29. Notetakers Company: Selling Class Notes to Students Teaching Notes

32. Sarah Norton and Wise Research^*

Teaching Notes

Sarah Norton was an outstanding 32 year-old MBA student at a large state university in Hammonsville, Montana who was known for her positive work ethic, strong moral character, and intelligence. She held a graduate assistantship with the university’s marketing department and had worked on a number of research projects with department faculty. She had developed a proficiency in survey design, data entry, statistical analysis, and the reporting of survey results and had hoped to find an entry-level marketing research position in the Hammonsville area upon graduation. Sarah was one semester short of her degree when she noticed a classified ad in the Hammonsville News Monitor announcing a position for a market research manager. Sarah chose to respond to the ad believing that if she were hired, she could break into the marketing research field while remaining in Hammonsville and complete the last nine hours of the MBA program at some point in the future.

After two interviews with the owners of Wise Research, Bill and Katie Wise, Sarah was offered the position and asked to immediately begin a two-week training program at the company’s home office in Dallas. Almost as soon as Sarah arrived at Love Field in Dallas, she began to question the integrity of the company’s owners and key employees. She was met at the gate by Mark Wise, the son of Bill and Katie Wise and a Wise Research employee, who made misstatements about the number of interviews conducted by his parents and questioned Sarah concerning a phone call that she had anonymously made to the company’s Hammonsville office. Once at the company’s office in Dallas, Sarah found out that the local employees had been told that she was in the office to monitor the performance of the office manager rather than to train to become the manager of the Hammonsville office. Sarah also found out from the Dallas office manager that her compensation might be less than what was quoted to her at the time of the job offer since Wise Research managerial personnel were hourly employees. She also learned that the Wises required office managers to carry out a number of unethical practices that created distrust among office personnel and were potentially illegal.

After completing four days of the two-week training period, Sarah was having serious reservations about remaining with the company. She was uncertain if she should resign and return to Hammonsville or stay with Wise Research and refuse to do anything she considered unethical.

This case is a good leadoff case for your ethics module. It is a relatively easy case for students to wrestle with, but more importantly, it offers an excellent example of business ethics at the individual and business levels and presents issues that many students might well encounter at some point in their careers. Many seniors and MBA students will desperately want a job immediately upon graduation and may be tempted to accept the wrong position for financial reasons. Similarly, later in their careers, many business people become involved in unethical business practices initiated by others because of the economic demands created by the need to provide for themselves or their family. Sarah Norton is presented with such a challenge. She is committed to remaining in Hammonsville for various reasons, but also wishes to begin a career in her chosen field. She understands that this will be difficult because of the limited number of marketing research jobs in Hammonsville and the strong competition for those jobs among recent and past graduates of the university. Many of your students may identify strongly with Sarah. They may be tied to a particular city because of personal reasons and realize how difficult it will be to get the type of job that they prefer.

The case pushes students to evaluate and try to balance the competing forces of a near-term desire for employment in a desirable geographic location and the long-term considerations of what is best for a person’s career and mental well-being. Almost all (if not all) students will clearly recognize that Wise Research is not the ideal place to begin a career. The owners of the business have questionable personal ethics and attempt to deceive employees on an ongoing basis. In addition, the company is involved in a number of highly unethical, and probably illegal, activities. However, students will also understand the difficulty that Sarah will encounter attempting to find another marketing research job in Hammonsville—where she so much wants to be located. Students will likely be divided on the issue of leaving Wise Research, with most suggesting that Sarah should resign and some suggesting that she should stay in the position and ignore/overlook what she considers to be unethical actions of others and let her own ethical standards dictate her actions. Generally, it will be students who have not closely evaluated and thought through the situation that will fall into the latter category. You may be forced to play devil’s advocate if students are unanimous in the decision to leave the company and move on to something else. You can do this be stressing the importance of her desire for a marketing research job in Hammonsville and the lack of other acceptable job alternatives.

Probably the most pragmatic way of launching class discussion of the case is to poll the class to determine the number supporting Sarah’s resignation and the number suggesting that she should remain with the company. You can then call on several students to make some general comments in support of their positions. This should start to put the discussion spotlight on the personal, economic, and ethical issues in the case and allow you to begin a structured analysis of the situation.

Because it may not take a full 75 minutes to draw out all the issues and arrive at a general consensus as to what Sarah should do, this is a good case to assign when you have several other matters to take up in class which will consume a portion of the class period. You ought to be able to cover this case in a 45-60 minute time frame if the need arises.

We think you will find the Sarah Norton case quite suitable for a written assignment that can either be done out of class or completed as an in-class exam. Our suggested written assignment question is as follows:

Sarah Norton and her boyfriend, Jeff Baird, have decided to skip the dinner they had planned to celebrate Sarah’s birthday and instead commit the evening to resolving her dilemma over whether she should remain with Wise Research. They have agreed to come to some conclusion during the evening and inform the Wises at 8:45 the next morning if she decides to resign and return to Hammonsville. What factors should Sarah and Jeff consider? What should be her decision?

Assignment Questions

1. 
   What is the ethical dilemma that Sarah Norton faces in her new job with Wise Research? What are the specific things that bother Sarah? Are any of these issues in violation of the Marketing Research Association’s Code of Ethics?
   
2. 
   What are the ethical issues surrounding Wise Research’s data collection process and other policies, procedures, and activities? Are any of these ethical issues also potential legal issues?
   
3. 
   What stakeholders are impacted by the field research conducted by Wise Research? How do the actions of Wise Research employees impact these stakeholders?
   
4. 
   What are Sarah’s alternatives? What are the pros and cons of each alternative? Do any of these alternatives create additional dilemmas for Sarah? How does her decision affect Wise Research stakeholders?
   
5. 
   How would you advise Sarah to resolve her uneasiness with her new job? Should she consider resigning? Why or why not? Are there other acceptable solutions? What approach is most consistent with Sarah’s core belief system and is most likely to further her long-term career objectives?
   

Sarah’s ethical dilemma centers on how she chooses to react to the numerous unethical actions of Bill and Katie Wise and other Wise Research (WR) employees. She can elect to ignore the unethical behavior of Wise Research owners and employees and remain in her position or she can leave the company and look for employment elsewhere. Sarah’s decision will come with some pain since she is eager to get a marketing research job in Hammonsville, but yet she is uncomfortable with an atmosphere of general distrust and a widespread lack of integrity at Wise Research.

The Wises seem to be devoid of any honesty in their dealings with their employees. They pursue a covert approach to running the business and interacting with employees and seem rarely to give employees a straight story about anything. Bill and Katie Wise create cover stories to conceal almost everything—even seemingly innocuous management decisions that will eventually become known to employees anyway. The culture created by their leadership facilitates an environment where other dishonest individuals can thrive. Not all WR employees appear to be dishonest, but the stifling culture that includes a prevailing fear of retribution for any unwitting exposure of Bill and Katie Wise’s deceitful statements has created an environment where many employees choose to turn a blind eye to the unethical actions of others.

Students should be able to compile a lengthy list of unethical and/or dishonest and/or deceptive personal behaviors carried out by the Wises that would most likely be troublesome to someone of Sarah’s character and reputation. Some things that ought to come out of this line of questioning include the following.

• 
  The Wises’ decision to interview applicants for the management position in Hammersville without notifying the current manager that he would be replaced will be seen as unethical or at least deceptive by many in the class. The Wises obviously wanted to hire and train a new manager before terminating the current manager since it would be very difficult to bring in an interim manager or to operate the Westfield Mall office without a manager. The Wises have no obligation to notify the manager that he will soon be replaced, but their approach to responding to the current manager’s poor performance may not be the most ethical or forthright or effective way to deal with poor performing employees. The manager’s statements to Sarah during their telephone conversation give the impression that he has not necessarily received formal feedback concerning his poor performance, but has learned of the Wises’ displeasure with his performance through the WR grapevine. It is unlikely that the Wises have traveled to Hammonsville to address the manager’s shortcomings or to offer coaching to improve his performance.
  
• 
  Karen Wise’s statement that Sarah would earn $25,000 per year appears to be inaccurate. Sarah noted on her application that she would consider annual compensation that ranged from $25,000 to $35,000. Karen told her that she would earn $11 per hour plus time and a half for overtime. Sarah calculated that she would need an average of 42.5 hours per week to reach $25,000 annually. However, Cindy later told Sarah that the Wises considered 37.5 hours per week to be full time work. If Sarah is limited to 37.5 hours per week her annual compensation will only reach $21,450.
  
• 
  Mark Wise’s comment to Sarah that his parents had interviewed nearly 100 applicants for the Hammonsville position was not necessarily unethical, but just not true. Mark may have been trying to make conversation and perhaps just misspoke, but by making this statement and quizzing Sarah about an anonymous call to the Hammonsville office about the position, he has contributed to Sarah’s suspicions about the company.
  
• 
  The Wises’ cover story that Sarah was an auditor and monitor to evaluate Cindy’s performance did little to avert the rumors of the Hammonsville manager’s pending termination. The Wises should have terminated the Hammonsville manager and sent someone to oversee the Westfield Mall office until Sarah was trained. If another manager was unavailable, either Bill or Katie Wise should run the office rather than leave for a vacation. The Wises undoubtedly learned long ago that owning a small business requires considerable sacrifices of leisure time to maintain the business’s viability. In addition, the deception put Sarah and Cindy in the unenviable positions of lying to their coworkers.
  
• 
  Labeling envelopes that contained routine paperwork “For Cindy’s Eyes Only” and “Top Secret” sent a message to WR employees that no one could be trusted. The Wises seem to act in a less than forthright manner in many areas and perhaps think that this is acceptable behavior. One wonders if the company really sends information to its mall managers on a regular basis that is so critically sensitive that other employees should be prohibited from opening the envelopes.
  
• 
  Sarah’s instructions to carry her time card in her purse had the same effect as the envelopes restricted to Cindy’s viewing and the Wises’ insistence that Sarah and Cindy lie to their subordinates concerning Sarah’s training. These secretive and deceptive acts did little to build trust and respect between managers and subordinates and were not necessary to protect proprietary information. How could the Wises view a time card and the number of hours worked as secretive issues? Most employees would be able to derive a relatively accurate assessment of how many hours their coworkers worked if they so desired. You may wish to press students to give reasons why it would make a difference if coworkers knew what time Sarah or Cindy clocked in and clocked out.
  
• 
  The Wises acted unethically by delaying Cindy’s pay raise. The owners had granted Cindy’s three-month raise, but had delayed the raise until just prior to her assignment to train Sarah. Some students may suggest that Cindy would still be waiting on the raise if Sarah had not been hired to replace the existing Hammonsville manager. Also, the lack of equity in regard to starting salaries and training expense reimbursement does little to build trust among WR coworkers or between employees and owners.
  
• 
  Katie Wise’s insistence on firing an interviewer that discussed wages with another employee had nothing to do with the interviewer’s job-related performance. Katie stated that the employee handbook prohibited discussion of wages, but this employee had not received a copy of the handbook and was unaware of the consequences of such a discussion. Why are the Wises so concerned that employees might casually mention their rate of pay? Do people in the same jobs have widely varying hourly wage rates? You may wish to ask students if the Wises appear to be the type of people that would evaluate an applicant’s circumstances and then offer the lowest compensation package that they think the person would accept. Would this approach to compensating employees (rather than tying pay ranges to each job) explain why Sarah was paid a higher entry-level wage than Cindy and provided training expense reimbursement while Cindy was not? Does it appear that Sarah has better employment alternatives than Cindy has? Did Cindy seem desperate to obtain employment at the time of her interview with WR? You may also wish to ask students if this is unethical or just a good negotiation tactic?
  
• 
  Sarah should also be concerned about Cindy’s statement that she has refused to do certain things that the Wises have asked of her. She also stated that she would not be a part of activities that were currently taking place. Cindy did not specify what the activities were, but Sarah should see the statements as red flags that the Wises not only engage in unethical behavior, but most likely illegal acts as well.
  

• 
  Students should determine that the company’s policy of manipulating the data to arrive at the total numbers of respondents screened, net incidence rate, and category incidence rate violates the 1^st, 2^nd, 3^rd, and 7^th provisions of the Code. The practice clearly lacks integrity, is potentially fraudulent and subject to civil and criminal prosecution, and is inaccurate and invalid. (The legality of WR’s research practices will be discussed in further detail in the discussion of assignment question #2.) In addition, the company does not inform its clients of the research method.
  
• 
  The practice of calling relatives to complete surveys when pressed for time violates the same provisions of the Code as the data manipulation practice.
  
• 
  The company hires interviewers that have been banned by various clients for submitting invalid surveys, but have chosen to use aliases to continue working as market researchers. The Wises must be aware of the practice since employees are required by law to have a valid Social Security number when completing a W-4 at the time of employment. There are obviously employees who complete surveys under a different name than what is shown on their W-4 and Social Security card.
  

The two primary ethical issues associated with Wise Research processes, policies, procedures, and activities are (1) the Wises’ lack of honesty and integrity in their relationships with WR employees and (2) WR’s data collection process.

The Wises’ questionable ethical behavior and propensity to engage in deceptive practices obviously pose a problem to Sarah and other WR employees. Most students will likely find it distasteful and unsatisfactory to work for someone that is deceptive and untruthful when communicating with employees. WR employees could never be certain that statements made by the Wises concerning work assignments, pay raises, expense reimbursement, or personnel matters would ever materialize. One suspects that the work environment fostered by the practices of the Wises prompts other WR employees to be deceitful or less than honest in their dealings with the company and perhaps even engage in various “gamesmanship” in their efforts to cover their flanks and stay in good graces with the Wises. The Wises exhibit little trust in dealing with their employees and seem to be the kind of people that would relish having informants in each office to let them know what subordinates are thinking and saying. The Wises’ approach to “people management” is apt to breed a culture of deceitful and/or unscrupulous interpersonal behavior that adversely affects and turns off honest employees.

The data collection process is unethical because it violates several provisions of the MRA Code of Ethics and is illegal under most state criminal and civil codes since the practice constitutes fraudulent misrepresentation. Most textbooks used in legal environment of business courses define fraudulent misrepresentation as a misrepresentation knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment. In addition the tort of fraudulent misrepresentation usually is perpetrated for personal gain. The tort includes several key elements: (1) misrepresentation of facts or conditions with knowledge that they are false or with reckless disregard for the truth; (2) intent to induce another to rely on the misrepresentations; (3) justifiable reliance by the deceived party; (4) damages suffered as a result of reliance; and (5) causal connections between the misrepresentation and the injury suffered.¹ You may wish to list the five key elements of fraudulent misrepresentation on the board and ask students to assess which of the five applies to WR’s data collection process and its relationships with its clients. Students will likely conclude that the company could easily be found liable for compensatory and punitive damages in a civil case and the Wises and WR personnel could face imprisonment in a criminal fraud case.

Students should be able to identify the following stakeholders that are impacted by the fraudulent field research conducted by Wise Research.

• 
  WR clients—the marketing research firms that contracted with WR to conduct field research risked their reputations and were exposed to potential litigation as a result of invalid research that was not collected according to accepted methodology. These clients were also defrauded by WR since all five of the key elements of fraud are present: (1) WR misrepresented the validity of its data; (2) WR intended for client firms to rely on the data; (3) clients were justifiable in relying on the data; (4) clients could have damages if they lost accounts or were sued because of invalid data; and (5) there would obviously be a causal connection between WR’s misrepresentations and any injury suffered as a result of WR’s invalid data.
  
• 
  Manufacturers that eventually relied on WR-generated data—the clients of WR’s clients were making marketing decisions based on invalid data. These companies risked millions of dollars to launch new products or improve existing new products based on information that might have little to do with actual consumer preferences.
  
• 
  WR employees—honest WR employees could have their own careers and reputation tarnished if the company were to be challenged to support the validity of data it collected. Wise Research employees might also face criminal and civil charges related to fraudulent misrepresentation.
  
• 
  Friends and family members of WR interviewers that assisted in the fraudulent data collection—friends or family members that agreed to complete surveys might have been unaware of the legal and ethical problems associated with WR’s data collection process. The friends and family members of the interviewers might also be exposed to potential litigation through aiding and abetting charges. Those that completed fraudulent surveys may not actually become defendants in a criminal or civil fraud case, but the would most likely be called as witnesses and might have to seek legal counsel.
  

Students will easily identify the alternatives of (1) remaining at Wise Research, (2) pursuing alternative employment, or (3) quitting and returning to graduate school. In evaluating these alternatives, students should be pressed to evaluate the pros and cons of each alternative.

• 
  Remain at Wise Research
  

Pros

Cons

Sarah would keep a marketing research job in Hammonsville. Sarah would gain experience with a market research firm that would help her if she chose to leave WR. The $20,000-$25,000 annual wages offered by WR is more income than what Sarah earns as a graduate assistant.

Sarah’s belief system and character are completely at odds with the WR culture. Sarah could become involved in litigation concerning WR’s data collection. Sarah might not want to list WR on her resume if the company is not respected in the industry. Sarah’s reputation could be tarnished by her association with the company. The job is an hourly job with no guaranteed number of hours per week. The job offers little opportunity for advancement since most strategic decisions are made by Bill and Katie Wise and the two sons will likely advance in the business. No one other than Sarah appears to have any marketing research expertise (including the Wise family). Sarah may find herself in continuing ethical dilemmas since the Wises will expect that she keep secrets from her subordinates and peers at WR. The Wises will undoubtedly put pressure on Sarah to continue policies that maximize the output of the office at the expense of ethical data collection practices. Field research will not give Sarah additional marketing research skills. Sarah should expect strained relationships with her subordinates since she will require them to alter their data collection process. A process that will yield valid data will require greater effort on their part, will make it harder to meet deadlines, and may reduce their pay. Sarah will be contributing to the damage to stakeholder interests if she acquiesces to the demands of the Wises.

• 
  Remain at Wise Research
  

Pros

Cons

Sarah will complete her MBA at the end of the fall semester. Sarah will be able to conduct a longer job search and look for a job with more long-term opportunity. Sarah’s MBA will allow her to obtain a better starting salary than $21,000-$25,000. Sarah will not damage her reputation through an association with WR. She will avoid becoming entangled in potential civil or criminal charges against WR. Sarah would not be continually confronted with the unethical actions of the Wises. Sarah would have the opportunity to begin her career with a company that is a legitimate marketing research firm. Sarah could use more of her skills with a company that engages in more than just field research and become more marketable as her skills and experience increase.

She will be forced to live on graduate assistantship for another semester. Sarah may find it difficult to get the type of job that she wants in Hammonsville.

After completing the list of pros and cons associated with either remaining at Wise Research or leaving the company and returning to school to complete her MBA, the big majority of the class will likely conclude that it is best that Sarah resign from her new job. Even though the job would provide an immediate financial reprieve from her university-imposed poverty, the job has little long-term appeal. Sarah will not spend a career with Wise Research and will probably note early on in her tenure that this is a job that she should get out of. She will be challenged by a series of ethical dilemmas if she remains in the position and will likely encounter considerable conflict with both the Wises and other WR employees.

It is almost certainly going to work out better for Sarah if she quits the job, registers for school, and contacts the Marketing department to see if she can reinstate her assistantship. She ought to do this immediately since there is little point in misleading the Wises as to her intentions to remain on with the company and the fall semester will soon begin.