Fat-Be-Gone, a publicly traded corporation produces an all natural weight loss drug that is not regulated by the U.S Food and Drug administration. Fat-Be-Gone is a large company with thousands of shareholders and number of facilities around U.S and Mexico with annual revenue exceeding $200 million.
However, the performance of Fat-Be-Gone has been degrading since last year with several of executive charged for misuse of company funds and increasing operation costs due to an increase in cost of raw materials, labor cost and employees health care cost. The company has been facing employee lawsuits from unsafe work conditions, wrongful termination to hostile working environment majority of which has been brought by employees in U.S. On the top of that several rumors regarding leading product may be linked with cardiac arrest has affected the sales. Company’s main product has not been successful as it was supposed to be causing company to net loss of 75 million.
As a newly selected CEO and Chairman of the Company, I am very much concerned about the declining sales and performance of the company leading to record fall of stock value from $25 to close of $7 per share. In order to improve the performance and profitability of the organization, I am implementing new company polices on a number of issues such that we can overcome the current problems and move towards the achievement of organizational excellence.
Policies regarding Board Compensation:
It is essential to provide a compensation opportunity that will enable the organization to compete with other investors to attract and retain talented investment and management professionals. Based on our company type and its future public offering plans, I believe stock options will be the primary means of compensating board members i.e., compensation will be in the form of company stock. The compensation should be at the high end of the spectrum such that it is large enough to give board members an incentive for helping your company and make them feel as if they have a stake in the success of the company. I believe, offering board members opportunity to invest in our company is a good way to bind their interest to ours.
Stock option can be defined as a call option on the common stock of a company, issued in a form of non-cash compensation. There are certain restrictions on the stock option which is an attempt to align the holder's interest with those of the business' shareholders. If the company's stock rises, holders of options experience a direct financial benefit which motivates the employees to perform in a manner that will enhance the company's stock price.
The benefits of stock options is once it is exercised, the holder has an ownership interest in the company, thereby making one vested in the success of the company and helping to retain talent and willingness to service the company's needs. There is no cash outlay at any time by the company. Despite giving up some ownership interest, stock options are a nice way to build company loyalty without having to use cash to pay for it. However, there are some negative aspects on compensating Board with stocks. Unless the option is structured otherwise, the percentage of the company owned by current shareholders is diluted and, if voting shares are issued, the control of the company by the current shareholders is diluted. Similarly, the holder pays either capital gains or ordinary income tax on the amount the stock has appreciated since the grant date, dependent upon the type of option and the time span of the option. They can manipulate the price of stock for their own purpose and interest as well. I will implement the policy of compensating board of directors with stock option such that they have the ownership interest and give their fullest in the achievement of the organizational goals.
Stock options is a valuable component in the compensation mix but, extreme care must be exercised in granting stock options to ensure compliance with federal tax laws and federal and state securities laws. Stock options grant a right to acquire shares of the issuer’s stock for a stated price upon satisfaction of stated vesting requirements. Several legal considerations have to be made while compensation Board with stock options. Options must be granted at fair market value in accordance with a written plan that includes the aggregate number of shares issuable and specifies the one eligible for those grants and is approved by required authorities.
Several ethical issues have to be considered while making any decisions such that it brings benefits to the maximum number of people while keeping up with the certain requirement and policies. The primary purpose of the business is to use it resources and engage in activities that brings maximum profits as long as it stays within a game. Ethical considerations such as does it brings benefit to maximum people, and is the right policy that is good from overall perspectives has to be considered. I view ethics as harmonious relationship with the community unfolding potential and reaching the fullest. Compensating board with stock option is ethical as far as, it brings maximum benefits to the organization and it meets the legal requirements and procedures.
Policies regarding Termination: There are many reasons and circumstances that may require termination, but our response should not be a case of unfairly terminated or wrongful termination. In today's litigious society, many employees may be tempted to sue if they feel they have been unfairly terminated. The explosion in employment-related lawsuits over the last year has left us wondering under what circumstances we can safely discipline or discharge an employee without legal action. In fact, it has hurt our organization a lot with increment in overall cost. There are, however, policies and procedures we are implementing to ensure our practice is not on the receiving end of a law suit. Our policies will be based under the norm of Employment at Will. I would implement the following policies for employee terminations:
- The Employee violated a known company rule.
- The employee is not able to perform the job adequately.
- The company is reducing its workforce for economic reasons.
It gives employer advantage by giving a chance on a new hire if employer knows that things don't work out. However, this can benefit employees as they can quit at any time or bargain for a raise at any time if a better offer comes along. There are some possible opportunities and risk associated with the implementation of such policy.
It may be true that employment is “at-will,” today, firing simply based on “at-will” can create legal liabilities if the employer is not aware that there are some exceptions to employment laws.“At-will” is a common law principle that allows the employment relationship to be terminated by either party at any time, with or without notice and with or without reason. Today there are numerous laws that employers must consider. These laws have been put in place to protect employees in the workplace, and set up what is commonly referred to as “protected classes” and limit, in many ways, the “at-will” prerogative such as Title VII of the Civil Rights Act of 1964: prohibits employment discrimination on the basis of race, color, religion, sex, or national origin.
Policies regarding whistle blowing protection:
A whistleblower protection policy establishes procedures to ensure organization’s board members, officers, employees and other key individuals can “blow the whistle” by reporting good faith suspicions of illegal, unethical or other inappropriate activity without fear of retaliation. Having such policy is becoming increasingly critical to protect an organization from legal liability. Fat-Be-Gone is committed to protecting employees and applicants for employment from interference with making a protected disclosure or retaliation for having made a protected disclosure or for having refused an illegal order. This policy is derived from Sarbanes-Oxley Act.
Our policy states that an employee may not retaliate against an employee or applicant for employment who has made a protected disclosure or who has refused to obey an illegal order, nor directly or indirectly use or attempt to use the official authority or influence of his or her position or office for the purpose of interfering with the right of an applicant or an employee to make a protected disclosure to the employee’s immediate supervisor or other appropriate administrator or supervisor within the operating unit, the locally designated company official as defined in the company’s Whistleblower Policy. It is the intention of the company to take whatever action may be needed to prevent and correct activities that violate this policy. This policy is being introduced to enable employees to raise concerns about any malpractice, impropriety, abuse or wrongdoing at an early state and in the right way without fear of victimization, subsequent discrimination or disadvantage.
There is efficient transmission, dissemination, analysis, storage and retrieval of insider ownership and transaction information after the implementation of this policy. Improved quality and transparency in financial reporting can be observed. A number of companies have begun to standardize and consolidate key financial processes, broaden responsibility for controls and eliminate unnecessary controls. There is some time and operational cost associated with implementation of this policy. There is little guidance as who to disclose. Costs of compliance are much higher than had been estimated. After that, well, define "worth it."
Sometimes, though whistle blowers intent is good for the organization, it can be very difficult to witness such events and wrongdoing has the unstated approval of management or upper administration. Arguably, a director’s fiduciary duty to the corporation encompasses the obligation to self-police, to establish compliance and detection programs, and to create and enforce a corporate culture that will not tolerate illegal conduct. Various laws and acts for whistleblower protection are to be considered such as Sarbanes V. Oxley Act.
Policies regarding Technology and Surveillance:
I believe proper workplace monitoring and surveillance is a sensible means for the protection of the firm and the employees as well. Monitoring promotes the personal protection of employees by reducing or eliminating instances of workplace harassment. Our organization has been facing serious problems as a result of poor surveillance.
I would like to implement the policy that ensures that the company complies with the requirements of the Workplace Surveillance Act. We will be monitoring employee’s activities by means of cameras, computers or tracking devices and notify employee as to the nature of that surveillance. Anything that is related with the performance of job like company email, company phone and in office activity is under the surveillance. This policy prohibits on surveillance in any change room, toilet facility, shower or other bathing facility at the workplace. Moreover, employee monitoring is prohibited when he/she is not at work except in cases of computer surveillance where the employee is using equipment and/or resources supplied by the company.
Implementing effective surveillance policy facilitates the smooth flow of work and enhances safety and security of the employees. Our policy on surveillance is rather protecting important data of the organization which are critical in overall achievement of the goals. Similarly, presence of surveillance promotes good behavior and proof in case of need and crime. Despite of some drawbacks such as potential invasion of privacy, false sense of security and lower morale, effective surveillance is of utmost essence. We believe, balancing monitoring and employee privacy is achievable with minimal stress when organizations inform employees of the purpose of monitoring activities, set privacy expectations and create reasonable monitoring policies.
Privacy laws has to be considered while implementing such policies regarding technology and surveillance such that there is no highly offensive intrusions such as bank information and surveillance in bathrooms and such which are actionable..Unfortunately, along with the benefits of technology, come several ethical issues. Employees feel that if e-mail is addressed to their name, no one else has the right to read it. Ethical issues arise regarding the right to privacy. However, employers have rights to protect themselves against the risk of liability, by notifying employees their e-mails may be read. These ethical issues have to be considered while setting the policies such that there is a proper balance.
Policies regarding Employment Discrimination:
It is the policy of the company not to engage in discrimination against or harassment of any person employed or seeking employment with the comapny on the basis of race, color, national origin, religion, sex, physical or mental disability, medical condition (cancer-related or genetic characteristics), ancestry, marital status, age, sexual orientation, citizenship, or status as a covered veteran. This policy applies to all employment practices, including recruitment, selection, promotion, transfer, merit increase, salary, training and development, demotion, and separation. These efforts conform to all current legal and regulatory requirements, and are consistent with company standards of quality and excellence.
This type of policies fosters smooth flow of work and equal opportunity to work despite of different circumstances. Moreover it brings equality among workers bringing equal opportunity to all. However, this would add or bring more operating cost to the organization and delay in performance of job. Various considerations have to be made on working environment based on providing opportunity to all. Ethical issues are the major factor in making such employment decisions giving opportunity to all. However, the Equal Protection Clause does not limit Fat-Be-Gone.
Policies regarding Sexual Harassment:
This policy covers unwelcome conduct of a sexual nature. Consensual romantic relationships between members of the company may begin as consensual; they may evolve into situations that lead to charges of sexual harassment, subject to this policy.
Harassment that is not sexual in nature but is based on gender, sex-stereotyping, or sexual orientation also is prohibited by the company’s nondiscrimination policies. if it is sufficiently severe to deny or limit a person’s ability to participate in or benefit from company, employment, or services. While discrimination based on these factors may be distinguished from sexual harassment, these types of discrimination may contribute to the creation of a hostile work or academic environment. Thus, in determining whether a hostile environment due to sexual harassment exists, the company may take into account acts of discrimination based on gender, sex-stereotyping, or sexual orientation.
Moreover, this policy also prohibits retaliation against a person who reports sexual harassment, assists someone with a report of sexual harassment, or participates in any manner in an investigation or resolution of a sexual harassment report.
Implementation of proper sexual harassment policy helps in the development of better working environment and flow of the work.
Policies regarding Workplace Conditions and safety:
I am very much concerned about promoting business while looking after the workers as well as protecting various health and safety rights of the workers. I encourage every employee to understand the importance of safe and healthy workplaces, both for their lives, well-being, and for efficiency and productivity of the organization. Our mission is to create a safe and healthful working environment. Fat-Be-Gone recognizes its responsibility to provide a safe and healthful working environment. This shall include making reasonable efforts to promptly investigate and address health and safety issues, not requiring employees to perform tasks that are dangerous to their health and safety without adequate training and safety equipment as determined by applicable state and federal laws, and making readily accessible information on hazardous materials. Where a working condition is thought to be unsafe, or potentially unsafe, but does not require immediate corrective action, employees and supervisors shall first work together informally to correct the unsafe working condition. An employee or group of employees who refuse a work assignment because of a reasonable belief that to perform such work would endanger his/her physical safety beyond the normal hazards of the occupation or violates governmental safety standards, should use the complaint procedure.
There are several benefits regarding the implementation of this proposal such as improved morale and performance of the employees and hence the overall benefits of organization. Moreover, it also reduces the various cost associated with poor performance of job and turnover related costs. On the other hand, there is an increased overall cost for the organization and can’t be applicable to some areas due to the need and the requirement of the job. Moreover, employee and shareholders may complain about overzealous enforcement and burdensome rules.
Employees are the key elements in the performance of job in any organization and achievement of organizational objectives. From my point of view, satisfied employees result in satisfied outcomes. Considerations regarding the dangerous allure of high work related hours and negative impacts on organization can’t be neglected. Legally, there is general duty on the part of every covered employer to maintain a work environment free from recognized hazards causing or likely to cause death or serious physical harm to employees. Moreover, keeping other lives and health at stake for fulfillment of certain results and lowering operation cost can’t be considered ethical. In the long run, healthy employees result in the improved performance of organizational objectives.
Policies regarding Advertising:
I would implement the advertising strategy that is based on facts and proven records rather than providing false and deceptive advertising. Our advertising campaign is to run national ads to consumers claiming that there are no such side effects based on proven records, clinical trials and research. Our marketing campaign is not a false or deceptive advertising rather it is based on proven record of growing hair in many instances.. Our campaign is based on the fact that customers have the right to know what they are buying, and that all necessary information they should know. Our advertising campaign will be backed up by competent and reliable scientific evidence such as tests, studies, or other scientific evidence, before we carry out the whole advertising campaign. Deceptive ad spoils the goodwill and reputation of the company and customers’ trust, and it will cost a lot for organization to overcome such damages. Because of such deceptive ads before it has cost much for the organization ie, lost customer base and faith.
I believe proper ad campaign based on facts and research will help us build good customer relation and hence improve the sales of the product in the long run. In the short run there might not be significant changes but gradually lost trust will be developed for the product. Changing whole marketing strategy is going to make more expenses but who is going to benefit in long run?
Taking ethical issues in consideration, as marketers, we must do no harm which means consciously avoiding harmful actions or omissions by embodying high ethical standards and adhering to all applicable laws and regulations in the choices we make. Setting marketing campaign based on deceiving information can’t be considered ethical as well as legal. This means striving for good faith and fair dealing so as to contribute toward the efficacy of the exchange process as well as avoiding deception in product design, pricing, communication, and delivery of information.
Policies regarding product liability:
An important aspect of maintaining a business is maintaining a healthy concern for the lifespan and health of current and potential consumers. I believe, the responsibility manufacturers, prior to selling a product, includes testing all potential merchandise for safety. If manufacturers fail to do so it has serious impact on the organization in terms of sales, growth and overall performance. So our policy regarding product liability will focus on the customer need and satisfaction.
Product liability is the area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries caused by those products. Our product will be sold in limited time expressed or implied. After that date or certain time span, our company will make no representations relative to the fitness of its products for a particular use or in a particular location. The one who sells the product will be liable for it be it distributors or retailers. However, keeping our customer satisfaction in mind we will try to pull our product from distribution prior to that date. We will improve the design and quality of the products, to decrease the possibility of producing problem products. If some of our products are considered to have some problems or complications, we will carry out some solutions to overcome such problems. We will be liable for the anticipated damage caused by the product so we should figure out what is wrong with them, and then take any further actions. It may cost the company a lot, but it can save the company’s reputation and customer loyalty and ultimately benefit the organization in long run.
Employing illegal practices may lead to dissatisfied customers, bad publicity, lost business and even severe legal actions. It is illegal to provide wrong information to consumers and the company will be liable for such conduct and the loss will be huge. Various factors are to be considered before bringing product in the market. It’s better if we launch our product after detailed research and analysis such that there is reduced risk associate with product development. It seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it. Second, the analysis does not take into all the consequences, such as the negative publicity and the judgments and settlements resulting from the lawsuits. Also, some things just can't be measured in terms of dollars, and that includes human life. However, there are arguments in favor of the risk/benefit analysis. First, it is well developed through existing case law. Second, it encourages companies to take precautions against creating risks that result in large accident costs. Next, it can be argued that all things must have some common measure. Finally, it provides a bright line which companies can follow.
References:
Halbert, J.D., Terry, Ingulli, ESQ., Elaine, (2006). Law And Ethics In The Business Environment : South Western Cengage Learning.
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