Sears Auto Center Scandal: Ethics and Management Analysis
This paper examines the Sears, Roebuck, and Co. Auto Center Scandal through the lens of business ethics, applying Trevino and Nelson's eight-step ethical decision-making model. The analysis identifies the primary factors contributing to the alleged unethical conduct — including a flawed performance-based reward system, diffusion of responsibility between mechanics and service advisors, compliance with perceived authority, and ambiguous role expectations. The paper evaluates Sears' ethical approach using both consequentialist and deontological frameworks, and assesses the adequacy of management's response to the allegations. It concludes that while some corrective measures were appropriate, the company's retention of the commission-based compensation structure for mechanics left the core problem unresolved.
- Introduction: Overview of Sears case and analytical framework
- Factors Contributing to the Alleged Unethical Conduct: Reward design, diffused responsibility, and authority compliance
- Ethical Approach Taken by Sears: Consequentialist and deontological evaluation of management decisions
- Sears' Response to Allegations and Adequacy of Changes Made: Assessment of Brennan's response and corrective measures
- Conclusion: Incentive systems and systematic ethical failure
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Applies named ethical frameworks (consequentialism and deontology) directly to a real corporate scandal, grounding abstract theory in concrete case evidence.
- Identifies multiple, distinct causal factors for unethical conduct rather than relying on a single explanation, demonstrating analytical depth.
- Evaluates management's response critically, distinguishing between measures that were appropriate and those that were inadequate — avoiding one-sided conclusions.
Key academic technique demonstrated
The paper demonstrates applied ethical framework analysis: it does not merely describe what happened, but systematically asks why it happened (causal factors) and how it should be evaluated (ethical theory). Using both consequentialist and deontological lenses to assess the same corporate decision is a strong technique that shows the writer can hold multiple analytical perspectives simultaneously.
Structure breakdown
The paper opens with a framing introduction that situates the Trevino and Nelson model, then moves through three substantive sections. The first identifies contributing factors (reward design, diffused responsibility, authority compliance, and role ambiguity). The second applies ethical frameworks to Sears' management choices. The third evaluates the company's corrective response. Each section builds on the previous, creating a coherent progression from cause → evaluation → remedy assessment.
Introduction
For a long time, Sears took pride in operating its auto center service and offering quality 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 ethical decisions. By following these eight steps, one becomes better equipped and well-versed with regard to ethical dilemmas that may exist, as well as more capable of successfully developing solutions to such dilemmas (Trevino et al., 1998). This paper analyzes the case of Sears, Roebuck, and Co.: The Auto Center Scandal with the purpose of assessing the management issues encompassed in the case. Specifically, it considers the factors contributing to the alleged unethical conduct, the ethical approach undertaken by the company, and the responses made with regard to those allegations.
Factors Contributing to the Alleged Unethical Conduct
Several factors contributed to the alleged unethical conduct at Sears. One clear issue is the reward system. Sears management designed a reward system that concentrated on ends rather than means — placing emphasis on quantity over quality and, instead of encouraging honesty with consumers, indirectly rewarding fraudulent and deceitful behavior. The system penalized those who were honest, where honesty meant performing only relevant and necessary repair services. For a corporation that had taken pride in consumer service for decades, this reward system posed a serious threat to consumer trust and confidence — trust that takes considerable time to rebuild. This flawed reward system is the most significant contributing factor to the unethical conduct (Hoffman & Siguaw, 1994).
Another contributing factor is the diffusion and dissemination of responsibility, particularly under the new reward system that provided commissions to mechanics. For instance, if a mechanic is performing the diagnosis, he or she might list more problems than actually exist simply because of the incentive structure. This outcome is made more likely by the fact that the mechanic may perceive himself or herself not as the one directly advising the consumer, but merely as the one identifying problems and passing them along to the service advisor. As a result, responsibility for providing misleading advice becomes diffused between the service advisor and the mechanic, and either or both parties can deflect blame onto the other. An important element in this dynamic is the psychological distance between the two parties. When a mechanic rarely interacts with the service advisor directly, it becomes easier to deceive the consumer indirectly than it would be to do so face-to-face.
A further contributing factor is compliance with perceived authority. In the case study, no specific individual or instruction explicitly directed employees to be dishonest. However, in the absence of clear guidance, employees attempted to infer what upper management wanted them to do. In this case, employees concluded that management wanted higher retail sales at any cost, and they acted accordingly (Hoffman & Siguaw, 1994). Additionally, role definition plays a role as a contributing factor. Making quality a meaningful component of the service advisor's and mechanic's roles — through mechanisms such as Quality Control — is important to consider, though it is not a complete solution on its own.
Conclusion
The Sears Auto Center scandal illustrates how a poorly designed incentive system can systematically produce unethical behavior, even in the absence of explicit instructions to deceive. By prioritizing revenue targets over honest service, and by diffusing accountability across multiple employee roles, management created conditions in which misconduct became the rational choice for employees. While some corrective measures were appropriate, the retention of the commission structure for mechanics meant that the core structural problem remained unaddressed.
References
Ferrell, O. C., & Fraedrich, J. (2014). Business ethics: Ethical decision making & cases. Cengage Learning.
Hoffman, K. D., & Siguaw, J. A. (1993). Incorporating ethics into the services marketing class: The case of Sears Auto Centers. Marketing Education Review, 3(3), 26–32.
Trevino, L. K., & Nelson, K. A. (2014). Managing business ethics: Straight talk about how to do it right. 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(3), 447–476.
Whetstone, J. T. (2001). How virtue fits within business ethics. Journal of Business Ethics, 33(2), 101–114.
Always verify citation format against your institution’s current style guide requirements.