Question

Super Security Co. offers a range of security services for athletes and entertainers. Each type of service is considered within a separate department. Marc Pincus, the overall manager, is compensated partly on the basis of departmental performance by staying within the quarterly cost budget. He often revises operations to make sure departments stay within budget. Says Pincus, “I will not go over budget even it means slightly compromising the level and quality of service. These are minor compromises that don’t significantly affect my clients, at least in the short term.”

Required:

1.    Is there an ethical concern in this situation? If so, which parties are affected? Explain.

2.    Can Pincus take action to eliminate or reduce any ethical concerns? Explain.

3.    What is Super Security’s ethical responsibility in offering professional services?

3.    Are there things outside Pincus' control that would cause costs to be over budget? If so, should his compensation plan be reevaluated? Explain.

Answer 1

ANSWER:

1. In the given situation the main ethical concern is that quality and level of service is been sacrificed for controlling the control. The clients are affected due to the lower levels of quality and services.

2. Senior Security Co is primarily using a responsibility accounting system for measuring the performance of the manager. Consequently Ms. Pincus is evaluated by her ability to operate within a responsibility accounting budget that set the goals based on costs that can be controlled by the manager. Although it is not the responsibility of Pincus to ensure any quality or level of service; but it is employee's moral responsibility that service level and quality are not sacrificed. Thus Pincus should have taken action to eliminate the ethical concern.

3. The ethical responsibility in offering professional services is providing accurate information. The quality of service should not be compromised. To achieve thus it can opt a process-oriented accounting system which targets to measure the outputs of cross-departmental work processes relative to service quality.

4. Although the ethical responsibility lies with the company, its values and its policies, however it is important that the company promote ethical responsibility or any non-financial goal, for that matter. If Pareto acts ethically, and acts as a whistleblower things will not go out of control and there will be no need to revaluate the plan.