HRM textbook

488 PART 5 EMPLOYEE RELATIONS
that they are to analyze the case and make the arbitrator s
decision. Review the case again at this point, but please do
not read the award and discussion.
Each group should answer the following questions:
1. Based on what you read in this chapter, including all
relevant guidelines, what would your decision be if you
were the arbitrator? Why?
2. Do you think that after their experience in this arbitration
the parties will be more or less inclined to settle grievances
by themselves without resorting to arbitration?
Botched Batch
Facts: A computer department employee made an entry error
that botched an entire run of computer reports. Efforts to
rectify the situation produced a second set of improperly run
reports. Because of the series of errors, the employer incurred
extra costs of $2,400, plus a weekend of overtime work by other
computer department staffers. Management suspended the
employee for 3 days for negligence, and revoked a promotion
for which the employee had previously been approved.
Protesting the discipline, the employee stressed that she
had attempted to correct her error in the early stages of the
run by notifying the manager of computer operations of her
mistake. Maintaining that the resulting string of errors could
have been avoided if the manager had followed up on her
report and stopped the initial run, the employee argued that
she had been treated unfairly because the manager had not
been disciplined even though he compounded the problem,
whereas she was severely punished. Moreover, citing her
impeccable work record and management s acknowledgment
that she had always been a model employee, the employee
insisted that the denial of her previously approved promotion
was unconscionable.
(Please do not read beyond this point until after you have
answered the two questions.)
Award: The arbitrator upholds the 3-day suspension,
but decides that the promotion should be restored.
Discussion: There is no question, the arbitrator notes, that
the employee s negligent act set in motion the train of events
that resulted in running two complete sets of reports reflecting
improper information. Stressing that the employer incurred
substantial cost because of the error, the arbitrator cites
unchallenged testimony that management had commonly
issued 3-day suspensions for similar infractions in the past.
Thus, the arbitrator decides, the employer acted with just cause
in meting out an evenhanded punishment for the negligence.
Turning to the denial of the already approved promotion,
the arbitrator says that this action should be viewed in the
same light as a demotion for disciplinary reasons. In such
cases, the arbitrator notes, management s decision normally is
based on a pattern of unsatisfactory behavior, an employee s
inability to perform, or similar grounds. Observing that
management had never before reversed a promotion as part of
a disciplinary action, the arbitrator says that by tacking on the
denial of the promotion in this case, the employer substantially
varied its disciplinary policy from its past practice. Because
this action on management s part was not evenhanded, the
arbitrator rules, the promotion should be restored. 123
APPLICATION CASE
ENRON, ETHICS, AND ORGANIZATIONAL CULTURE
For many people, a company called Enron Corp. still ranks
as one of history s classic examples of ethics run amok.
During the 1990s and early 2000s, Enron was in the business
of wholesaling natural gas and electricity. Rather than actually
owning the gas or electric, Enron made its money as the
intermediary (wholesaler) between suppliers and customers.
Without getting into all the details, the nature of Enron s
business and the fact that Enron didn t actually own the
assets meant that its accounting procedures were unusual.
For example, the profit statements and balance sheets listing
the firm s assets and liabilities were unusually difficult
to understand.
It turned out that the lack of accounting transparency
enabled the company s managers to make Enron s financial
performance look much better than it actually was. Outside
experts began questioning Enron s financial statements in
2001. In fairly short order, Enron collapsed, and courts
convicted several of its top executives of things like manipulating
Enron s reported assets and profitability. Many investors
(including former Enron employees) lost all or most of their
investments in Enron.
It s probably always easier to understand ethical breakdowns
like this in retrospect, rather than to predict they are
going to happen. However, in Enron s case the breakdown is
perhaps more perplexing than usual. As one writer said,
Enron had all the elements usually found in comprehensive
ethics and compliance programs: a code of ethics, a reporting
system, as well as a training video on vision and values
led by [the company s top executives]. 124
Experts subsequently put forth many explanations for how
a company that was apparently so ethical on its face could
actually have been making so many bad ethical decisions
without other managers (and the board of directors)
noticing. The explanations ranged from a deliberate
concealment of information by officers to more psychological
explanations (such as employees not wanting
to contradict their bosses) and the surprising role of
irrationality in decision-making. 125
But perhaps the most persuasive explanation of how an
apparently ethical company could go so wrong concerns
organizational culture. The reasoning here is that it s not the
rules but what employees feel they should do that determines
ethical behavior. For example (speaking in general,
not specifically about Enron), the executive director of the
Ethics Officer Association put it this way:
[W]e re a legalistic society, and we ve created a lot of laws.
We assume that if you just knew what those laws meant
that you would behave properly. Well, guess what? You