Business Ethics

Case Study Page 324 :

Value-Based Stakeholder Management

Written by:
Dinar Nilam S.
041214353055

Magister Management Program

Airlangga University
2012
 Case : Whose Values? Whose Decision?

Case Review :
Jim Howard is a sales manager at software company. The company is an established vendor
and has a good reputation for its high-quality products, fast and personal customer support,
and strong loyalty to customer. The values statement of company is the company will treat its
customers with respect and dignity. First year, the sales force was having difficulty acquiring
new customers and retaining existing ones. He faces the problem that there is an unfair
treatment of old customers in comparison to new customers in product pricing. The old
customer were offered the highest price than the new one. This information was already
available to customers and point out the contradiction. However, Jim’s boss has contradiction
solution with Jim. Therefore, Jim felt he was betraying the company, the customer, his sales
force, and his own professional values.

Questions for Discussion :

1. If you were Jim, what would you do in this situation?
If I was Jim, I would do things that make benefit both to company and customer. I would
inform the old customer that the price had changed and negotiate with them whether they
can get benefit from the lowered price. And also I will give explanation to the customer
about the point out contradition. To make the boss understand about the situation, I will
held the meeting involving cross functional department in order to find the best solution
of the problem. According to the result meeting, it is expected that the company will fix
the problem and maintain the reputation according to its values.

2. What are the issues here? For whom?

The issues in this case are Jim’s feeling about he feel that he was betraying the company,
the customer, his sales force, and his own professional values. He had to choose whether
he should inform the old customer that the price had changed or he had to follow his boss
instructions to cover the new price which means he do the unfair treatment in product
pricing of old customers compared to new customers. It is a difficult choice because he
didn’t want to lose his job because opposing his boss and in the other hand, he also didn’t
want to lose any more customer accounts.

3. Who stands to be hurt the most from following the advice of Jim’s boss?
The advice of Jim’s boss make all the stakeholder is hurt. The customer especially old
customer feel that they treat unfairly because they can’t get the benefit of the lowered
price and it pointed out the contradiction among the customer. The company also had the
problem about difficulties in retaining the existing customer and acquiring the new
customer, the increasing competition, and the emergence of free alternatives from the
internet. But Jim is the person who stands to be hurt the most because he is the key
person who have to choose between defend his job and follow his boss instruction or
betray the company, the customer, his sales force, and his own professional values and
lost his customer accounts.
4. What would a values-based stakeholder management approach suggest that you do,
if you were Jim? Lay out an action plan and be ready to roleplay your suggested
approach.
From values-based stakeholder management approach, the strategy development and
implementation process should reflect the vision and mission of the organization. A firm
should identify issues that affect its stakeholder obligations and relationships while
developing strategies. From a social and moral perspective, managers should be
concerned about fulfilling their internal stakeholder obligations through their strategies.
Responsible corporations must be prepared to equitability and justly enable the
workforce with new technical skills and integrate aging employees, dual-career families,
and new immigrants. Flexible work time, health care programs, and flexible management
styles must be implemented to manage this changing workforce responsibly.
In addition, from stakeholder management perspective, it is the role of an organization’s
leaders, with the support of each professional, to ensure that the integrity and market
effectiveness of a company is based on the types of relationships and values that embody
trust, collaboration, and “win-win” goal for stakeholders and stockholders. This the
picture about characteristic of values-based leader :

According to value based stakeholder management approach suggestion, If I was Jim, I

should conduct the decision align with the vision, mission, and value of the company.
Jim’s company value is “treat the customers with respect and dignity”. Furthermore, the
company should be concerned about fulfill the stakeholder obligations. Therefore, as
Jim, I have to inform the old customers that the price had changed and make them can
get the benefit from the lowered price. This things should be done as an effort to fulfill
the company’s value and stakeholder obligation. Also, it can solve the problem with the
customer and maintain the company reputation.
This an action plan which should be conducted by the company to implement the values-
based stakeholder management approach suggestion :
This is the step used to make the company ready to implement the value-based
stakeholder (refers to a value based stakeholder rediness checklist) :
a. The top leaders should socialize to their staff to believe that the key stakeholder and
stockholder relationship building is important to the company’s financial and
bottomline success.
b. The CEO spend more time in building new and sustaining existing relationships with
key stakeholders.
c. Employees is trained in order to can indetify the organization’s key stakeholders.
d. The employee spend more time in building productive stakeholder relationships.
e. The organization’s vision, mission, and value statements identify stakeholder
collaboration and service and also leaders and employees “walk the talk” of these
statements.
f. The corporate culture value and support participation and open and shared decision
making and collaboration across structures and functions.
g. The corporate culture treats its employees fairly, openly, and with trust and respect.
Policies are employee-friendly, training programs on diversity, ethics, and
professional development are available and used by employees.
h. There is collaboration and open communication across the organization and they are
openness, collaboration, and innovation rewarded.
i. There is a defined process for employees to report complaints and illegal or unethical
company practices without risking their jobs or facing retribution.
j. The strategy of the company encourages or discourages stakeholder respect and fair
treatment and the strategy is oriented toward the long or short term.
k. The structure of the company facilitates or hinders information sharing and shared
problem solving.
l. The systems are aligned along a common purpose or they are separated and isolated.
m. Senior managers and employees know what customers want, and the organization
meets customer needs and expectations.
5. Compare your answer to question 1 to your approach in question 4. Any
differences? If so, could you still follow what you said in question 4?
Compare to the answer in question 1 and question 4, there are not significant differences
between them. The answer in number 1 is to give the win-win solution between company
and customer by fixing the problem and maintaining the company reputation. This
answer is align with value based stakeholder management approach that the company
decision should align with the vision, mission, and value of the compay. The answer is
suitable because it give solution to conduct the company value (treat the customers with
respect and dignity). Furthermore, the company should be concerned about fulfill the
stakeholder obligations to implement the value based stakeholder management approach.
Win-win solution is the best solution to make all member of stakeholder satisfy and not
objected with company decision.