Background of the case
Walt Pavlo began his employment at MCI in 1992 and quickly rose up to get the second highest position in the company’s finance department. In the period that he spent at the firm, Pavlo took part in some fraud cases on both the business as well as its customers (Workplace Ethics Cases, n.d).
Ethical problem the case presents
The ethical challenge that exists in this instance is the amount of effort that Walt put into covering up the fraud being carried out at MCI. As part of the company’s management, he encouraged employees to make use of a wide range of techniques aimed at ensuring the fraud problem was significantly reduced and to restrict the yearly write off that took the place of bad debts (Workplace Ethics Cases, n.d).
Solutions reduced into main solutions
One of the solutions Pavlo could have considered was to report all of the bad debts without attempting to hide the problem. Additionally, when Pavlo was asked to engage in manipulation of the company’s accounting, he could have considered either leaving his position or filing a complaint to higher management (Brooks and Dunn, 2014).
Outcomes of each main solution
Had Pavlo adopted the first solution of reporting the realistic bad debts without making an attempt to conceal them, it would have likely led to a reduction of the company’s profit as MIC would have gained a negative image in the minds of the customers and stakeholders. On the other hand, the second option would have resulted in MIC losing a skilled employee or having to carry out an internal investigation into the company (Brooks and Dunn, 2014).
Likely result of each major solution on people’s lives
The first major solution would likely lead the company’s investors to lose out on a significant amount of money because the financial decisions they made were founded on financial statements that were not accurate. The second solution is one that is not socially responsible, as Pavlo’s leaving would not prevent the company from continuing with its unethical practices. The public benefits in the instance when an individual is not allowed to carry on with any illegal activity (Brooks and Dunn, 2014).
Values or ethical principles upheld and violated by each primary solution
The first key solution supports the principles of honesty and the right that the public to know as it reveals to everyone involved the actual extent of the bad debts that the company is going through. In doing so, Pavlo would have provided the chance for the company’s customers and its shareholders to make financial decisions based on information that was accurate (Workplace Ethics Cases, n.d). The second primary solution upheld the principle of fidelity and that of lawfulness. In this regard, by resigning Pavlo would have been able to keep the promise he made to the customers and company shareholder to remain faithful to protecting their interests and acting in a reliable manner and by extension ensuring he does not break the law (Brooks and Dunn, 2014).
Evaluate the values, and likely impact of the major solution
The first solution would ensure that Pavlo remains ethical putting a stop to the wrongdoings of other people within the company and by extension ensure that he upholds his integrity. On the other hand, the second option would prevent Pavlo from continuing down the path of criminal activity and would have made sure he was not convinced to take part in the side business with Harold Mann (Workplace Ethics Cases, n.d).
Decision stated, detailed and supported
After making a consideration of the two outlined options, the most efficient course of action for Pavlo would be to report to the public the company’s bad debts without making an attempt to hide any information. Not only would this decision ensure that Pavlo remained ethical but would also provide protection to the company’s investors and stakeholders (Workplace Ethics Cases, n.d).
Defense of the decision against objections to its main weakness
An argument might be put across that engaging in such an action would not result in social responsibility as it would lead to significant costs for the company and reduce its profits. However, the costs to the company would only be short term, and MIC would eventually be able to recover. If the company continues to hide its bad debts, it would likely impact on its image for an extended period and eventually lead to its permanent closure (Brooks and Dunn, 2014).
- Brooks, L.J., & Dunn, P. (2014). Business & professional ethics. New York: Cengage Learning.
- Workplace Ethics Cases. (n.d). Walt Pavlo’s MCI Scams/Frauds.