Ethical Dilemma: Siemens Building Technologies
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Published: Thu, 14 Sep 2017
CASE STUDY 1:
The business background
In the construction industry, Siemens Building Technologies works primarily as a subcontractor doing building automation designs where we bid on contracts for specific sections of an overall project.
In the construction business, the market contains many multi-million dollar projects which are essentially a commodity on the open market. When Company X decides to build a new hospital, it then sells the main contract to a General Contractor (GC) who in turns sells individual subcontracts to subcontractors (SCs), like Siemens, that specialize in specific areas: electrical, plumbing, and automation controls to name a few. These SCs in turn sell further contracts for the materials, and labor needed to do the job. With ethical bidding, sellers search for the best deals available from buyers by any legal means at their disposal. Such as, asking subcontractors for prices, negotiating subcontractor’s price or competitors’ prices.
The Ethical Dilemma
Siemens has routinely awarded subcontracts to JDS Electrical for jobs all over the state of Colorado as well Wyoming. During one particular contract negotiation, Siemens was put into an ethical dilemma by a member of JDS Electricals’ sales team. During phone meeting, the salesman mentioned that JDS did not have the manpower to bid on this contract, but were grateful for the offer. However, during the conversation he specifically asked if we wanted the price list of other contractors that have been used in previous contract specs. Which essentially means do you want to see what other companies have bid for similar jobs. By having that information Siemens could potentially “bid cut” those companies to make more profit which is illegal. By being offered information like this it put our sales manager in an ethical dilemma.
Acting on the manager’s role responsibility and authority he has been given, the manager had multiple options.
- He could refuse the offer and just carrying on with business as usual. Siemens has done business with JDS for nearly 20 years and they have an exceptional business record.
- He could Inform the JDS salesman that is not how he does business nor does Siemens.
- He could inform upper management and the legal department.
- He could recuse himself from this project contract negotiations.
Solution and Results
As a result of the ethical dilemma, the sales manager did three of the four options: First, he told them no and hung up. By doing so, the manager did not allow his personal values to become corrupted. In fact, it was his moral character that allowed him to navigate the ethical dilemma. Second, once he got off the phone, he immediately called the general manager and requested a meeting as soon as possible. By the next day, he followed his role responsibility to the letter and reported the unethical offer and a potential bribe. Third, he asked to be removed from this project considering what he was offered. After discussing it with the general manager, they both felt that was the proper action, and was in keeping with the organizational values, especially after speaking with the legal team. According to legal, the offer violates Colorado Criminal Code: 18-8-307. Crime of Designation of supplier prohibited. “Any public servant who requires or directs a bidder or contractor to deal with a particular person in procuring goods or services required in submitting a bid to or fulfilling a contract with any government commits a class 6 felony.”Â (Colorado Criminal Code) According to Siemens, the sales manager acted exactly like thy hoped he would act. Siemens believes in its ownership culture where every employee takes personal responsibility for the Company’s success. “Always act as if it were your own Company” – this maxim applies to everyone at Siemens, from Managing Board member to trainee.” (Siemens 2017) By taking this approach with every business opportunity Siemens ensures the employee role responsibility always has the company’s best interest in mind as well as our customers. By doing so, it makes Siemens a socially responsible company.
With the ethical dilemma that the sales manager faced, I did see possible tension between values or responsibilities. For example, when people are faced with an unethical dilemma, most people do not act ethically even though they think they would, because of this the sales manager did not allow his “want self” to override his “should self” and acted ethically and in kept to his role responsibility. Additionally, I also saw unity between the different responsibilities as well. The reason for this is Siemens strong commitment to stakeholders. Siemens ensures their core values are designed around their people and community. “[Siemens] will gear all our actions to the requirements of our customers, our owners and our employees as well as to the values of society.” (Siemens 2017) Thereby ensuring accountability and corporate social responsibility.
Siemens Strategy. (2017)
COLORADO CRIMINAL CODE – GOVERNMENTAL OPERATIONS … (n.d.). Retrieved from https://www.criminal-lawyer-colorado.com/colorado-criminal-law-code-of-offenses
CASE STUDY 2:
The business background
As a system engineer for a major building automation company, once a project has been confirmed that we won the bid, there is a process that takes place before the engineering design begins. One of the most critical phases is the sales to operations turnover. During this phase, the project manager and engineer review the scope of work for the design. From this, questions arise based on the actual intent of what the customer is looking for and how accurate the sales estimate is compared to the actual design process. More importantly, if we are using third party material, it is the responsibility of the sales team to obtain that information. Once the project manager and engineer both feel comfortable with all the information we accept the job and design phase begins.
The Ethical Dilemma
During one project I was designing, I was working with an experienced project manager who had just moved to the area from Seattle ahead of his wife and family. As I worked through the information, I discovered that the sales team did not correctly bid a small portion to the job. The information that I found was charging the customer $20,000 for migrating data from an existing third party system and replacing it with a new automation computer system so that our network could control the associated equipment. However, to accomplish the intent of the job specification, this could be achieved without installing a designated automation computer for the migration, thereby saving the customer $20,000. Upon discovering this mistake, I went to see the project manager and informed him of the mistake as well as my intention to continue to design the job without the migration and automation computer. He agreed that it did not need to be part of the design. Thinking everything was good, I asked if he was going to inform the customer or would I add it to my notes for the weekly project meeting with the customer. He responded with, “Absolutely not.” When I asked why “he said that this would give us some extra room and cover any unforeseen slip on the project.”
As a person with good moral character and high ethical standards, I found myself in an uncomfortable situation. Thankfully, I had multiple options available to me.
- I could try and handle the situation at my level first by talking with the project manager.
- I could accept the answer and just design the job.
- Considering that he just started with the company and was in the process of moving his family, I could go along with what he said so I don’t get him in trouble and cause him and his family problems.
- I could speak to other engineers and ask if they would review the specification and ask them for their perspective on the migration and see how it compares to my decision because my decision could be wrong.
- I could speak to my manager requesting to be removed as the engineer because I do not want to have my name on a job that is blatantly deceiving the customer.
Solution and Results
As a result of the ethical dilemma, I did seek the other engineer’s perspective, in the engineering field there are multiple ways to design a system, and my way may not always be the best way. After speaking with them, they also agreed that the sales estimate was wrong and what I found was accurate. Considering my personal values, I could not just go along with the ethical dilemma. So I sent the project manager an email explaining what I found after talking to the other engineers and asked him again if he was going to inform the customer or did he want me to take care of it during a meeting or via an email. Additionally, I advised him that if he decides to keep this from the customer, I will request to be removed from the project. Within a matter of minutes, he was at my desk. By doing so, I created a paper trail that protected myself and my personal values as well as forcing him to act ethically, even if he does so for the wrong reason. Furthermore, based on my course of action, by following my core values it ensured my actions were in keeping with my job responsibility which is to design a system that at the very least, meets the customers’ expectations; without taking advantage of customers with information asymmetry. Additionally, by not allowing my personal values to be compromised, my actions aligned with the organizational values that require everyone in the company to be responsible and to act in an ethical manner because we are accountable for our actions. By doing so, I was able to overcome this ethical dilemma by being true to myself, because of this I prevented a project manager from taking advantage of customers to increase his profit margin on that job.
When I look back on the overall events of ethical dilemma that I dealt with, I do see lots of tension between my personal values and my role responsibility to the company as well as the customers. After reading “Blind Spots,” and reflecting on the events, I can see some similarity to Bazerman’s “in-group favoritism” when I considered keeping quiet and going along with the project manager because we worked together and were both prior military. Additionally, the thought of not wanting to get him in trouble crossed my mind. However, by not immediately reacting and taking the time to look at all my options, it allowed my “should self” to come forward and act in an ethical manner which is why Siemens is viewed by their customers and the community as a company that is socially responsible.
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