Flint Hills Company\'s most recent financial statements showed dismal performanc
ID: 2477443 • Letter: F
Question
Flint Hills Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better.
Ed Gray, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers.
Mike Cane, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.
Were Ed Gray's actions ethical? Explain.
Were Mike Cane's actions ethical? Explain.
Were the company president's actions ethical? Explain.
Explanation / Answer
Were Ed Gray's actions ethical? Explain.
Answer: There is a valid question as to whether Ed Gray's actions are ethical or not. Either answer could be considered correct. On the one hand, he was probably within his legal rights to reclassify the workers. He also might be commended for allowing more workers to have a job than was previously the case. On the other hand, however, he has removed a very real benefit from the former full-time workers, and he has done it fairly arbitrarily. He may have harmed morale, and harmed the company if the workers quit and new workers have to be hired.
Were Mike Cane's actions ethical? Explain.
Answer: Mike Cane's actions all appear to be ethical.
Were the company president's actions ethical? Explain.
Answer: The company president may have placed undue pressure on the employees to show better results. The managers may feel that they need to sacrifice the long-term goals of the firm for short-term benefits.
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