Galvatren's Unethical Business Practices

This report examines the unethical business practices of Galvatren. It identifies two specific unethical actions taken by the company, explains why they are unethical, and proposes more ethical alternatives. The report also analyzes the factors contributing to Galvatren's failure to prevent unethical behavior, including the role of its board and CEO.

Running head: LEADERSHIP IN BUSINESS
Leadership in Business
Name of the Student:
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Executive Summary:
The report deals with a case study on Galvatren and three related questions. The first question
deals with identification of two unethical actions or decisions of the company and explanation on
why the actions and decisions seem to be unethical. The section also, there are suggests better
alternative of the actions or decision taken. The second question of the report is a justification of
the reasons for the failure of Galvatren’s efforts at preventing unethical behavior. The third
question in the report has two parts. The first part is a discussion on the responsibility of
Galvatren's board and CEO bear for failing to promote ethical behavior whereas the second part
is a discussion on the measures for preventing unethical behavior in future.
Table of Contents

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Introduction:....................................................................................................................................3
Answer to Question 1......................................................................................................................4
Identification of Two Unethical Actions or Decisions................................................................4
Explanation Why These Actions or Decisions are Unethical Using Ethical Analysis
Techniques...................................................................................................................................5
More Ethical Alternative for Each of the Action or Decision.....................................................6
Answer to Question 2......................................................................................................................7
Justification of Why Galvatren's Efforts at Preventing Unethical Behavior Failed....................7
Answer to Question 3......................................................................................................................8
Responsibility of Galvatren's board and CEO in Failing To Promote Ethical Behavior.............8
Measures Adopted by Board for Preventing Unethical Behavior In Future................................9
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12

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Introduction:
The report here does an analysis of a case study on Galvatren based on three specific
questions. The first question deals with the identification of two unethical actions or decisions of
the company based on which an analysis as to why the actions and decisions seem to be
unethical. In this section, there are also suggestions of better alternative of the actions or decision
taken. The second question in the report however justifies the reasons for the failure of
Galvatren’s efforts at preventing unethical behavior. The third question deals have two parts. The
first part is a discussion on whether Galvatren's board and CEO bear any responsibility for the
company's failure in promoting the ethical behavior whereas the second part discusses the
measures of preventing unethical behavior in future.
Answer to Question 1
Identification of Two Unethical Actions or Decisions
The discussion here focuses on Galvatren which is a Houston based consumer products
company operating under CEO, Chip Brownlee. However, presently, the company is facing
accusations and lawsuit for manipulation of the sales. This came as a sudden shock on the part of
the company as it grew from midsize firm running on hierarchical and authoritarian style to a
company with increased product portfolio in healthcare and personal beauty under Chip
Brownlee. Moreover, the company also experienced a change in culture strategies focused on not
only building relationships with business partners but also the customers and on day-to-day
operations (Shu & Gino 2012). However, there were illegal schemes in the company responsible
for inflating sales. In addition to this, there was termination of employees like Mike and Greg
who tried to report this misconduct through confidential reporting implemented by the company.

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Further, the company manager Harry never followed up with Arch Carter, the lead director of
Galvatren, in informing him about the illegal schemes in circulation. Instead, he always reported
to Terry Samples, the vice president of sales that finally resulted in termination of his job (Gino,
Ayal & Ariely, 2013).
Explanation Why These Actions or Decisions are Unethical Using Ethical Analysis
Techniques
Three behaviors cause an ethical person in making potentially illegal and unethical
choices. These are as follows:
1. Need: Perceived pressure of a person acts as driving force in making a shift from
ethical to unethical behavior (Lu, 2015). The need described in a various forms. In this case, the
need to convert the company from a mid size firm to a bigger one has forced the company CEO
to hire managers like Terry Samples who big time indulged unethical activities through illegal
schemes. Thus, the need sets the ball rolling from making unethical choices.
2. Opportunity: The need becomes vague if there is no opportunity for satisfaction. Thus,
lack of opportunity provides no chances of implementation of unethical behavior. However, in
Galvatren case, CEO Chip Brownlee, trusted Terry Samples and ensured him the opportunity of
becoming the vice president of the sales (Pendse, 2012). Moreover, the company CEO also
recruited employees like Greg believed to coordinate with Arch Carter, the lead director of
Galvatrens. In doing this, the CEO never could comprehend that would support an unethical
activity just for mere gain in sales.

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3. Rationalization: The prevalence of the unethical activity happens due to the persistence
of ability of rationalizing the wrong for the right. This was the scenario in Galvatren case where
the CEO had no clue of the illegal activities taking place in the company for inflating the sales
(Eastman, 2013). Everything came to the forefront when only a former employee, Mike who
tried to uncover the activities through the confidential reporting system implemented by the
company, filed a lawsuit against the company.
More Ethical Alternative for Each of the Action or Decision
However, a more ethical alternative for each of these actions or decisions adopted by the
following means:
1. Recognition of Common Characteristics of Poor Decision Making
The common mistake amongst the employees in making weak ethical decisions poor are
ruled by overconfidence, complexity in issues and weak or nonexistent structures of the
corporate governance(Thiel et al., 2012). Thus, confidence in business is a necessary component
but overconfidence may sometimes lead to rationalization that overlooks the complexity of the
problems and issues. In this context, the urge to expand Galvatren, made the CEO so
overconfident that he missed the issues that resulted in filing a lawsuit against the company.
2. Adopting Means for Resisting Request for Acting Unethically
Recognition of an unethical request is important at the first place. Therefore, the
employees made clear of the code of ethics adopted by the company and the kind of behavior
expected of them (Sheldon & Fishbach, 2015). In the case of Galvatren the human resource and

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the legal professionals of the firm should have properly conveyed to the employees about the
open door policy and the code of conduct followed by the company.
3. Understanding the Ways to Lead Ethically
The CEO and the leaders of Galvatren should understand and adopt the code the ethics in
manner so that they act ethically. There is a general understanding that states working for a boss
who is unaware of the unethical means of the employees or is himself missing some of the ethics
would force the employees in conducting and rationalizing their unethical code of conduct
according to their own understanding (Yoder-Wise, 2014). In this regard, Galvatrens had senior
members who did not take initiative in properly conveying the ethics code to the employees lead
to innumerable terminations due to some unethical decisions.
Answer to Question 2
Justification of Why Galvatren's Efforts at Preventing Unethical Behavior Failed
The case study on Galvatren introduces a 24-hour toll free hotline number that was
available for reporting violations in ethics but not utilized in a proper manner. Moreover, the
proposals of the company on hiring of an ombudsman and board of directors for ethics over
sight were not accepted. Such policies adopted in the interest of the employees who might not
feel comfortable in raising the concerns to the formal management channels ( Carroll &
Buchholtz, 2014). However, there was other unethical intention influenced by individuals,
issues and at the same time environmental factors that led to the failure in the efforts for
prevention of unethical behavior. These are as follows:
 The Presence of Bad Employees

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 Presence of Illegal Schemes
 Emphasis on Short Term Revenue
 Absence of Written Code of Ethics
 Desire for Quick and Fixed Solutions
 Financial Concerns taking Precedence over Ethical Considerations
 Lacking Clear Procedures for Dealing with Ethical Problems
However, individual characteristics remain an important predictor in determining the
unethical behavior of an employee emphasized mainly on self-gain. This implies the tendency
of using the interpersonal relationships in an opportunistic manner and possesses lesser
concern for others. Unethical behavior may also arise when an employee feels that their
actions will not be harmful for a victim and their peers will not condemn their actions.
Unethical behavior also persist in a company an ambience that emphasizes. They will engage
in behavior that is more unethical when the company promotes an atmosphere where the
employees keep to themselves.
Answer to Question 3
Responsibility of Galvatren's board and CEO in Failing To Promote Ethical Behavior
I believe that Galvatren's board and CEO bear some amount of responsibility in failing to
promote the ethical behavior. This is because of the following reason:
1. More Focus on Company Expansion

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Majority of ethical decisions in most companies tied to money in some way or the other.
There is so much focus on Galvatren's expansion to make it improved and explore in unknown
sectors like beauty and heath care resulted in neglecting for means for creating a strong ethical
background of the company. Moreover, the CEO also relied on the decisions of the consultants
to discard the implementation of ombudsmen and board of directors who would be responsible
for ethics oversight (Wheelen & Hunger, 2017). More importantly, training procedure related to
the open door policy that never was completed.
2. Non Clarity in Policies
The company though implemented policies but they remained unclear to the employees,
since there was no written format. The policy manual or ethical code of conduct of the company
normally helps in establishing the standards ethically and focuses on the consequences of the
poor decisions (Webb, 2012). Moreover, the ethical guidelines provided also remained vague,
inconsistent and unclear.
3. Prevalence of Unethical Culture
The culture of a company is comprises of the shared values and norms amongst its
workers. Thus, the ethical nature of the company’s forms the basis of its culture. There are
businesses where peer also demands ethical behavior and standards amongst the colleagues. In
the case study of Galvatren's there has been prevalence of certain unethical practices by some of
the employees that finally landed the company in soup.
Measures Adopted by Board for Preventing Unethical Behavior In Future

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The work of a good manager involves careful planning for the purpose of marketing,
budgeting and product placement. However, implementing ethical behavior at a workplace also
involves careful planning (Ford & Richardson 2013). This will result in creating ethical
employees for ethical company that will help it to earn benefits due to its good reputation. When
a company operates on strong ethical guidelines it will not only attract more consumers but will
also retain and entice a skilled workforce.
Thus, Galvatren's in order to prevent unethical behavior in future should the following programs:
1. Compliance based Ethics program: This program driven by law and aims at preventing,
detecting and punishing violations. The program also emphasizes surveillance, control and
penalties and adheres to 1991 guidelines for Federal Sentencing. However, the characteristics of
the program include:
a. Follows compliance procedures and standards
b. Mentions the right and the wrong in the Code of ethics
c. Ensures Mechanism for Oversight
d. Ensures Training for Communication of Standards
e. Availability of employee hotlines for reporting violations
f. Monitoring Audit for Tracking Compliance
g. Mentions Disciplinary and Preventive Measures
2. Integrity-based Ethics Programs: This program is management driven and aims at
defining values and conduct (Van, Beck & Twijnstra, 2013). Further, the program also

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emphasizes on a culture or ambience that promotes ethical behavior. However, the characteristics
of the program are as follows:
a. The code of ethics embodies the values of the company
b. Ensures training for promotion of ethical values
c. Ensures Leading by example
d. The Ethical Standards remains embedded in the culture and policies of the firm that
includes employee evaluation and incentive systems and criteria for decision-making.
Conclusion:
The report ends by suggesting measures to the board of directors of Galvatren's for
prevention of unethical behavior in future. There are also reasons describing the role of
Galvatren's board and CEO in failing to promote the ethical behavior. There are also
justifications on the failure of Galvatren's Efforts in preventing unethical behavior. The report
also identifies two unethical actions or decisions of the company and explains why the decisions
or actions are unethical. The report also put forward more ethical alternative for each of the
actions and decision made.

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References:
Carroll, A., & Buchholtz, A. (2014). Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Eastman, W. (2013). Ideology as rationalization and as self-righteousness: Psychology and law
as paths to critical business ethics. Business Ethics Quarterly, 23(4), 527-560.
Ford, R. C., & Richardson, W. D. (2013). Ethical decision making: A review of the empirical
literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer
Netherlands.
Gino, F., Ayal, S., & Ariely, D. (2013). Self-serving altruism? The lure of unethical actions that
benefit others. Journal of economic behavior & organization, 93, 285-292.
Lu, K. (2015). Two-Way Partial AUC and Its Properties (Doctoral dissertation, School of
Statistics, Renmin University of China, Beijing, China).
Pendse, S. G. (2012). Ethical hazards: A motive, means, and opportunity approach to curbing
corporate unethical behavior. Journal of Business Ethics, 107(3), 265-279.
Sheldon, O. J., & Fishbach, A. (2015). Anticipating and resisting the temptation to behave
unethically. Personality and Social Psychology Bulletin, 41(7), 962-975.
Shu, L. L., & Gino, F. (2012). Sweeping dishonesty under the rug: how unethical actions lead to
forgetting of moral rules. Journal of personality and social psychology, 102(6), 1164.

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Thiel, C. E., Bagdasarov, Z., Harkrider, L., Johnson, J. F., & Mumford, M. D. (2012). Leader
ethical decision-making in organizations: Strategies for sensemaking. Journal of Business
Ethics, 107(1), 49-64.
Van Montfort, A., Beck, L., & Twijnstra, A. (2013). Can integrity be taught in public
organizations? The effectiveness of integrity-training programs for municipal
officials. Public Integrity, 15(2), 117-132.
Webb, W. N. (2012). Ethical Culture And The Value‐Based Approach To Integrity Management:
A Case Study Of The Department Of Correctional Services. Public administration and
development, 32(1), 96-108.
Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. pearson.
Yoder-Wise, P. S. (2014). Leading and Managing in Nursing-E-Book. Elsevier Health Sciences.