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Corporate decision-making without observing ethics is disastrous. Consider the case of the Sunbeam Company. After being hired to lead the recovery of Sunbeam, Dunlap was out to use any method, ethical or unethical, to help revive the company. He issued out blatant criticism for previous management and gave investors confidence in the company they had missed for a long time. However, it did not take long before his methods, specifically, his lack of ethics, were proved to be futile. He drove the company to further debt, reduced sales, and employee dissatisfaction which had a great impact on investors, and thus he had to manipulate figures to regain investor confidence and maintain the value of the company (Ferrel, Fraedrich & Ferrel, 2009, p. 65). The essay explores the events that brought the need to manipulate their quarterly sales figures.
On his arrival at Sunbeam, Dunlap started his queer method of steering recovery. He was a loud critic to his junior executives and lacked all measures of business ethics. With his perfectionist style, his first company expenses were a bulletproof vest and a company bodyguard. He gave investors an assurance that he would turn around the situation at Sunbeam in months and set a couple of other unrealistic goals. With his experience in rescuing companies, the investors had no reason not to believe in him and his hiring saw an increase in Sunbeam’s share prices. He then called Donald Burnett to scheme payroll cuts and plant closures that were his characteristic recovery strategies. After an evaluation by Burnett, he offered a restructuring plan that would dismiss half of the employees in a sunbeam and cut down products by 87 %. This meant that implementation of the restructuring plan would see a serious deficit of skilled and experienced labor. With the daily firing of its workforce, Sunbeam was left without people to manage and run departments and functions, and everything lacked adequate manpower for proper operation. Plants were also insufficient for the production of goods that had already been promised to retailers. The situation was really bad. The restructuring plan also included outsourcing of the IT department. This led to the firing of a couple of employees and the need to contract these functions. Sunbeam, therefore, found itself contracting the functions of the IT department to other people; some of them being the employees who had been fired. They were however contracted at a higher price. After these misguided recovery strategies employed by Dunlap, the company was in great deficit of funds such that the payroll was being met by credit. It had also recently acquired a 1.7 billion loan and was afraid that the banks and other creditors would turn to the harsh covenants the company had signed with them. There were also a couple of employees who had gone unpaid for months. Shareholders were also keeping a close eye on the company after new management took office following failure by the previous management. When an attempt to boost their sales by hawking their products was met with failure, they started using accounting methods to manipulate sales figures to fool investors and the public (Byrne 1999, p. 1).
The above-discussed failures brought a lot of embarrassment to Sunbeam. Most of these embarrassments can be blamed on Dunlap. His lack of business and public relations ethics was very critical in the failure that faced Sunbeam. He had no respect for his executives, employees, and even the shareholders of his company. This can be evidenced by the way he used to yell disrespectfully at executives, the way he fired employees comprising even of managers without even the slightest hint of remorse. He also did not respect the efforts other people put into their work. In this regard, he closed 87% of the plants that were existent in Sunbeam in his restructuring attempt. It can also be argued that he was impatient and that his impatience had tremendous input in the failure seen by Sunbeam. Within days of his hiring, he addressed investors promising them recovery in a matter of months. His projections for growth and their timing were purely unrealistic. Thus his management of the recovery process of the company was based on his precedential success in recovery instead of being based on the facts on the ground. A lot of dictatorships is seen in his leadership and thus he used to implement his ideas even when he was wrong. This is evidenced by the fact that recommendations were always met with rejection and he was highly feared that recommendations conflicting with his ideas were always kept out of his knowledge. An example is an internal memo that was written by the internal auditor, Den Danto, complaining of the alienation of the audit department from the operations of the company. The Director of internal audit, Thomas Hartshorne, discouraged her from sending the memo (Byrne 1999, p. 1).
Byrne, J. (1999). “Chainsaw Al”. Business Week. Web.
Ferrel, O., Fraedrich, J., & Ferrel, L., (2009). Business Ethics, Ethical Decision Making & Cases. Boston, MA: Prentice Hall.