A Test On Ethical Leadership And Decision Making Commerce Essay

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The case revolves around peter, a human resource manager for eighteen years and two years as the vice president at Zyedego Corporation. He faced three major issues which could save or close the company, the first problem a raised after hurricane Katrina hit New Orleans. To keep the company running, all the employees were working round the clock and they even started to rehire all the former employees, if they could be located. She also contacted Dana Gonzalez. Moreover she said that Dana can be paid only 75% of her wages because; they have already exceeded their budget. From Dana's side, she said that if she wasn't rehired, then she would go to a competitor and that they (Zyedego) will still have to pay her wages for two weeks as her severance. Gwyn is also concerned with her documents as a US Citizen; she feels that Dana's documents are possibly false.


Zyedego require many truck drivers for their daily operation, and also their driving records as part of their pre-employment procedures.


The hiring of Dana and hiring of truck drivers were not the only concern for Peter; he was concerned with the death of Guy Martin.

Guy Martin started working at Zyedego since twenty years ago. He had a wife, two children and mortgage. Martin had his ups and downs related to his married life, he even got divorced but then six months later, they got remarried. When Peter was the HR manager he assured Martin that his son (who had asthma), will be covered and will not be in a preexisting condition. Peter helped Martin in many occasions by providing him over time work.

But on the day that the hurricane struck, Martin went to warehouses to help evacuate the machinery and products, to protect them from the floods, and Martin went missing since that day and police and rescue work are unable to find body Peter knows that Martin's family depends on Zyedego as their only source of income and he also knew that Martha (Martin's wife) will only get 50%of the retirement benefits, moreover there is legal question over his death and it usually takes seven years to claim any type of death and medical benefits from the insurance company. Even with the social securities she will be forced to lose the house and work.


Darrel Lambert was the chief adjuster for Zyedego's insurance and pension provider. The real problem for Peter started with this person. He said that he could not help martin for many reasons. To start with he said that the body of Guy Martin's body was nowhere to be found and the family of Guy Martin's will not get money until the body is found and he also said it will take at least one year before the judge declares him dead.

Darrel Lambert told Peter that he understands the financial pressure faced by Zyedego. He also said that they can sit and discuss each and every case, but will take twelve months and till then Zyedego will go bankrupt and that is something they don't want to happen.

Darrel Lambert told Peter that he can reduce the reimbursements by 40% and he can start with Martin's case or have nothing. Peter will have to par down twenty five cases including martin's case by 40 % percent. Peter was given only 24 hours to decide what will he do and several hours later he received a phone call from the top management and asked him what his decision was to save the company.


What will be the best solution(s) that peter gives it to the top management and Darrell Lambert, the insurance adjuster.


3.1) to come up with a decision that will save the company in the short run

3.2) to make sure that the truck drivers are not found DUI again

3.3) and help Guy Martins family



One of the HR managers, Gwyn, was thinking to rehire Dana, a former employee, who was pregnant and Gwyn was also worried about her safety due to the tough conditions at the work place. Gwyn had asked Dana to provide her with the new document which proves that she is a US citizen, but Dana failed to do so and her original documents were destroyed in the flood.


Many of the newly hired drivers were a having a past record of DUI (Driving Under Influence), but all the cases were five years ago.

All the drivers said that they knew the consequence of their actions, if they repeat it. And they will never repeat DUI. Gwyn has started to think that she maybe creating a potential risk for the company and needs guidance from peter regarding these hiring practices.


There was a strong possibility that the body of Guy Martin could be eaten by alligators and snakes.

Even with the social securities, Martha will be forced to lose the house and work.



Accept the offer of the insurance company and receive 60% of the claim and the take to cover up the expense and hire Dana Gonzalez.


Will have immediately have cash to run the business.

Can help Guy Martin's family.

Will have cash to cover up some of the loss that incurred due to hurricane.

The company will not get anything if they reject the offer and New Orleans is a place where after a disaster minorities and poor suffer a much slower recovery because of the slow response by the agencies. They have less government reliefs and endure discrimination and rejection.

(Race, place and environmental justice After Hurricane Katrina: Struggles to reclaim rebuild and revitalize New Orleans and the gulf coast. Edited by Robert D. Bullard and Beverly Wright)


The company may not be able to pay all their expenses.

Dana Gonzalez can be a trouble to the company, because the company has to pay her a) if she is harmed, b) if the documents are fake

The truck drivers can still DUI.

Dana can cause the company to pay fines for hiring illegal immigrants in case the documents she provides are false, under the "The Immigration Reform and Control Act of 1986 imposed civil and criminal fines for the unlawful hiring of aliens". Accordion to this Act, if the company knowingly hires a person, whose has no for false documents then the fine is the company can be up to $11,000 per worker. But if the same violations are occurring on or after March 27, 2008 then they the company will be subjected to a maximum fine of $16,000. (http://www.shihabimmigrationfirm.com/lawyer-attorney-1682630.html).

Since January 2009, the Obama administration has audited at least 7,533 employers suspected of hiring illegal labor and imposed about $100 million in administrative and criminal fines (MIRIAM JORDAN 2012), which means that government is very particular about the hiring of illegal employees


Don't accept Darrel Lambert's offer and go for full claim of the settlement and meanwhile take loans from government agencies like SBA (small business administration) to cover up the expense and do not hire Dana Gonzalez. Take an undertaking from the drivers that if they are found DUI then Zyedego will not be held responsible. And help the family of guy martin to show that Zyedego does not give up on its employees and that ethics is an important part of the company.


SBA provides loans for small business if they were affected by disaster, they provide loans @ 4% interest rate m\ximum and the maturity is 30 years.)However, the actual maturity is based on your ability to repay the loan.

The insurance application given to SBA right; final insurance information can be added when a settlement is made. SBA can gratn a loan for the total replacement cost needed; but, the company (Zyedego) must assign the insurance claims to the SBA settlement. (http://archive.sba.gov/services/disasterassistance/businessesofallsizes/physicaldisasterloans/index.html)

Pay guy martin's family their monthly needs.

Pay Dana her severance payment (Severance pay is often granted to employees upon termination of employment. It depends on the number of years the employee has worked for the company. Severance pay is a matter of agreement between an employer and an employee. (http://www.dol.gov/dol/topic/wages/severancepay.htm#.UJQToMVVmwQ). It's better than paying her compensation, if she gets hurt and paying fine if found illegal. And companies cannot risk by being lax on the environment or courting the anger of investors by flouting governance rules (Ruth Sunderland and Zoe Wood -The Observer, Sunday 16 November 2008)

The drivers should be warned that if they are caught then he/she will lose his/her commercial license for a minimum of one year and possibly for life (http://www.shouselaw.com/commercial-license.html)

If they can get full claim then they can pay SAB and use the remaining money for other investments.

Ethical behavior of a company helps it in the long run

Unethical behavior by employees or the company is reduced as per to a study conducted by the Ethics Resource Center in the 2011 National Business Ethics Survey.



A SAB loan is completed within ten days after the documents are received. Zyedego may not survive that long without cash.

They have less government reliefs and face discrimination and rejection. (Race, place and environmental justice After Hurricane Katrina: Struggles to reclaim rebuild and revitalize New Orleans and the gulf coast. Edited by Robert D. Bullard and Beverly Wright)

They may lose the some of the settlements against the insurance company. Hence may not be able to recover the whole amount.


I will select the second solution, don't accept Darrel Lambert's offer and go for full claim of the settlement and meanwhile take loans from government agencies like SBA (small business administration) to cover up the expense and do not hire Dana Gonzalez. Take an undertaking from the drivers that if they are found DUI then Zyedego will not be held responsible.


I reason why I chose this solution is that it is has minimal risk, since the business is just recovering it has to focus on, day to operations rather than the profits. One of the first needs in disaster recovery is distribution of goods and services. One of the first goals in reconstruction is re growth of the economy. Both of these needs are served by business activity in the community (Roxanne Zolin and Fredric Kropp, January, 2007- Pages: 183 - 199).

More the risk of hiring Dana is more than her contribution and since she is pregnant she may not be able working as efficiently as before and most states do not mandate paid pregnancy leave. In these states, the issue of paid leave for pregnancy is usually decided by individual employment policies. Such policies often use a worker's sick leave, and compensation may be full or a reduced percentage of the worker's average weekly pay. The duration of benefits tends to vary and generally does not exceed six weeks. The Family and Medical Leave Act of 19939 federally makes it necessary that all employers give a 90 days paid leave to all its pregnant workers. It also provides job security. Safeguarding a worker's job on her return to employment within 90 days. (Pregnant Workers: A Physician's Guide to Assessing Safe Employment Jason s. Feinberg, and Charles r. Kelley.). This means that Dana can take a leave at any time and still be get her wages and have her job secured

Helping Guy Martin's family at this point, will prove the ethical contribution of Zyedego, toward the community and no matter what the economic climate is, many people prefer to invest in, and shop with, companies that behave ethically and care for the planet. (Ruth Sunderland and Zoe Wood -The Observer, Sunday 16 November 2008)



First the top management should divide the duties, the finance department should take care of the cash collection and they along with top management should go to SAB to give the applications for the loan and explain it if necessary.

At this point the company needs cash to fulfill all its expense, first the company need to all its cash and cash equivalents, to help the day to day operation. Then they have to submit an application to the SAB, where all the cost of damage is mentioned and the amount they are requiring to help their business. So their main aim is to collect cash but they also have think about the future, the solution I have recommended will provide them all the cash they need and also at a very low interest rate and the maturity is after 30 years.


SAB provides loans after 10 days of receiving the application; meanwhile they can manage the company using the company's cash and cash equivalent. Dana should be told of her condition and the risk that she causes to the company by hiring her.

The truck driver after taking the undertaking can understand the consequences of what they will be if they are caught then they can lose their license for the rest of their life.

Martha (Martin's wife) should be informed about the plan and ask her to tell the monthly amount required to save the house and help guy martin son (who had asthma) for now until they can get the full amount from the insurance company and tell Darrel Lambert that Zyedego will be claiming full amount for all the twenty five cases including the case of Guy martin.


The management's leadership skills are very important at this point. All the employees should be told of the problem that the company is facing and that the company needs all the help and support for the survival of the company and even give them incentives once the company is stable. Motivating employees is very important as the individual contribution is also significant.


Control the expenses as the company can't afford unnecessary expenses at this point, employee's presence and productivity should be closely observed.

The management should control the employees in term of peaceful working environment, fights and strikes are the last thing the company wants at this stage.


Profit should not be the aim of the management, the survival of the company should be the aim of the company.

All the managers should be on the duty to supervise the operations.

The financial transactions should be strictly monitored

All the truck drivers must provide a report of their day to day activities.

All the money should be used to run the day to day operation.


First the cash available should be evaluated on weekly basis.

Production and employee performance should be evaluated on weekly basis.

The insurance claims should be discussed with Darrel Lambert on a daily basis

Check on Guy Martin's family on a weekly basis.


Pregnant Workers: A Physician's Guide to Assessing Safe Employment Jason s. Feinberg, and Charles r. Kelley.

Roxanne Zolin and Fredric Kropp, Journal of Business Continuity & Emergency Planning - Volume 1, Number 2 / January, 2007- Pages: 183 - 199.

Race, place and environmental justice After Hurricane Katrina: Struggles to reclaim rebuild and revitalize New Orleans and the gulf coast. Edited by Robert D. Bullard and Beverly Wright

Fresh Raids Target Illegal Hiring Obama Administration Seeks Employment Records from Hundreds of Companies - article by MIRIAM JORDAN 2012





Ethics still matter in hard times- http://www.guardian.co.uk/business/2008/nov/16/observer-good-companies-guide-1Ruth Sunderland and Zoe Wood -The Observer, Sunday 16 November 2008