At her urging, Galvatrens took steps to upgrade its procedures for uncovering misconduct and solving conflicts in the workplace – reforms Syd had championed at Paloreq. Chip gave Syd the go-ahead to have a consulting firm review the existing system. Following the consultants’ advice, Galvatrens instituted an open-door policy for raising workplace concerns or problems, formalizing rules and practices that some operations had adopted on their own. While the policy encouraged employees to go to their immediate supervisors whenever possible, it emphasized that they could approach any manager at any level for assistance. The policy included a specific ban on retaliation.

The company also added a toll-free, 24-hour hotline for reporting violations of the code of conduct, added an ethics officer to its ranks, and launched an ethics awareness campaign. The ethics officer, who was responsible for ethics training and enforcement of the code of conduct, reported to the general counsel. After the passage of the Sarbanes-Oxley Act, the company mandated that the ethics officer inform the board’s audit committee of any allegations of  financial wrongdoing or other possible code violations that involved company executives.

Two of the consultants’ recommendations, however, were not adopted: proposals that the company should hire an ombudsman and that the board should make a director or a committee of directors responsible for ethics oversight. Focus groups and interviews had revealed that many employees would not feel comfortable raising concerns through formal management channels. Having a truly impartial ombudsman who reported to the CEO and had access to the board would make employees much more likely to come forward. The ombudsman would allow people to report issues anonymously or confidentially and could offer a range of informal means for helping them resolve issues, the consultants said.

Dale Willis, the senior vice president of HR at the time and a holdover from the Walter Nikels era, had opposed both of these recommendations. Anything that operated outside management’s chain of command, he argued, might let serious problems slip through the cracks and was therefore a recipe for disaster. With some reservations, Chip agreed not to create the ombudsman role.

Chip also acceded to Dale’s request to delay training related to the new open-door policy until HR had completed existing programs. Then other priorities arose, and the training initiative was forgotten.

Getting the Lowdown

On Monday, three days after Mike’s lawsuit had been filed, Chip opened a conference call with the eight directors he’d been able to round up.

“Okay, I think we’re all here – or at least everyone we could get on such short notice,” Chip said.

“The negotiations for the Aletha Products acquisition are at a critical stage, and Harry couldn’t break away,” he said, referring to Galvatrens’s COO.”And Dan Richardson is on a trek in the Himalayas.”

When Chip asked Syd to brief the group, she said, “We’ve confirmed that Greg Wilson pitched a channel-stuffing scheme to two of his biggest customers. However, we don’t know at this point whether he got any further than that.

“We’ve also determined that Mike’s performance declined considerably in his last ten months here,” she continued. “Records show that his team missed sales targets by a growing amount during that period.” Syd noted that Mike had been unreachable during business hours with increasing frequency and had missed important meetings. Prior to that period, though, he had been a solid producer. In an initial phone conversation with Galvatrens’s outside counsel, Mike’s lawyer hadn’t disputed the change in performance but claimed it was due to a nasty custody fight between Mike and his ex-wife. Terry’s reaction to the slide in performance had been brutal, contributing to Mike’s emotional stress, the lawyer said.

“Given this information, we intend to file a response to Mike’s lawsuit, denying his charges of wrongful termination,” Syd said. “We’re also having an independent investigation of the channel-stuffing allegations. Chip has asked me to be the liaison between the outside investigators and the board. We’ll try to delay discovery in the lawsuit to give the investigators time to do their job.”

“This is Sheila,” interjected Sheila Cruse, the chair of the board’s audit committee and an accounting professor at Valhalla University. “What should the board’s role in the investigation be? To whom should the investigators report? Do we need a special committee for something like this?”

“We do need to sort that out,” replied Arch, the lead director, “but first let’s focus on how we’re going to respond to the lawsuit. How does battling with a guy who attempted to raise some serious allegations square with our mission and values? I see giant reputational risks on every front here. If we don’t handle this well, we could hurt ourselves with employees, customers, and shareholders.”

“Arch, this is Syd. We do have to respond to the lawsuit. Denying Mike’s claims while we also investigate and negotiate is just standard procedure.”

The other directors acknowledged that while Arch had raised some good points, it still made sense to proceed as Syd had outlined. They agreed to take up the issue again in six weeks at a scheduled board meeting. By then, they should have more facts and would be in a better position to weigh their options.

Preventing a Repeat

The board met six weeks later at the Houstonian. Located on sprawling, heavily wooded grounds in the center of Houston, the hotel and spa complex was a popular choice for off-site Galvatrens meetings. Arch and Chip stood outside the conference room as the directors filed in, complaining about Houston’s legendary humidity. Dan Richardson, a software entrepreneur and a friend of Chip’s from the Paloreq days, was back from his trek in the Himalayas; he was sunburned and noticeably leaner. But Harry, the COO, was absent again – this time because of continuing problems at factories damaged by hurricanes Katrina and Rita, the ongoing merger talks, and a labor dispute.

The independent investigators had reported to the board the previous week. They found that the customers had simply ignored Greg Wilson’s channel-stuffing proposal. It appeared that Terry had forced Greg out when he learned about the plan, but he’d allowed Greg to resign and hadn’t told anyone else about the scheme. Greg had not responded when the investigators tried to contact him.

Terry’s only reply had been a terse note, delivered through his lawyer, saying that Terry was reviewing their questions and would respond appropriately. The investigators had also confirmed the decline in Mike’s performance, although Terry’s role was still murky. What was clear was that Mike had done his best to raise the alarm about Greg’s scheme. The judge had allowed discovery to begin, and the company had initiated settlement discussions with Mike.

“For the life of me, I still do not understand why we didn’t hear about all this sooner and why no one except Mike Fields came forward,” said Dan, who served on the board’s corporate governance committee.“It’s disappointing enough that Terry didn’t report this, but I can’t help wondering if others in Sales knew about it, no matter what the report says. And why didn’t we hear about it from our customers? It doesn’t seem like we have a handle on these kinds of problems.”

Syd pointed out that extensive research over the years had demonstrated that, in many cases, employees who see misconduct in their organizations don’t come forward. “And in our own defense, Dan, we’ve come a long way since Chip took over,” she added.

“That may be the case,” Sheila said, “but clearly the good things we’ve already put in place – the open-door policy and the code of conduct – aren’t working. Harry didn’t take the original complaint seriously and just passed the buck. Nothing came in through the hotline. And no one contacted the ethics officer or HR.” “Is it realistic to expect Harry to deal with something like this?” Arch asked.

“After all, he’s the guy responsible for making the trains run on time – it’s not like he’s lying around drinking cocktails on the beach.”

Sheila shook her head in disagreement. “I know we don’t expect Harry to personally investigate and resolve complaints that come directly to him, but we do expect him to follow up and refer a problem like this one to the ethics officer. He didn’t do that.”

“A lot of this is at my doorstep,” Chip said. “I’ve kept Harry’s plate full. He realizes now that he should’ve given this more attention. I’ve asked Syd to think about how we can ensure that something like this doesn’t fall through the cracks again.”

Arch and Sheila exchanged skeptical looks. Later, when they were walking to their cars, they agreed to meet for breakfast the next morning at the Four Seasons.

Taking Charge

When Arch walked into the hotel restaurant at 7 am, the summer sunlight was pouring into the beautiful room, which was elegantly set with white linens and flowers. It was Arch’s favorite place for breakfast meetings. He spotted Sheila standing at the buffet table, admiring the glistening berries. He joined her.

After they sat down at their table and the waiter poured them coffee, they compared reactions to the meeting the day before.

“I’m thinking that we need a board retreat to deal with this situation,” Arch said. “We’ve got a lot to chew on. We should look at ourselves first. I don’t feel we’ve met our oversight responsibilities. We were not ready for something like this.”

Sheila wholeheartedly agreed. “Once we got into this thing, it seemed clear to me that we as a board didn’t know what our role was supposed to be,” she said. “And I certainly took it for granted that Chip and Syd had established the channels for anonymous reporting that the audit committee – and the full board, for that matter – needs in order to provide oversight.”

“That’s on us,” Arch said. “It’s got to show up in our self-evaluation this year. And I think we have to take several aspects of this into account in evaluating Chip and deciding what we should ask of him in the future. After we put all these procedures in place, why did only one guy come forward–and he ends up suing us? Why did Chip keep Dale Willis on so long and let him get in the way of some of the very changes we brought Chip in to make? When the new employee survey comes out, I’ll be curious to see if we’re really improving morale – especially in Sales, where we’ve had so many turnovers.”

Sheila hesitated. “I agree with you about Chip, but the person who worries me the most is Harry. I know you’re a big fan of his, but I am troubled by his failure to respond appropriately when Mike Fields called him. Harry may be technically strong, but he has got to be able to take care of people, and he’s just no good at it. I think we have to look at the consequences for him as well as new expectations for Chip.”

“I’m thinking we’ll need a full day,” Arch suggested. Sheila nodded. “Let’s get the ball rolling.”

Part II:

1. 
   Who is the whistle-blower in this case? What protections are available for him/her? In your opinion, why did only one individual come forward? Support your argument with concepts from the text and class discussions.

1. Explain the reporting system available to employees for reporting sensitive issues. Is it an effective system? Why or why not? Support your argument with concepts from the text and class discussions.

1. Is there evidence showing discrimination and or a hostile work environment toward the plaintiff in this case? Why or why not? Support your argument with concepts from the text and class discussions.

1. Are there any conflicts of interest with members of the board? Why or why not? Support your argument with concepts from the text and class discussions.

1. How should management and the board respond to the lawsuit? Support your argument with concepts from the text and class discussions.