Aaron Chomsky, Jr. has been CEO of Varnett Publishing for twenty-five years; his
ID: 342776 • Letter: A
Question
Aaron Chomsky, Jr. has been CEO of Varnett Publishing for twenty-five years; his father, Aaron Sr., founded the company in 1921. In the last thirty years, Varnett has acquired many smaller publishing companies in an effort to dominate the whole of the Northeast publishing industry. The small family company has grown into a publishing house that produces daily, weekly, and monthly news publications, as well as magazines and other print media for communities in New York, Connecticut, New Hampshire, and Vermont. Aaron Jr. took over as CEO during the high point in the life cycle of the news paper industry; that industry has, however, been in decline since 1998. Aaron has just received word from the CFO that most of Varnett’s acquisitions are failing individually, and that because of the decline in the market, Varnett will not be able to easily unload them. Consequently, Varnett is facing bankruptcy. Varnett has many employees who have been with the company for more than thirty years, and many employees have family members also employed by Varnett. Aaron’s father always promoted a sense of family within the company, even as Varnett grew well beyond a small town-single newspaper organization. Aaron values his employees greatly, but if he alerts them to the severity of the situation, he knows that they will be compelled to search for employment elsewhere. If too many employees leave, however, Aaron knows that Varnett will not be able to produce the newspapers that are still operating. If Varnett stops producing newspapers, the company will absolutely fail and devastate shareholders. If Varnett absolutely fails, his employees will absolutely be out of work, and he will be able to offer them nothing. Aaron feels great loyalty to his employees, but he also feels great loyalty to run Varnett in the most profitable way for his shareholders for as long as possible. He feels that he cannot protect one without sacrificing the other. Time is passing quickly—if he doesn’t commit to an action one way or the other, both will suffer equally. He must make a decision soon. Questions: Answers should be in the range of 600-750 words – in total. 1. Using consequential, rule-based, and character theories, evaluate Aaron’s options. 2. What should Aaron do? Why?
Explanation / Answer
The given case highlights that the owner of the organization V, Mr. A is in an ethical dilemma. Since his organization is at the stage of the bankruptcy he will have to choose being loyal either to the employee or towards the share holders.
1. The organization V is in the stage of the bankruptcy as there is a decline in the market for the newspaper industry. According to the view of the VFO of the organization, it cannot employ all his current employees at its present condition. If they strive to manage them, the share holders will suffer.
In the given case the theories of ethics can be implemented which are the consequential, rule-based, and character theories.
The consequential theory highlights that the business owners or the managers should think about the consequences for their actions or their behaviour. Here when the owner chooses to be loyal towards the employees, then the result would be bankruptcy. The organization doesn’t have sufficient fund to provide salary to these employees and there is also no profit generation. This can make the company down and finally if there is no company the employee also won’t be there at the same time it cannot also protect the share holders also.
The rule based theory highlights the character of the act providing less emphasis to its outcomes or results. According to this law, the nature or the act of the owner is taken into consideration. If the owner decides to protect the employees, then his nature towards the shareholders will be criticized. If the employer supports the interest of the share holders, his attitude towards the employees will be criticized.
The character theory of ethics highlights the character, personal virtues and the integrity of the owner. According to this law the approach of the owner towards the employees, share holders and the organization will be provided emphasis.
This theory would be more appropriate in the given case. Here the approach of the owner towards the employees, organization and the shareholders are genuine. He provides importance to three factors. But in the given situation he will have to choose to protect the organization which is the basis of all components. This shows his integrity towards and personal virtues.
2. The owner A has to take a decision in order to protect his organization from the stage of bankruptcy and to operate the organization in a successful manner. For this he will have to make some strategic moves which can make the organization competitive in the industry.
For this first he should do is to lay off some of the employees from his company. This will enable him to be stable in the present situation and can yield profit from the current newspaper business. Being ethical he can make the employee who is being laid off understand the present situation of the company. He can also assist his employees to get some other employment. At the same time he can maintain some effective staff members to run the current business effectively.
Then they can look into the business strategies which he can adopt to make the organization survive. By doing this he can keep up the interest of the share holders which will enable him to make the business sustainable. Successful share holder management will enable the owner to get the required capital to implement new strategies and to make some improvements in their business. Once the organization reaches a stable stage, it can think of reappointing the employees who has been laid off during the period of crisis. This can enhance the reputation of the organization.