Case 3: Auditing, Attitudes, and Absenteeism

Learning Goals
In this case, you will have an opportunity to evaluate whether an ethical lapse in an
employee’s behaviour should be considered as an isolated incident or a symptom of
broader problems within the corporate culture. You will also be asked to consider which
factors contributed to the decision by Peter’s direct reports to simply go along with his
directions. Other issues to consider include the following: How might factors such as poor
socialization or communication have contributed to the behaviour of Peter’s direct reports?
What would theories of motivation suggest? Should the organization have used a more
formalized structure? Use your own insight to make recommendations about what the
organization could, and should, do to prevent similar situations from developing in the
future.

The Scenario
“You’ve got to be kidding” said Sanjay, shaking his head, “is he there right now?”
“Yes,” said Bianca, “if we drive over there you can see for yourself.” “What the heck,”
exclaimed Sanjay, “let’s go.” 1 The pair left their office tower and drove the 10-minute
distance to Peter’s house. Bianca was right. Peter was supposed to be out at a client site
overseeing an audit, but his car was parked in his driveway, and he could be seen clearly
through his large, living room window. “Well, this is awkward,” sighed Sanjay. “What do we
do now?”

Sanjay and Bianca were senior managers at one of Canada’s top four professional
audit firms. Their team was responsible for performing audits for a broad range of
corporate clients. The firm had a very traditional and formalized structure, like the other
large players
in their industry. Recent graduates were hired as “students in accounts” during which time
they were expected to complete their professional exams and work toward their chartered
accountant (CA) designation. Upon passing their CA exams, they could compete to
become junior auditors in the firm. If they chose to stay with the firm, they could then
expect to progress to a supervisory role and finally, in six to seven years become a senior
manager. The best and brightest auditors stood to become future partners in the firm.
Many graduates, however, simply worked at the company long enough to achieve their CA
designation, which requires a minimum of two years’ experience working in an auditing
firm. The culture this process created was coined “up or out,” since that is exactly what
happened. Employees moved up (i.e., they were promoted) or out (i.e., left the company).
There was no shame in leaving, though; in fact, it was anticipated that most employees
would remain only long enough to get their designations and then move on.

Peter had joined the firm a few years ago and had progressed to a supervisory role.
Recently, Peter had come to the conclusion that the path to partner was not right for him,
and he began applying for jobs with other companies. But his decision to apply for jobs
elsewhere created a dilemma. He was not comfortable telling his employer he was looking
for work elsewhere, and he was also concerned that if his employer knew that he was
contemplating leaving the firm, his current assignments and standing would be negatively
affected. To make matters worse, Peter had no idea how long it would take to find a new
job, and he also had no idea how to manage organizing time off to participate in interviews.
 Peter reviewed his work tasks and responsibilities and came up with what he
perceived to be a viable solution to his dilemma. He began telling the people under his
supervision that their current client did not require their presence on Fridays, and they
should work at home instead. Peter encouraged them to use the time to work on things
like file reviews or even just to relax. The members of Peter’s team did not question his
instructions, even though it was highly unusual to be allowed, and even encouraged, to
work from home. Even full partners seldom worked from home. The clients themselves
did not question the team’s absence on Fridays either (one suspects that the average
worker is not terribly disappointed when he/she discovers that the audit team is absent
for a day). This arrangement allowed Peter to tell his manager that he was conducting
on-site audits on Fridays, when he was actually scheduling and attending a series of job
interviews on those days.

The situation continued for a couple of months before a few of Peter’s direct
reports became uncomfortable enough to say something. They approached Bianca,
who drove past Peter’s house the following Friday to see for herself whether or not he
was there. When she confirmed that he was at home, instead of “on-site,” she returned
to the office to discuss the situation with Sanjay. Now here the two of them were,
standing on Peter’s front step, wondering how to handle the situation. Sanjay knocked
on the door. Peter answered, but as soon as he saw Sanjay and Bianca, his face turned
red. They asked him what was going on and were stunned when Peter began to cry.

After Peter regained his composure, the three of them returned to the office to
discuss the situation. Sanjay and Bianca learned that the reason for the absences on
Fridays was so that Peter could attend job interviews. Once Sanjay and Bianca heard
all of the details, they asked Peter to step out of the office while they discussed the
situation in more detail. “The irony,” remarked Sanjay, once they were alone, “is that if
Peter had just told us what was happening, we would have been happy to give him time
off to go to interviews. We recently completed his performance evaluation, and although
he is a solid accountant, he just isn’t partner material. He doesn’t have a future here
anyway. It’s not that he is a bad auditor, but others are better. I would have been happy
to help him find a good placement.” “That’s all well and good,” said Bianca, “but it isn’t
even Peter I’m worried about. He supervised several different teams over the couple of
months he was doing this. Why did it take so long for any of them to let us know what
he was doing? I know the work still got done and the clients were satisfied, and I know
that everyone likes to be friendly around here and hang out together, but these people
are auditors for goodness sake! I would have expected better. Do you think this might
be a symptom of a bigger problem with our corporate culture? And if so, what should we
do about it?”

Discussion Questions

1. Why do you think Peter’s direct reports kept quiet about the “work from home”
directive for as long as they did? Why did some of them eventually decide to inform
management?
In the employee’s case, they might feel that the power of Peter to make a
decision supersedes for their capabilities. Their commitment can be justified probably
because the employees invest too much on the idea of not having to work on Fridays,
and they able to rest. And the other tasks are not being completed at the right time so
that some of them eventually decide to inform management. People tend to conform the
role of the authorities or the supervisors. The clients did not question the team’s
absence every Fridays.
The team members did not know what to do, so as a team, decision usually
takes time and collaboration. Decisions can be made by one person or more. Friendly
environment and lack of professionalism.

2. Do you think this situation would have happened if the organization had a more
formal structure in place? Why or why not?
Well it depends, a company must choose a structure that makes the employees
feel better to perform their tasks. A structure that gives the members clear guidelines
for how to proceed and maintain order and resolve disagreements. For the members
binds them together to create an organization which is inevitable.
But for us, we do prefer a formal setting, but not a segregated one. A formal
organizational structured company that focuses on organizing and achieving
organizational goals where there’s an assigned fixed authority or decision-making
power and each employee in the organization is assigned a specific job. A formal
organizational structure that is systematically divided among various departments and
employees, makes a superior-subordinate relationship, and coordinating with the
various departments. In order to work efficiently and to achieve the organization’s goal,
an organization must possess a positive work environment where the employees still
have an open and constant communication with each other that will lead to team effort
and lessen the anxiety and problems within the organization.

3. Do you think the lapse in Peter’s ethical behaviour indicates a broader problem with
the firm’s corporate culture? Why or why not? If yes, what should management do
now to try to change its corporate culture?
For us, we think that the management must they change their corporate culture
that can guide individual decisions, and help everyone work together towards the
same goal. Most of them are already making their own decision which is not
consistent with their work. just as peter made his own decisions for his lesser workers
he should not do that because he is simply making the people below him lazy.
To prevent situations like Peter's situation, we need to pay attention to the
company's organizational structure, culture and motivation. Group dynamics are
important and can bring ethical issues are around the corner if not detected on time. In
order to have a strong organizational culture can guide individual decisions where
everyone works together toward the same goal and encourage and reward employees
with respectful interactions in the organization.