Executive Summary
A deputy director of finance and information for a hospital trust responsible for the preparation of non-financial data regarding the performance faces particular pressure from a newly appointed director of finance and information. The central concern is that the latter suggests creating a coalition with the primary aim to alter the existing financial and non-financial data for presentation to the trustees and regulator (CCAB, 2012). The second actor clearly outlines his vision of this action. He is sure that the introduction of irrelevant statistics will help to retain an excellent rating (CCAB, 2012). However, the favorable financial information that should be added to the final report has not been verified and checked. Regardless of this fact, the director continues to insist on its adding because it will help to demonstrate the enhanced performance of the trust.
The problem is complicated by the fact that some departments experienced difficulties in achieving their goals during the last year. To a greater degree, it was preconditioned by funding limits and significant staff shortages (CCAB, 2012). The deputy director realizes the fact that the financial information might be incorrect because of the existence of obvious problems, while relevant data will reveal performance shortfalls (CCAB, 2012). Additionally, the director is aware of the use of a double-counting activity to increase the funding income of the hospital and guarantee its stable functioning (CCAB, 2012). This information is contained in a recent audit report that should be forwarded to the audit committee (CCAB, 2012). In such a way, the financial director is confident that these facts should be concealed as they will do harm to the functioning of all departments and result in new staff shortages. At the same time, he is going to review the current position and introduce a plan for remedial action (CCAB, 2012). The deputy director has to decide how to act regarding the existing problem and pressure from the financial director.
Identification of Ethical Issues
The case gives rise to several ethical issues. The major ones are pressure and unethical conduct. The deputy director is forced by his colleague, responsible for the financial aspect of the hospitals functioning, to create a coalition with the primary aim to provide corrupted and false data to the audit board and regulator. The given pressure comes from the realization of numerous problems the hospital faces at the moment. Correctly understanding the current state of finances and the fact that the provision of relevant information might corrupt the image of the hospital and deteriorate its rating, the finance director acts unethically to make the person responsible for reporting alter this information.
This behavior results from the lack of competence and poor organizational culture as the hospital has experienced numerous problems with funding and financial support. Additionally, staff shortages evidence the inefficient human resource strategy that might also result from multiple flaws in the existing approach to accounting (Ferrel, Fraedrich, & Ferrel, 2016). The emergence of these problems might also be connected with the provision of false data by the financial director in previous reports. Finally, the possible deterioration of the units functioning is used as one of the levers of influence to make the deputy director follow the suggested course and conceal the relevant pieces of data. In this regard, this pressure is the first issue in the case.
The second ethical issue is the unethical behavior that is introduced to make a secret agreement. The finance director is sure that the given coalition is the only possible solution to the existing problem with funding and decreased performance. All his actions can be explained by this belief. Additionally, applying Kohlbergs stages of moral behavior, the finance director judges his actions and their morality by their direct consequences, which means that he is on the pre-conventional level of moral reasoning (Ferrel et al., 2016). The director is sure that the creation of the false report will help to acquire the highest rating and avoid significant deterioration of the hospitals state. However, regarding the utilitarian ethical theory that emphasized the long-term consequences of the action, he does not realize the unethical character of this manner of conduct and all problems that might emerge if the given fraud has been discovered (Ferrel et al., 2016). Moreover, insisting on the intentional corruption of data, he does not realize the unethical character of this action and its impossibility regarding the existing code of professional conduct. At the same time, he is not able to consider the long-term perspective as further deterioration of the hospitals functioning can be expected.
Nevertheless, the issue between the deputy director providing non-financial data to the committee and the finance director can be considered the violation of the existing hierarchy and code of behavior accepted between colleagues holding managerial or leading posts. The fact is that close relations might impact objectivity and result in the emergence of errors deteriorating outcomes. At the same time, it is critical to maintaining good working relations with all colleagues (Ferrel et al., 2016). In such a way, there is another ethical issue related to the attempts to preserve professional objectivity and resist pressure on the part of the financial director.
Analysis and Linkage
The given conflict reveals the impact conflicts within a collective and the companys poor outcomes might have on ethical behavior. Regarding the framework for conflict resolution, there are central shareholders involved in the situation: two directors responsible for financial and non-financial reports, the hospital trustees who are responsible for funding, the regulator who rates the unit, and employees working in the organization (Ferrel et al., 2016). All these parties are affected by the suggestion to create a coalition between two central actors and provide false data. Thus, analyzing the case, several aspects should be outlined. First, the finance director wants to offer the wrong data to achieve an excellent ranking and ensure that the hospital will be provided with additional funding next year. At the same time, being responsible for accounting, he correctly realizes the existing problems with finances and double-counting activities performed by some departments.
The central motif for his actions is the preservation of the hospitals functioning at a high level. For this reason, he does not seek self-profit and does not want to introduce false data to generate extra profit. The problems with reporting might occur due to the incompleteness of existing information systems and poor level of training among staff (Ferrel et al., 2016). That is why the gradual deterioration of the hospitals functioning and significant staff shortcuts might be considered a result of the lack of communication and cooperation between various departments within the unit. Moreover, the existing organizational patterns might stipulate in the appearance of drawbacks in accounting because of the poor reporting practices. In this regard, the deputy director faces a significant ethical dilemma regarding the possible resolutions of the conflict, preservation of positive relations with his colleague, and minimization of the threat of new shortcuts.
Applying the model of ethical conflict resolution mentioned above, a possible solution to the problem can be found in improving particular aspects of the hospitals work and elimination of problematic issues. The finance directors intent to provide false data violates the fundamental principles of objectivity, professional behavior, integrity, professional competence, and familiarity (Hartman, DesJardins, & MacDonald, 2013). At the same time, this conduct is preconditioned by the existing problems and environment. In such a way, the best possible conflict resolution is the introduction of more efficient reporting techniques to ensure enhanced data collection and presentation. The finance director can be demonstrated how to present performance information in the best way. At the same time, utilizing the ideas of utilitarianism, the consequences of frauds of this sort should be revealed to ensure the impossibility of these actions and the absence of any benefit if the fraud has been introduced (Hartman et al., 2013). On the contrary, the provision of relevant data will generate good for most employees and improve the functioning of the hospital (Hartman et al., 2013). Moreover, it is critical to appealing to the existing code of ethics and policies accepted by the unit that limit unethical behaviors and presuppose specific punishments.
Altogether, violation of ethical principles mentioned in the case might have a pernicious impact on the hospitals functioning because it will result in the aggravation of existing problems with funding and the emergence of new staff shortcuts in the future. In such a way, the creation of coalitions to provide false data remains an unethical action that undermines the fundamentals of any organization and results in its collapse. It means that both directors should adhere to specific practices of ethical problem resolution to preserve their trustful relations and objectivity.
References
CCAB. (2012). Ethical dilemmas case studies. Web.
Ferrel, O., Fraedrich, J., & Ferrel, L. (2016). Business ethics: Ethical decision making & cases. Boston, MA: South-Western College Pub.
Hartman, L., DesJardins, J., & MacDonald, C. (2013). Business ethics: Decision making for personal integrity & social responsibility (3rd ed.). New York, NY: McGraw-Hill Education.