case study 5.

• Te case of the missing

performance Reviews
Susan R. Stryker and James B. Stryker

A fter working her way up the managerial ladder in the fnance

departments of a number of large manufacturing companies, Margo
Romano fnally landed what she believed was her dream job: chief fnancial
ofcer and a member of the executive committee for a fnancially successful,
family-owned tool and die manufacturing business. Initially, she had been
concerned about being the frst nonfamily member to hold a position on the
executive committee, but the frm was highly regarded in the industry, and
the compensation package was excellent. She was also working hard to de-
velop a good rapport with the other members of the executive committee,
especially the CEO. Te CEO, the daughter of the founder of the company,
had told Margo privately that although some of the other family members
had initially been concerned about bringing a nonfamily member onto the
executive committee, she had supported her and told them that Margo was
the “perfect match” for the position.
Afer Margo had been with the company for about a year, the CEO called an
executive committee meeting to announce that, for the frst time in company
history, the company would have to downsize to respond to rapid changes in
its manufacturing business. Margo and the CEO had met several times prior
to the announcement to review the fnancial situation, and Margo had agreed
with the CEO that downsizing, although always a painful process, was neces-
Copyright © 2019. Myers Education Press. All rights reserved.

sary for the long-term health of the 40-year-old company.

Margo was pleased that the CEO publicly stated that Margo would be in
charge of the entire process of reorganizing the company because she trusted
that Margo would do things “in a thoughtful and an ethical manner.” Further,
afer the meeting, the CEO told Margo privately that she had complete faith
in her and, in fact, trusted her more on than she did the head of her human
resources department, who had “been around for quite some time now.”
On Margo’s recommendation, the company decided to make its layof de-
cisions based on the annual performance appraisal scores of the employees.

Mitchell, P. A. (Ed.). (2019). Ethical decision-making : Cases in organization and leadership. Myers Education Press.
Created from nu on 2023-03-26 16:59:35.
 Te Case of the Missing Performance Reviews 123

Margo directed that each department manager submit a list of employees

ranked according to the average score of their last fve annual performance
appraisals. Several years ago, the company had initiated what it felt was a very
fair performance management system. At the start of every year, each man-
ager and employee met to establish fve goals for the employee for the coming
year. Afer agreeing on the goals, the manager and the employee signed of on
those goals. At the end of the year, they met again, and the manager assigned
the employee a performance rating based on accomplishment of the agreed-
upon goals. Both, manager and employee then signed of on the annual score.
As long as the performance appraisals had been conducted in a fair and im-
partial manner, this seemed to be the best way to approach the challenging
task of layofs. In fact, this method of review has been used by other major
U.S. corporations, including General Electric.
As Margo was reviewing the performance evaluations, she noticed that in
three departments, employees were listed at the bottom of the performance
list for that department but had “N/A” where the evaluation score should
have been written. When she asked the managers to explain, they told her
that these workers were old-time employees who had been with the company
since the beginning. Te formal performance-appraisal system had only been
instituted 10 years earlier, and the former CEO and founder of the company,
the current CEO’s father, had agreed to these long-time employees’ request
that they keep receiving informal evaluations “as they always had.”
In a private meeting, Margo raised the issue with the CEO, stating: “Yes,
I am aware that some of our oldest employees haven’t been evaluated in a
long time, said the CEO, “but frankly, and just between you and me, it’s time
for them to retire anyway. Tey just aren’t performing the way they used to.
However, remember that the company’s been very good to them; they will
Copyright © 2019. Myers Education Press. All rights reserved.

have a good retirement package, not to mention the severance you’ve con-
vinced me to ofer. Letting them go will let us lower our overhead and save
jobs for the younger people—you know, the ones with young kids and fami-
lies just starting out.” Margo thought for a moment. “Have these employees
been informed that their performance has not been satisfactory” she asked?
“Well, good question,” the CEO responded. “I’ve tried to talk with each one
of them, or most of them, in any case, informally every year and we’ve talked
in general about when they might want to consider retiring for a number of
years now. It’s true, some of them seemed to get the hint, others didn’t. But in

Mitchell, P. A. (Ed.). (2019). Ethical decision-making : Cases in organization and leadership. Myers Education Press.
Created from nu on 2023-03-26 16:59:35.
 124 et h i c a l d e c i s i o n - m a k i n g

any case, we have got to do what is in the best interests of the company, don’t
we? If we don’t, in this competitive environment, no one will have a job.”
As they got up from the table, the CEO put her arm around Margo’s shoul-
der. “By the way,” she said, “you should know that both the executive commit-
tee and I think you’ve really been doing a good job. Tis makes me feel good
about what a good choice I made when I hired you!” she said with a smile.
“Also, I’m glad you talked with me today about these employees. It’s a good
reminder that you and I always need to keep all communication channels
open!” Margo smiled in return as she lef the CEO’s ofce. But as she walked
down the corridor, she knew there were some important issues she needed
to think about.

Questions:

1. What are the key ethical questions raised?

2. What ethical principles apply in this case?
3. What is your solution to the ethical dilemma? What is the right thing
for Margo to do?
4. What ethical-leadership lessons have you learned?
Copyright © 2019. Myers Education Press. All rights reserved.

Mitchell, P. A. (Ed.). (2019). Ethical decision-making : Cases in organization and leadership. Myers Education Press.
Created from nu on 2023-03-26 16:59:35.