Scandal Involving Sears Auto Center Case Study

Length: 5 pages Sources: 5 Subject: Sports - College Type: Case Study Paper: #24736596 Related Topics: Ethical Decision Making, Sports Marketing, Unethical Practice, Ethical Dilemma
Excerpt from Case Study :

Sears Auto Centre Scandal

For a long time, Sears has taken pride on being an auto center service and offering services to consumers. The eight step model proposed by Trevino and Nelson (2014) is a tool that can be employed to assist individuals in making decisions that are ethical. In following these eight steps, one becomes better equipped and well-versed with regards to ethical dilemmas that might be existent in addition to the capacity to successfully come up with solutions for such dilemmas (Trevino et al., 1998). The paper will make an analysis of the case Sears, Roebuck, and Co.: The Auto Center Scandal with the purpose of assessing the management issues that are encompassed in the case. The paper will consider the factors that are contributing to the alleged unethical conduct, the ethical approach undertaken by the company and the responses made with regards to the alleged unethical conduct.

Factors Contributing to the alleged Unethical Conduct

Several factors have contributed to the alleged unethical conduct in Sears. The following section will outline and discuss these contributing factors. One clear issue in this particular case is the reward system. The management of Sears has designed a reward system that concentrates on the ends and not the means. In so doing, it places emphasis on the quantity and not the quality and instead of being honest with the consumers. In addition, the system rewards individuals not only for retailing more service but also indirectly rewards them for being fraudulent and deceitful. The system thus penalized those who are honest where being honest implies undertaking only relevant, just, and necessary repair service. For a corporation that has taken pride in having consumer service over the decades, this new system of rewarding is tantamount to issues with consumer trust and confidence, an aspect that takes a long time to mend. This reward system is the biggest contributing factor to the unethical conduct (Hoffman & Siguaw, 1994).

Another factor contributing to the alleged unethical conduct in Sears is the dispersion and dissemination of responsibility, particularly with the new reward system that sustains commissions to be given to mechanics. For instance, if the mechanic is doing the diagnosis, then he or she might list down more issues than the ones existent simply due to the reward system. On the other hand, this is more probable as, the mechanic might perceive that he or she is not really the one offering advice to the consumer but rather is only making a list of the existent problems and giving it to the service advisor. As a result, there is the diffusion of the responsibility of handing out bad advice between the service advisor and the mechanic. Additionally, it is probable for either or both of the parties to point blame to the other as being responsible. One element that plays a great role in this factor is the psychosomatic distance that exists between the two parties. For instance, if the mechanic barely ever sees the service advisor, then it becomes quite easier and simpler to deceive the consumer compared to being dishonest to the consumer face-to-face. This follows from the fact that it is much harder to lie to the consumer in person.

Another factor that is causal to the alleged unethical conduct is the submission and compliance to authority. In the case study, it is important to take note that there was no specific individual or instruction that openly pointed out to these personnel to be deceitful. However, taking into account that there were no clear or distinctive statements, the employees will make an attempt to gain an understanding as to what the authorities or the upper management wants them to undertake. In this particular case, the employees concluded that the management of the company wanted the employees to have more retail sales in terms of their service to be attained at any costs and therefore the personnel followed the practices they eventually carried out (Hoffman & Siguaw, 1994). What is more, the factor of roles being played comes into consideration as a contributing factor. It is imperative to deliberate on setting quality to be a significant element of the service advisor and mechanic roles. prevalence of such instances give rise...

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However, it is important to point out that this is not the perfect solution.

Ethical Approach Taken by Sears and why

One aspect of the model encompasses defining the ethical issues. This step takes into consideration the benefits and drawbacks with revealing and withholding certain facts. It covers what facts of a certain circumstance could in fact be harmful to an individual or a group or even the society as a whole. It includes the decisions made and the individuals affected by such decisions.

By using a consequentialist perspective, one can comprehend to a certain extent why Sears executed or enacted their new productivity incentive strategies in all of their auto centers. The Consequentialist approach places emphasis on the consequences or the outcomes of the decision or action taken (Whetstone, 2001). The main goal of the upper management was to increase or maximize the level of profits as much as possible subsequent to several years of deteriorating sales and returns. Towards fulfilling that objective, they made the decision to develop a compensation system that is performance-based for every individual who was involved in the auto center, in pursuit of the overall objective of increased returns aiming to increase the level of motivation of the employees to attain higher revenues. By employing this new approach, there was a likelihood of positive outcomes for all stakeholders involved aside from the consumers. Mechanics as well as service advisers would have the chance to generate more money if they had the ability of making more revenues through improved, hard work, through which the corporation would have the capacity to attain higher profits. The issue with this approach is that the consumers had a likelihood of having a worse experience compared to they had in the past, if the mechanics and service advisors made the decision to take advantage or exploit them for their own benefits. In the end, people will do what is rewarded in the work setting to attain praise or acknowledgement as well as the financial rewards that come along with it, irrespective of how they acquire the same- meaning, the path chosen would become immaterial. Therefore, mechanics began double-dealing or being deceitful with regards to the problems with the vehicles which were brought in and would perform needless and pointless repairs for no purpose except to benefit by achieving their everyday or weekly quotas. This was the result of the upper management's new incentive program. The program stated nothing about ethical actions or behaviors and undertaking what is right for the consumer. The management only told its personnel that they required higher sales revenue and by failing to mention how such sales were to be attained, was inferred as achieving them at any cost.

In this case, the deontological perspective seems to be the most beneficial in this aspect. For instance, the aspects of impartiality, honesty and the obligation to offer consumers the most relevant service are deemed to be the most apparent ethical issues in this case. The mechanics are acting out of vested interest, as they make inflated lists of problems for the consumers that will accrue additional personal benefits. These personnel are not obligated in any way to offer the consumers only the necessary services. This is because; the management of the company has not laid out any rules or procedures that ought to be followed. Instead, the personnel have been told to maximize the level of sales revenue generated in order to be rewarded (Ferrell & Fraedrich, 2014).

Sears' Response to Allegations and Adequacy of Changes Made

The response of Brennan was a weak one. He ought to have apologized and wholly accepted the accountability and responsibility of the management for coming up with a reward system that was faulty. In addition, he ought to communicate a strong message to the personnel of the company with regard to future expectations. On the other hand, a number of the notions that were subsequently executed can be considered to be fitting. For instance, commissions centered on consumer satisfaction ought to place emphasis and concentrate on providing satisfaction to the consumer instead of retailing a particular amount of brake jobs. In addition, shopping audits can offer the management beneficial and pertinent information regarding the quality of service being given to the consumers. Nonetheless, Sears has not yet come up with a satisfactory solution to the problem or issue. Taking into account of the fact that the company sustained the system of compensation for mechanics is one of the major problems. In response to the letter from Chuck Fabbri, it asserted quite clearly that it is the mechanics who regularly make provisions for the diagnosis. This particular system encouraged or steers the mechanics to overrate or exaggerate and make…

Sources Used in Documents:

References

Trevino, L.K., & Nelson, K.A. (2014). Managing business ethics: Straight talk about how to do it right. New York: Wiley.

Trevino, L. K., Butterfield, K. D., & McCabe, D. L. (1998). The ethical context in organizations: Influences on employee attitudes and behaviors. Business Ethics Quarterly, 8(03), 447-476.

Ferrell, O. C., & Fraedrich, J. (2014). Business ethics: Ethical decision making & cases. Cengage learning.

Whetstone, J. T. (2001). How virtue fits within business ethics. Journal of Business Ethics, 33(2), 101-114.


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