summary of the case employee termination in intermountain trust bancorp

His manager faced an ethicaldilemma and had to decide whether to coach Max to improve or consider alternative solutions,such as terminating his employment or reassigning him to a differe

FOREIGN TRADE UNIVERSITY

BUSINESS ADMINISTRATION FACULTY

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BUSINESS ETHICS REPORT

DEBUNKING TEAM

Hanoi, March 2024

1 Summary of the case: Employee termination in Intermountain Trust Bancorp

This report describes a case involving Max, an assistant branch manager at Intermountain Trust Bancorp, a regional bank Max had been a loyal employee of the bank for over 15 years and was highly regarded for his sales skills and professionalism Despite his successful track record, Max faced challenges when he was promoted to assistant store manager without receiving proper training and guidance from his hiring manager The situation worsened when a new manager took over the branch, implementing rigorous training and operational goals for Max

As a result, Max struggled to fulfill his managerial responsibilities, leading to an increase in mistakes and a decline in his performance His subordinates noticed these shortcomings, which resulted in insubordination and a loss of trust in Max's abilities His manager faced an ethical dilemma and had to decide whether to coach Max to improve or consider alternative solutions, such as terminating his employment or reassigning him to a different role

This decision was complicated by various factors, including Max's positive contributions to sales and the organization's financial goals, as well as the impact of his struggles on office morale and overall success The branch manager recognized the need for change and had a responsibility not only to the bank's performance but also to the well-being of the employees Inaction and maintaining the status quo were not viable options, necessitating a prompt decision that took into account multiple stakeholders and considerations

2 Identify ethical issues

The ethical issue in this case is the potential termination of an employee, Max The manager is facing a dilemma of whether to dismiss or sustain Max's employment based on various factors The following are the ethical aspects of the situation may arise are:

- Failure to provide necessary training and support: Max's initial hiring manager failed to set

training, operational, and managerial goals for him when he was promoted to assistant branch manager This lack of leadership resulted in a serious delay in acquiring the skills necessary for success in his new position

- Employee development and well-being: Max's struggles and mounting mistakes are causing

stress not only for himself but also for his immediate manager and the entire office The ethical dilemma is balancing the responsibility to help Max develop his skills while ensuring the success and morale of the office

- Manager's responsibility: Max's new manager is faced with a difficult decision on how to

handle the situation ethically The manager needs to consider the best interests of Max, the office, and the organization as a whole

- Inadequate transition and adjustment to new management: When a new manager was

introduced to the branch, there was a significant shift in office culture and expectations Max, who had been accustomed to a different management style and set of expectations, faced challenges in adapting to the new manager's approach This highlights a lack of effective transition and adjustment processes within the organization

- The Peter Principle: Max's struggles in his new role point to a potential issue of promoting

employees based solely on their past successes without considering their suitability for higher-level positions The Peter Principle suggests that individuals tend to be promoted to a level of incompetence, and Max's situation aligns with this theory It raises questions about the organization's promotion and succession planning processes

- Impact on office morale and success: Max's struggles and mistakes have had a negative

impact on the morale and success of the entire office His subordinates are exhibiting insubordination, and the office's performance is being affected This highlights the need for a resolution to maintain a positive and productive work environment

- Organizational Values: The manager should align the decision with the organization's values

and ethical principles If the company values long-term employee loyalty and commitment, dismissing Max solely based on his current struggles may contradict those values The decision should reflect the organization's commitment to fairness, integrity, and employee well-being

3 Arguments against the suggested solutions

3.1 Solution 1

Max stops working as an office leader Then, he will be given one month working as an assistant manager The manager finds a buddy or a supervisor for Max, for instance, a retired assistant manager This man will supervise Max or work with him After one month,

- If Max does not do his job well, he will be terminated

- If Max does well, he will continue being an assistant manager The manager would continue approaches to develop Max

3.1.1 John Rawl's Theory of Justice

The proposed solution of hiring a retired manager to supervise Max for one month, while seemingly targeted at addressing his performance issues, fundamentally violates the Principle of Equal Opportunity within John Rawls' Theory of Justice “Fair Equality of Opportunity (FEO) requires that social positions, such as jobs, be formally open and meritocratically allocated, but, in addition, each individual is to have a fair chance to attain these positions.” (Stanford Graduate School of Education, n.d.)

By granting Max access to outsourced supervision from a retired assistant, the company allocates him with resources and opportunities exceeding what others in similar positions might receive This creates an unfair advantage for Max, as it is not a resource or opportunity equally available to all employees In doing so, the solution violates the principle of FEO by perpetuating inequalities and depriving other employees of the same opportunity to advance their careers

Moreover, the proposed solution introduces an arbitrary mechanism for addressing performance issues that lack transparency and consistency For no reason of fairness, Max should receive special outsourced supervision while others may not - except if Max belongs to disadvantaged groups within society, in which case he would be subject to the Difference Principle This solution emphasizes the unfairness in the organizational

hierarchy and gradually demolishes employee morale by cultivating a lack of fairness and impartiality in decision-making processes

The reason Max is undoubtedly receiving “special treatment” is that the proposed solution

is impractical and unsustainable to be carried out on the organizational scale Hiring a retired assistant for one-month supervision every time a potential assistant faces performance challenges imposes unnecessary financial burdens on the company and disrupts its operational efficiency by diverting resources away from more strategic investments in employee development and organizational improvement

In conclusion, the proposed solution not only fails ethically to satisfy the principles of fairness and justice within the organization Therefore, the company should reconsider its approach to addressing performance challenges while upholding the principles of fairness and justice for all employees

3.1.2 Jeremy Bentham Theory of Utilitarianism

a) Results in the company financial situation

Retaining an underperforming employee like Max can have significant implications for the financial situation of the company Firstly, there are direct financial costs associated with retaining Max, including his salary, benefits, and any additional compensation or incentives provided These expenses contribute to the company's operating costs without generating corresponding value or productivity Over time, these ongoing costs can accumulate and impact the company's profitability

Moreover, Max's underperformance is likely to lead to reduced productivity and efficiency in his role This can result in lower output, decreased quality of work, and increased errors or rework, all of which contribute to inefficiencies and higher operational costs for the company Addressing these inefficiencies may require additional resources, such as hiring temporary staff

or investing in process improvements

Furthermore, Max's underperformance may result in missed revenue opportunities for the company Delays, errors, or subpar performance in delivering products or services to customers could lead to lost sales or business opportunities Additionally, Max's inability to meet customer

demands effectively may hinder the company's ability to capitalize on market trends, further impacting revenue potential

Even if the company decides to invest resources in training and developing Max for a higher position, it incurs additional training costs These expenses include training programs, materials, and personnel involved in providing the training However, if Max's underperformance persists despite training efforts, these costs may be considered wasted investments that could have been allocated more effectively elsewhere

In conclusion, retaining Max within the company despite his underperformance and lack of improvement is likely to result in adverse financial ramifications for the organization Such a decision could potentially affect the company's profitability and negatively impact its stakeholders and shareholders Therefore, it is crucial for the company to carefully evaluate the costs and benefits of retaining underperforming employees like Max and consider alternative solutions to mitigate financial risks and optimize performance

b) Results in the company working culture and the impact on other employees

Allowing this action may create the perception among staff that underperformance is acceptable since they would be sympathized and given training just like what Max had received Consequently, this perception could gradually erode the company's performance standards and foster a culture where mistakes are tolerated In the long run, this would negatively impact the company’s overall performance quality and working culture

Moreover, retaining an underperforming employee like Max without addressing the issues could lead to a sense of unfairness among other employees who consistently meet or exceed expectations Employees may begin to question the company's commitment to performance standards and fairness in promotions and advancement opportunities This could result in decreased morale and productivity within the team, ultimately affecting the company's overall performance

Besides, not only that the action will affect the morale of other team members but also impacts overall team dynamics and collaboration Team members may feel frustrated having to compensate for Max's shortcomings or redo work due to errors caused by his underperformance

This could lead to increased stress and tension within the team, hindering effective communication and cooperation

In conclusion, providing Max with the opportunity to be prepared and trained for a higher position would be bizarre and set a problematic precedent for other employees

c) Cost-benefits analysis

According to Utilitarianism, the morality of an action is not solely determined by its outcomes, but also by the overall utility or happiness it generates for affected individuals.In evaluating the ethical considerations surrounding the decision to retain Max, we will conduct a thorough cost-benefit analysis to examine both the potential positive and negative consequences of this action This analytical approach will enable us to assess whether retaining Max aligns with the principles of utilitarianism

Financial cost:

1 Retaining an underperforming employee like Max without

addressing the issues can lead to significant financial costs

for the company This includes the direct costs of paying

his salary and benefits without receiving adequate

productivity in return Additionally, there may be indirect

costs associated with lost revenue opportunities due to

decreased productivity and potential errors or

inefficiencies caused by his underperformance

2 It is unnecessary for Max to be supervised under the role

of an assistant manager as he used to work in this position

before being promoted Providing him with a supervisor

will become another financial burden to the company as

they will have to pay the fee for the buddy situation, where

the result is not guaranteed

3 If Max's underperformance affects the quality of products

or services delivered to customers, it could result in

dissatisfaction and loss of loyalty among customers

Avoid mitigating turnover cost:

Recruiting, onboarding, and training

a new employee can be time-consuming and expensive By investing in Max's development, the company may mitigate turnover costs and retain a valuable asset within the organization

Keeping Max on board ensures that this knowledge remains within the organization, which can be beneficial for continuity and decision-making processes

Opportunity cost:

1 By investing time and resources in training Max for a

higher position despite his underperformance, the company

may miss out on opportunities to develop and promote

more deserving employees This could result in a loss of

potential talent and hinder the company's ability to

maximize its human capital

2 Failing to address underperformance and reward

meritocracy may lead to the departure of high-performing

employees who feel undervalued or unfairly treated

3 In case of Max's underperformance persists despite

training efforts, the money spent on him may be

considered as wasted investments that could have been

allocated more effectively elsewhere

commitment:

Providing Max with opportunities for growth and advancement within the company can foster a sense of loyalty and commitment among employees When employees see that the company invests in their development and supports them through challenges, they are more likely to remain loyal and dedicated

to the organization

Legal and compliance cost:

Ignoring Max's underperformance and providing him with

opportunities for advancement without proper justification could

expose the company to legal and compliance risks This may

include allegations of favoritism, discrimination, or breach of

contractual obligations, which could result in costly legal

proceedings and reputational damage

Reputational Costs:

Tolerating underperformance and lowering performance standards

can have significant reputational costs for the company Negative

perceptions among external stakeholders, such as customers,

investors, and partners, may lead to damage to the company's

brand image and reputation Rebuilding trust and credibility with

stakeholders can be a costly and time-consuming endeavor,

impacting the company's ability to attract and retain customers

and investors

Reputational benefits:

By providing Max with opportunities for improvement and advancement, the company can enhance its reputation as an employer that values its workforce and invests in their success, which may attract top talent and enhance employee loyalty

As seen on the table, the cost outweigh the benefits

3.1.3 Immanuel Kant Theory of Morality

The first problem in the solution is that they will continue to keep Max as an assistant manager which primarily focuses on using Max's skills and potential to benefit the organization, without considering Max's autonomy and personal development This solution go against the principle of respecting people’s dignity and freedom of choice and the principle of considering human as an end

The first reason why the problem violates the ethical theory mentioned above is because Max has received extensive training, guidance, and supervision throughout his tenure as an assistant

branch manager with “daily meetings and a system of checks and balances between Max and his

manager came the norm in this office daily” before from his current manager But unfortunately,

mentioning in the case “Regardless of what the new manager implemented, Max's mistakes

seemed to grow in number and frequency So as can be seen, none of the training methods of

Max’s current manager has proven effective Moreover, he was a very talented salesperson before, he only fail to handle the scope work as an assistant manager This indicates that the issue lies not in the lack of sufficient monitoring or having colleagues to work with, but rather in Max's lack of suitability for the role and the necessary skills it demands Moreover, according to the Peter Principle, Max's struggles in his new role point to a potential issue of promoting employees based solely on their past successes without considering their suitability for higher-level positions The Peter Principle suggests that individuals tend to be promoted to a level of incompetence, and Max's situation aligns with this theory It raises questions about the organization's promotion and succession planning processes Therefore, if the company were to continue placing Max in the assistant manager position solely for the purpose of having a potential future leader, rather than focusing on personal development and alignment with the employee's role, it could be seen as treating humans as a means to an end Secondly, the proposed solution of retaining Max as an assistant manager and finding him a buddy to work with and supervise him simultaneously does not fully address an important aspect: whether Max himself agrees with this approach It is crucial to consider Max's thoughts and preferences when determining the best course of action for his career development Max has the right to decide the direction he wants to take in his professional growth, and it is essential to respect his autonomy

in making decisions about his own career Most importantly, Max has been facing difficulties in his current role, Max's performance issues have even caused dissatisfaction among the staff,

directly impacting the previously established working relationships with colleagues Rather than focusing on the employees issues and his ability or desire to design the training method and support plan for him, the solution insists on keeping training him with assistant manager’s necessary skills by a retired assistant manager only in an attempt to keep him available for future leader position One might question whether it is truly Max's choice to continue receiving training in his current position, considering the numerous obstacles he is currently facing Furthermore, the main motive here is solely to groom Max to fit the company's expectations for future leadership positions, it may raise ethical concerns In this scenario, Max's personal development might be secondary to the company's strategic goals, potentially undermining the principle of respecting individuals' autonomy and freedom to choose their own career paths Therefore, the solution is neglecting Max's autonomy and freedom of choice The proposed solution contradicts the principle of respecting individuals' dignity and their right to make decisions about their own lives

The second problem is that Max continuing to be given opportunities, support, supervision, and training by a new supervisor might raise concerns from a universal law perspective

Firstly, continuing to coach and support Max, despite the negative impact on the office and its employees, may lead to a situation where Max's subordinates begin to notice an increasing number of shortcomings, potentially resulting in more insubordination which already mentioned

in the case “As mistakes continued, Max's subordinates began to take notice of the mounting

number of shortcomings which caused them to blatantly exercise insubordination.” This raises

the question of whether it is rational and consistent to invest significant resources and compromise the well-being of the broader team, ultimately undermining organizational success Secondly, the broader question that arises is whether this solution can be universally applied in cases where employees repeatedly make mistakes, even after receiving extensive training, support, and supervision from their managers This is because universal law by Kant stated that

“individuals should act only in accordance with maxims (personal principles or rules) that they can to become a universal law that applies to everyone.” So, the question raised is “Can we in all similar circumstances hire a new supervisor or a buddy for our employees who consistently fail

to rectify their errors despite much training and support form the current manager?” Continuously forgiving and providing support to those who consistently make mistakes can foster a habit of being less fearful and less accountable People may develop the belief that no