Case 1

Workplace Drug Abuse

When Amber Peetz started her job as an administrative assistant at a five-person public relations
firm, she seemed to come with no liabilities. "She got here on time, worked steadily, dressed
professionally, and always double-checked her work," recalls Liz Leslie, owner of the agency.
"She was meticulous and reliable in every way." About a year into her tenure, she began arriving
late and calling in sick often, especially right around the time she got paid. She began borrowing
and failing to repay money, and then started showing a short temper on the phone with
customers. After being found in the ladies’ room sniffing white powder, she was confronted
about a cocaine problem, and reacted by quitting immediately, leaving a hole in the organization
for months before a replacement could be found and replaced.

Questions
1. What kind of policy should the agency have in order to evaluate and reprimand
employees for poor job performance?
Answer: The agency may conduct an evaluation concerning their employees in which the
respondents are the customers and co-workers. The evaluation may be conducted at least semi-
annually. This would help the agency monitor their employees in performing their duties and
responsibilities. In addition, the agency may adopt reward-punish policy wherein the agency give
reward to those employees doing their task accordingly and punish those who do not. This would
help the agency motivate their employees to do their job better.

2. What kind of drug policy should the agency have in order to deter employees from using
drugs?
Answer: The agency may administer disciplinary action where sanction will be imposed to those
employees who will be caught from using illegal drugs. First and second offenses may be
pardoned but should give warnings. The third time around the offender will be caught, he/she
should be penalized. However, if the circumstance is getting worst, the agency should provide
dismissal from the rolls. Consequently, the agency may dissuade employees from engaging in
such activities.
Case 2

The CEO of Starbucks and the Practice of Ethical Leadership

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two
black men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business
associate, but they didn’t purchase anything while they were waiting. The store manager asked
them to leave, and they refused, explaining that they were there to meet someone. The manager
called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an
interview after the arrest, the woman who took the video mentions that she had been sitting there
for a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally,
the video shows the business associate of the black men show up during the arrest, and he asks
the manager and the police what the men had done wrong. The general public and those who
witnessed the arrest labeled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no
longer worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks
the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “The
video shot by customers is very hard to watch and the actions in it are not representative of our
Starbucks Mission and Values. Creating an environment that is both safe and welcoming for
everyone is paramount for every store. Regretfully, our practices and training led to a bad
outcome—the basis for the call to the Philadelphia police department was wrong.”

Before the incident, Starbucks had no companywide policy about asking customers to leave, and
the decision was left to the discretion of each store manager. Because of this flexible policy,
Starbucks had become a community hub--a place where anyone could sit without being required
to spend money. Johnson mentioned this community in his apology when he said Starbucks
works to create an environment that is “both safe and welcoming for everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake.
The apology detailed actionable steps Starbucks leadership would follow to learn from the
situation, including meeting with community stakeholders to learn what they could have done
better. Johnson took full responsibility for the actions of his employees, and he acknowledged
that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed
more training, including about when to call authorities, and that the company needed to conduct
a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to
involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to
conduct unconscious bias training, which they did on May 29, 2018. A month after the arrests,
Starbucks released a new “Use of Third Place Policy,” which states that anyone can use
Starbucks and its facilities without making a purchase; it also explains what managers should do
if a customer becomes disruptive. Additionally, the policy says that Starbucks seeks to create “a
culture of warmth and belonging where everyone is welcome. This policy is intended to help
maintain the third place environment in alignment with our mission ‘to inspire and nurture the
human spirit – one person, one cup and one neighborhood at a time.’”

1. How is Johnson practicing ethical leadership?

Answer: Kevin Johnson’s ethical leadership was well-founded. He responded to the incident
responsibly and took an action appropriately. He went to Philadelphia just to talk with two
black men and issued an official apology for problem they may have caused. After that, he
conducted unconscious bias training for their employees and released a new policy intended
to help maintain the third place environment in alignment to their mission. This is actually a
 good quality of leadership. The resolution resulted to a positive outcome as the rights of both
employees and customers have not been violated.
CASE 3
Case on Executive Integrity

Ann Skeet
Below are three examples of CEOs whose leadership of their firm has been called into question
over matters of their personal integrity and behavior. Issues have included their personal
political positions and contributions, personal behavior and relationships with employees while
CEO, and illegal and inappropriate behavior in college.

Mozilla
“Mozilla was built on the mission to promote openness, innovation and opportunity on the
Web. Every day, we bring together over half a billion users and thousands of contributors from
more than 80 countries to advance the cause outlined in the Mozilla Manifesto. The web is a
vital public resource and Mozilla exists to protect it. That is what we do at Mozilla, our singular
point of focus.” --From Mozilla’s blog Q and A regarding the resignation of Brendan Eich

Brendan Eich was a co-founder of Mozilla, an organization set up as a nonprofit foundation,

passionate about its purpose. Eich’s previous political support for the Defense of Marriage Act,
which prior to 2015 defined marriage on the federal level as the union between one man and one
woman, was well known by the board and employees prior to his appointment as CEO. What
wasn’t known was how strongly employees and outsiders would react to a perceived disconnect
between Eich’s personal values and the values of the company. In spite of posting about his
commitment to continuing the organization’s support of the LGBTQ+ community through
various policies and benefits and apology for “causing pain,” the issue did not die down. Eich
made his own decision to resign as CEO and declined the board’s offer to take another C-level
position in the company.

American Apparel
“Passion, innovation & ethical practices for the clothing industry. That's American Apparel.”--
From American Apparel’s website under “About Us”

American Apparel founder Dov Charney has never apologized for using sex to sell clothes. In
fact, it’s been central to his company’s strategy and marketing from Day One. He has also long
acknowledged his personal behavior is strange and he is his own worst enemy.

For example, 10 years ago, “Charney gave a now infamous interview with Claudine Ko, a
reporter for Jane magazine, during which he masturbated, with her consent, while carrying on a
conversation about business. He engaged in oral sex with an employee with Ko nearby, too”
(Bloomberg Businessweek, July 9, 2014). Also, in 2006, American Apparel starting asking
employees to sign a form indicating that they knew they were coming to work in a sexually
charged environment.
According to board co-chairmen, in mid 2014, Charney was removed as chairman by the board
pending termination following a 30-day notice clause in his contract. The board first gave him
the choice to resign if he gave up voting rights to his 27 percent share of the company. In that
scenario, he would have received a four-year, multi-million dollar consulting contract. Officially
removed for violating the company’s sexual harassment policy and misusing company funds,
Charney refused to go quietly, which threw the company’s ownership and governance into play.
Hedge fund Standard General stepped in with a cash infusion for the company following a loan
call by another investment firm after Charney’s ouster. Five of the seven board directors
voluntarily agreed to step down, and Standard General agreed to add three new directors.
Charney stayed on as a strategic consultant but was eventually fired as CEO in December 2014.

Snapchat
“Deletion should be the default.”--Snapchat’s mission statement

At the end of May 2014, details of sordid emails from Snapchat CEO Evan Spiegel’s college
days were released to the media. Trouble is, his college years were only four years prior to these
emails being released, because, in 2014, he was only 24. The e-mails detailed illegal drug use,
underage drinking, and misogynistic behavior, including urinating on one after she passed out
following sex, and harassing women who he believed were overweight. Some found elements of
his emails racist as well.

Spiegel’s privileged background and lavish lifestyle had always received plenty of press. After
the email release, he began getting more press for his bad behavior than his app. He apologized
immediately following the release of the e-mails saying, “ I’m obviously mortified and
embarrassed that my idiotic emails during my fraternity days were made public. I have no
excuse. I’m sorry I wrote them at the time and I was a jerk to have written them. They in no way
reflect who I am today or my views towards women.” Spiegel remains CEO and was responsible
for taking the company public in 2017.

Leader Company Issue Outcome

Brendan Mozilla Personal support of Prop 8 Resignation

Eich
Dov Charney American Sexual relationships with employees Dismissed as CEO in
Apparel resulting in lawsuits for charges of December of 2014 and
harassment, misuse of company funds for removed as chairman prior to
personal expenses his termination
Evan Spiegel Snapchat Misogynistic behavior, drug use prior to Still in place
serving as CEO
Questions to Consider

1. Are there ethical issues involved in all of these cases? Which ones and why?

Answer: Some ethical issues have been violated by Dov Charney who is the founder of
American Apparel company. He is engaged in using sex to sell clothes. He is also engaged in
 sexual relationships with employees resulting in lawsuits for charges of harassment and
misuse of company funds for personal expenses. Charney did not take responsible of his
action as he never apologized. His behavior is contrary to law, moral, and customs which is
definitely not acceptable to the public. How important to a company’s investors and
shareholders is the personal behavior of the CEO? Do people have to like him/her for the
company to be successful?

2. How important to a company’s investors and shareholders is the personal behavior of the
CEO? Do people have to like him/her for the company to be successful?

Answer: Personal behavior of the CEO may influence and affect the company's operation,
management, and reputation. When company's CEO is involved in some ethical issues such
as corruption, fraud, or sexual harassment, employees and customers may lose appetite in
maintaining patronage to the business. This occurrence may result to decrease on sales.
Therefore, company's investor and shareholders must consider the personal character of CEO
who run the business.

3. Does mission matter when assessing gaps between a leader’s values and the organization
he or she is running?

Answer: Leader's personal values may have impact on the operation of company. In the case
of Mozilla, for instance, Brendan Eich who is the co-founder of the said company shows
support on Defense of Marriage Act which emphasizes that marriage is the union between
one man and one woman while in fact the organization he is running is in support of the
LGBTQ+ community. This has caused confusion to employees and outsiders as leader’s
personal values conflicts with the mission of the organization.

4. Should boards consider risky personal behavior in hiring executives? What should
boards do if the risky personal behavior comes from the founding CEO?

Answer: The boards should consider risky personal behavior in hiring executives because it
might put the company in a disadvantage position. As what is being emphasized in answer #2
that personal behavior of the CEO may influence and affect the company's operation,
management, and reputation. However, if the risky personal behavior comes from the
founding CEO, the boards may conduct a voting whether or not the current CEO be replaced.

Case 4
Facebook and Our Fake News Problem. Who is responsible for ensuring trustworthy
news?

The 2016 election season generated many headlines, some of which are notable for being
blatantly false. Fake news ranged from, “the Pope endorsed Donald Trump” all the way to
“Hilary Clinton is running a child sex ring out of a pizza shop.”

Did “fake news” influence the outcome of the 2016 US Presidential election? While the answer
is unclear, one thing is certain. The rise of fake news has reached unprecedented levels and has
raised serious concerns about how citizens receive their news and form opinions.

The increase in fake news has several sources. Social media platforms like Facebook gave these
stories the same visibility as news publications, such as those from the New York Times or Wall
Street Journal. Moreover, these posts often had higher engagement rates (comments and
reactions) resulting in them receiving even higher visibility and prevalence in users’ news feeds.

Facebook CEO Mark Zuckerberg initially downplayed the problem, calling it a “pretty crazy
idea” that fake news on Facebook influenced the election. Zuckerberg has since begun to address
the fake news issue, but warns, “We must proceed very carefully… and must be extremely
cautious about becoming arbiters of truth ourselves.”

The Society of Professional Journalists has a code of ethics with four principles: seek truth and
report it; minimize harm; act independently; and be accountable and transparent. But the
transition to online platforms has fundamentally changed journalism. Google and Facebook
control 80 percent of ad revenues; the same revenue source that news publishers depend on.
Moreover, more than 40 percent of people now get their news from social media networks –
making Facebook a de facto middleman in people’s intake of news.

Facebook is taking the problem seriously, albeit with a great deal of caution. They have
introduced efforts to help users spot fake news and inject indicators of trust (disputed tags) into
their posts in partnership with a few institutions. They have also banned fake news sites from
advertising on the network.

1. Does Facebook have an obligation to address the fake news problem? If so, what should
be done about it?

Answer: Lots of things we read online in our social media feeds may appear to be true, often
is not and this refers to fake news which is news or stories created to deliberately misinform
or deceive readers. The spread of fake news on social media like Facebook is a very rampant
issue and probably has to be addressed from various angles. Facebook should have an
obligation in addressing this problem by having strategies to stop misinformation on their
website. However, as a social media users, we also have the role to play. We should learn to
verify information that we read in social media platforms and not to quickly spread it.
Personal responsibility can be the first step to protecting the fabric of our societies.

Case 5
Targeting a Broken Heart

Irina Raicu
In 2017, Facebook’s “People Insights” blog published a post titled “What Mends a Broken Heart
on Facebook.” In it, the company’s researchers detailed insights that they had gathered by
examining “how the break-up moment influenced the online behaviors of people across France,
the Netherlands, Poland, the United Arab Emirates and the United Kingdom who indicated on
Facebook that they recently went through a break up.”

One of their findings was that “there could be a gap between the break up itself and the Facebook
post announcing it. During the two weeks before and the two weeks after their break-up
announcement,” they explained, users “accepted more than one invitation to an event 40% more
than [during] the 60 days before and 60 days after their announcement.”

The researchers also noted that “’Healing,’ ‘detox,’ ‘drowning sorrows,’ ‘binge watching’
and ‘suffering’ are just some of the words and phrases that are more pronounced in men’s posts
before they mark themselves ‘Single.’ The same types of words and phrases are more
pronounced in women’s posts on the actual day of their announcement.”

As to what helps people get over a breakup, Facebook researchers wrote that “[g]aining new
experiences… seems to be more therapeutic than buying things.” Under the subhead “What it
means for marketers,” the post then asks, “How can brands be a part of the journey to help mend
people’s broken hearts?” Suggested answers include “Empathize with them” and “Offer them
new experiences.” The post concludes by encouraging potential Facebook advertising clients:
“Tracking signals of intent to travel, experience new things or take up a new hobby can help you
reach this group with a relevant ad at the right time.”

1. Is it ethical for Facebook to mine its users’ posts for signals that those users are about to
go through a break up? Is it ethical for the company to then help its clients target their ads
based on this research?

Answer: It is unethical for Facebook to mine its user's posts for signals that those users are
about to go through a break up. Though users are posting such pieces of information on the
platform of Facebook, it will still violate the privacy of individuals. Therefore, it is
inappropriate for the company to then help its clients target their ads based on this research.

2. Is what Facebook is doing different from what other companies do?

Answer: Facebook is a platform where users can create, edit, share, and delete pieces of
information. It is created for people to socialize and interact with others. Facebook is
continuously evolving from day one. The company has numerous researchers who work to
improve further their services where it addresses the concerns of its users.

3. How might Facebook’s actions be perceived through the ethical prisms of utilitarianism,
rights, justice, virtue, and the common good?
Answer: Facebook’s action in terms of marketing strategies is ethical if it contributed a
greater good to its users. Those advertisement that try to encourage potential online clients
must considered common good, rights, justice and virtue. It would be great and ethical if
their products and services can really help those who have broken hearts in their healing
process.