Characters: Mary, Broker for a firm which buys and sells businesses; Rev. Smith, a retired minister now managing a nonprofit organization; George, Mary’s supervisor
Mary, a recent college graduate, works for a company which represents clients who are interested in either buying or selling businesses. As a “business broker,” her job is to arrange such sales.
Rev. Smith, a retired minister, contacts Mary’s company to arrange for the purchase of a small manufacturing plant just outside of town. He has recently formed a nonprofit corporation to aid troubled youths and wants to convert the building into a recreation center. He desires to work with Mary because she formerly attended his church and he trusts her implicitly.
Mary’s supervisor, George, has assigned her the task of negotiating a deal for Rev. Smith’s organization. Some of the machines at the manufacturing plant are in poor condition and would require $100,000 to repair. Rev. Smith intends to remove them in any event.
The seller is asking for a $250,000 down payment on a $1,000,000 sale. Rev. Smith’s organization can only raise $150,000. After studying the situation, George is convinced that if the seller can be led to believe that repairing the machines is important to Rev. Smith, the down payment request would be reduced to $150,000 and the asking price to $950,000.
George therefore instructs Mary to mislead the seller. She is told to insist–with a straight face–that either the seller repair the machines or drop the down payment and asking price. Mary is uncomfortable with this strategy, both for the sake of honesty and because Rev. Smith has not approved it. Yet, as a new employee, she wants to please her supervisor.
Author: Alexander D. University. Hill, Associate Professor of Law and Ethics, Seattle Pacific
What Are the Relevant Facts?
- Mary is a new employee in the company.
- George outlines a specific strategy to complete the deal.. He does not give Mary much “wiggle room” to create her own approach.
- Smith does not want the machines currently in the plant.
- George instructs Mary to intentionally mislead the seller.
- Smith is not aware of George’s strategy.
What Are the Ethical Issues?
- To which principal, the company or Rev. Smith, does the agent Mary owe the higher duty? Would Rev. Smith be bothered by this strategy?
- Is George asking Mary to lie? Or, is telling such untruths an acceptable part of the business “game”?
- Is such deception less objectionable morally if the seller is likewise attempting to mislead Mary?
Who Are the Primary Stakeholders?
- The troubled youth to be helped by Rev. Smith’s organization
- The seller and his family
- The banks which may loan money to complete the sale
What Are the Possible Alternatives?
- Mary completes the sales per George’s plan.
- Mary refuses to engage in deception and confronts George.
- Mary talks the matter over privately with Rev. Smith.
- Mary ignores George’s plan and creates her own.
What Are the Ethics of the Alternatives?
- Questions based on the “utilitarian” perspective
- Which possible alternative would provide the greatest benefit to the greatest number?
- How would these costs be measured?
- Mary’s future with the company?
- The seller’s satisfaction with the deal?
- The profitability of the brokerage company?
- Smith’s response if George’s strategy were disclosed?
- The troubled youth who will be benefited by the recreation center?
- Impact on the banks?
- Questions based on the “rights” perspective
- What does each stakeholder have the right to expect?
- Which alternative(s) would you prefer if you were Mary? Rev. Smith? The seller? George? The troubled youth? The banks?
- Questions based on the “justice” perspective
- Which alternative allocates the burdens and benefits most fairly among the stakeholders?
- Which stakeholders carry the greatest if Mary completes the sale per George’s plan?
- Do the benefits of successfully completing the sale outweigh concerns of honesty and the duty of an agent to fully disclose information to her principal?
What Are the Practical Constraints?
- As a new employee, Mary might very well lose her job if she confronts George. She has little organizational power.
What Actions Should Be Taken?
- What action(s) should Mary take?
- Which alternative would you choose if you were in her position? Why would you make that choice?
- Which ethical theory (utilitarian, rights, justice) make the most sense to you as it relates to this situation?