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Phl 323 - Ethics in the Workplace Case Study, Sears, Roebuck: the Auto Center Scandal

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Ethics in The Workplace Case Study, Sears, Roebuck: The Auto Center Scandal

PHL/323

December 20, 2010

David Rowe

Sears, Roebuck, and Company tarnished their reputation as a trustworthy and ethical business. The company was being accused of fraud and scamming customers in the Auto Centers departments. Employees that were in charge of the customers car repair were misleading them to believe there was more problems wrong with his or her vehicles than there really was. Complaints of Sears Auto Centers misleading customers and charging unnecessary repairs to the client to increase sales and productivity.

Sears Roebuck company placed their auto center employees on compensation incentive pay instead of a regularly hourly salary. The intent of the plan was to create productivity and increase profits and sales in its auto centers nationwide. Employees mismanaged his or her own personal ethics to increase the commission they would receive for productivity.

Employees were no longer receiving a decent hourly wage for work being performed; instead they were receiving a fixed FDA amount of $3.25 an hour. Which placed production quotas as the main income employees would receive, based of sales and productivity. The faster the employees got the work done, the more money the employee will make.

Employees were faced with high pressure to meet quotas by Sears management contributed to the stress and the unethical choices employees were forced to take.

Which ethical systems were at work for key individuals in the organization--managers, executives, and employees?

Sears Roebuck managers and executives

Sears had always experienced high earnings but in the 1980's it started to see a decline and experience financial woes. To respond to this Sears implemented an "everyday low price" policy and brought in a mixture of new non Sears labeled inventory. But to Sear's dismay earnings were still in decline and by the 1990's more measures were to be taken. The measures taken to cut-costs were eliminating jobs and produce "profits at every level" (Trevino & Nelson, 2007).

Sears leadership in 1991 produced and "unveiled a productivity incentive plan to increase profits in its auto centers nationwide." (Trevino & Nelson, 2007). Mechanics who were once paid hourly wage were now "paid a base salary plus a fixed dollar amount for meeting hourly production quotas." (Trevino & Nelson, 2007). The service advisors had worked off of salary before were now on working for commissions and product-specific sales quotas. These changes in wages and salary were intended to make goals and increase sales. In doing

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