Case 18 American Red Cross

Case 18: The American Red Cross Faces Organizational Integrity Challenges 1) Explain the possible problems in the
ethical culture of the Red Cross that created the issues discussed in this case. On the surface, the American Red Cross is a remarkable organization that makes a huge difference in the lives of those in need after a disaster such as September 11, 2001 and natural disasters. The organization itself is huge and with this it brings some natural challenges as with any large organization. Some of these issues stem from the corporate level while some of these are on the front line. On the corporate level, there is the possible ethical issue of overcompensation of employees. With a huge board and high turnover rate of top executives, it is no wonder why there are allegations of overcompensation. For top executives, there is a generous severance pay involved even when some executives have not been with the company for a full year. On the front lines, there are issues with management and supervision. With the overwhelming majority of the company made up of volunteers, it is too easy for these volunteers to partake in unscrupulous activity without the managers ever knowing. From theft to embezzlement, the Red Cross has seen it all, especially in times of a major crisis. For example, during Hurricane Katrina, the Red Cross did not follow their procedures for screening volunteers and in turn had felons volunteering. Granted, not all of the felons were there to take advantage of the situation, but it goes to show how these actions could potentially lead to the demise of the organization in the long run. 2) Name some of the problems the ARC has encountered with handling donation money. With donations pouring in at an astonishing rate, it is hard to keep track of every dollar that comes into the organization. That is where technology becomes a huge factor, and of course as we all know, technology can sometimes cause more problems than we plan for. For
example, the lack of technology at the ARC causes issues left and right. The ARC is in dire need of updating their equipment and software in order to effectively handle their priorities and operations. One of the public uproars stemmed from the fact that the ARC was going to use some of the money from the 9/11 donations in order to update operations. Of course, this is highly unethical as these funds that were donated were to be directed towards those affected by the disaster. Another factor is the lack of control of their money supply. Although there are internal control methods at the top, on the local levels there is a severe lack of control. This is evident in the amount of funds that has been embezzled from the organization. If two people are capable of embezzling over one million dollars, just imagine what else is going on behind the scenes with donor money. In addition, the lack of control of technology allows this embezzlement to be done on the front lines. If a computer that is used to transfer need related funds gets into the wrong hands, it is simple for one volunteer to take money and run. 3) What are some of the reasons for the ARCs ethical dilemmas, and how can the organization guarantee that these problems will not recur in the future? The one factor that this case boils down to is money. The majority of the organizations problems is based off of the fact that money rules the world and power the desires of mankind. With that said, there are still many issues within the organization on their handling of donor money. Everything from receiving to distribution of these funds need to be more closely monitored. This stems from the lack of formal leadership in the head of the organization. There is too much turnover within the organization and it is leaving the ARC in shambles. With the constant changes in leadership styles from CEO to CEO, the employees are left with very little to have faith in. There is too much inconsistency and until this is corrected, there will continue to be problems within the organization.
As for correcting these issues, one of the main things that the organization has to establish is a transparent relationship with their stakeholders. They need to be clear on what funds are coming in, how the money is going to be divided even before the organization sees the funds, and finally, where the funds are going during disaster relief. In order to implement these changes, the organization needs consistency at the top level of management. Without this, the ARC will continue to be untrustworthy and full of greed. 4) What effects do organizational structure and compensation have on ethical behavior among chief executives at ARC? As noted earlier, within the organization there is an extremely high rate of turnover at the top level of management. With this turnover, there essentially is a breeding ground for unethical leadership. With all managers at the top receiving a handsome severance package, it is no wonder why many take the position only to leave in less than a year. This instability at the top trickles down throughout the organization. This trickle-down effect is what allows the unethical conduct on the frontlines. A company restructuring and a strong foundation is needed to stop this unethical behavior from happening.

Case 18 American Red Cross

Uploaded by

Copyright:

Available Formats

Case 18 American Red Cross

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Case 18 American Red Cross

Uploaded by

Copyright:

Available Formats

Case 18: The American Red Cross Faces Organizational Integrity Challenges 1) Explain the possible problems in the

You might also like