You’Ve Got Questions
After his hiring as a new CEO the company lost its positions and the result was that share price dropped to a 3 year low level. Mr. David Edmondson neglects the Company ethics and than he was fired. The strange part of the story was that he received a huge worth for his job. After his management The RadioShack Code of Ethics was changed. The date was 21. 02. 2006 immediately after his leaving. This wind of change in company’s policy was a big step to turn back their customers. Question 1: Evaluate this situation from the viewpoint of David Edmondson’s ethical leadership.
What could RadioShack have done differently? Answer 1: According to D. Edmondson the only thing that he has done wrong is that he lied about his educational background and also says that this is the only thing that he did not followed from the ethnical leadership. After the truth was revealed he did not try to hide or to deny it, and that issue can be consider as ethical behavior. Also he made an apology to the investors about the bad performance of the company and did not cover up his fault. However, Radio Shack could have done better and could have avoided this shameful situation.
First, they have to investigate all their employees before hiring them in the company. Thus they would have understood that Edmondson did not have his two degrees and all of his educational background is just a scenario. Also they could have prevented themselves from losing more money by firing him at the moment and not paying him anything as compensation. As a conclusion I would say that the company could have done things first to avoid the uncomfortable situation that they fell into after hiring an uneducated employee and second to save money by not paying anything to a person who have deceived the company and ruined its reputation.
Question 2: What stakeholders might be impacted by this situation? What concerns might each stakeholder have had? Was any of the stakeholders’ concern in conflict with each other? Explain. What impact might this have had on employees? Answer 2: Radio Shack is a company with many stakeholders that are interest mainly in the good performance of the company. A situation like that with David Edmondson could have a great influence on them. From the one side are the investors who might not be very satisfied, because the company can start losing money, customers, reputation, market share etc.
They are interested in the good functioning of the company as they consider it as a lucrative vehicle. On the other side are the employees, who surely do not want to be managed by an uneducated person, but they are not capable of doing anything in order to change the situation. Last but not least are the customers that can stop buying the products after they learned about the fraud of the CEO. (although it is not very likely to happen just because nowadays people are more interested of the product itself that the company that is producing it).
Bearing all this in mind we can say that the stakeholders can do almost nothing if a situation like that occurs just because they do not have the right and the power to interfere into the manager’s business, decisions and actions. Question 3: Do you think the board’s decision to fire Edmondson was “tough,” as Len Roberts suggested? Why or why not? Why do you think Mr. Roberts would have described this decision as such? Answer 3: In our opinion, the decision to fire Mr. Edmondson was not „tough“under the circumstances that occurred. Mr.
Edmondson already started at the RadioShack Corporation lying about his educational background. That is not a good precondition for being a responsible and exemplary top manager. When Mr. Edmondson became the new CEO of the company, flat sales and lagging stock prices occurred. On top of that, the RadioShack share prices were falling greatly right after the uncovering of his lies and underhandednesses. He apologized for making those mistakes and in order to make an improvement, the CEO’s idea was to close a lot of stores. His behaviour violated the company’s ethics.
The main value of the company is to be responsible so as to create an environment that encourages employees to adapt the values of the company. He did not act according to the company’s slogan which shows that the management was not value-based. In general, Mr. Edmondson just failed to meet the company’s standards by his unscrupulous behaviour. He has a lack of moral sense and the company does not permit or even encourage unethical practices. Top managers are role models which means that they have to set an example to their employees
Although being socially responsible and ethical is a serious challenge nowadays, the company can not tolerate his performance. Besides that, it is very important for a company to be successful and Mr. Edmondson was not able to archive the goals. Therefore it was not such a tough decision as Len Roberts suggested. He probably said that because at first the broad was sure about selecting him as the new CEO of the RadioShack Corporation. But now they had to admit the mistake. Nobody wanted to be blamed by the society and so they pretend to still believe in Mr.
Edmondson’s work. They did not want to make the situation worse and loose more customers who have a huge impact on the company’s profits. Question 4: What impact do you think the company’s severance package to Mr. Edmondson might have? Answer 4: The company’s employees will be dissatisfied when a CEO who has lied about his background receives a severance package of over a million US dollars. This might lead to demotivated employees. Also the stockholders will not be happy to hear this. It’s their money which is being given away to a ‘’bad’’ person.
In general the company’s image has been damaged. In the worst case this might lead to decrease of sales. Question 5: Could an organization ever prevent a situation like this from happening? Why or why not? What could you do? How could the company’s Code of Ethics play a role? Go to the company’s Web Site (www. radioshach. com) and take a look at its Code. Answer 5: An organization/company can and must prevent situations like this from happening! In every school, university or working place you can find a simple info for a person had been there.
When some one wants to be accepted in a company the HR managers should not only check the CV and if it looks good to hire him. They are supposed to check on his past to see if he is telling the true in his CV and it is not such a big job. True sometimes is a few phone calls away. However a lot of organization do not check this information and hire people on a low position in the company only by CV. Later when the employee is dealing summarily with his job no one is asking questions about his education or his past, and on and on the story is getting closer to Mr. Edmondson’s.
Every company can approach tactfully or directly for the information about their future employees and they should know every thing about their professional life and bad past. Question 6: In the March 2004 issue of Wired magazine, it reported that 44 percent of Americans lie about their work history. What’s your reaction to this statistic? What problems can lying on a resume create for an organization? Answer 6: The reaction which is appearing in my mind is all based on assumptions! People can lie because they want a job, want to work but with the background they have is not going to be easy to find a well paid job.
You can lie because you are ashamed of your background. These are not the only reasons. An example for a person who does not have a education, but is very highly motivated to work is Mr. Edmondson a former CEO of RadioShack. He worked there for 12 years from the lower level to becoming a CEO of the company. After he get the CEO position a newspaper ran a story that he has a dirty past and he has not graduated school. You can lie even if you have an education and a good background. LIE – an act done for changing the true for a better and in a manner that will sound better.