What Is Radio Shack Ethical

Introduction:

Ethics is the consideration of how human actions can improve or deteriorate the environments in which we work and live. In the wake of recent corporate scandals like Enron and WorldCom leading to trials and imprisonment of previously powerful (Chief Executing Officer) CEO’s public trust in CEO’s has diminished. Therefore when the story about the forged academic credentials of Dave Edmondson, CEO of Radio Shack came it re-ignited the mistrust. This paper will provide a brief background of the scandal and detailed analysis of the ethical issues involved and whether the actions taken by RadioShack were ethical or not.

Background:
Dave Edmondson was on a fast career track and was named CEO of Radio Shack in May 2005. In February, 2006 Radio Shack announced that its CEO, David Edmonson has resigned over questions raised over his resume. The Fort Worth Star- Telegram discovered that he had not earned degrees in theology and psychology from Heartland Baptist College as claimed on his resume. Moreover Edmonson had only finished two semesters at the college and the college did not even
offer a psychology major. Edmonson admitted to the errors calling them “misstatements” and resigned in the aftermath of the corporate scandal.

Analysis:
The main issue about this case is not just forging of the academic credentials but how Radio Shack handled the case that generated criticism from public and turned it into a media circus. The basic hypernorms of honesty and integrity were not met by RadioShack in handling the situation. Edmondson did not display fairness towards Radio Shack by trying to communicate the value of knowledge via false degrees. It was not just the disappointing fact that Edmondson lied on his resume but what was equally troubling was the individual and corporate response to the scandal. Radio Shack supported its CEO and failed to give public any substantial answers. The ethical question then becomes that what is the responsibility of board of directors? Should they oversee the personal ethics of a CEO as long as he is driving the shareholders maximum value and yielding higher profits for the firm or they should step up and take responsibility for their own short comings, take the required action and set an example of driving the company by ethical values and standards not just profits? Radio shack displayed lack of responsibility as a company when it came to take ownership of the issue and failed to address the public with compassion and was unable to provide clarification regarding the resume issue.
From philosophical approach- consequentialism view holds that whether an act is morally right depends only on the consequences of that act. Edmondson’s decision to lie on his resume turned out to bring good consequences only for him in terms of a career hike. Deontology brings up these questions: Was Edmondson’s decision legal, fair, just or right? No, it was not and transparency and information sharing regarding the falsified resume might have led to different outcomes both for Edmondson and RadioShack.
Considering the virtue ethics, did Edmondson and RadioShack’s decision demonstrate expected virtues?
The company had built its image and reputation over many years. This reputation entailed virtues of trustworthiness, compassion, integrity and responsibility. It did not seem that Edmondson’s decision to not come clean was based on any of these considerations. He bluntly violated the virtue ethics. The stakeholders involved were shareholders, board of directors, employees and common people. He could be cut slack for being an ambitious young individual at the start of his career but how can the ignorance be overseen that in the years of making towards a CEO he never came clean. Infact when the scandal was raised and he was confronted he did not even admit right away. This displays lack of character and credibility. A company’s leader should be transparent and
trustworthy.
From a modified moral standards approach I feel that there wasn’t any net benefit to the company from his falsified educational claims. It was also not fair to all the stakeholders involved as there could have been a better candidate who got rejected due to a truthful but less flashy resume. Also the distribution of benefits was enjoyed by the CEO whereas the burdens were shared by him and the company equally in terms of a bad reputation and loss of public trust. Also RadioShack was not consistent with the virtues expected by its employees as they did not bring them and other stakeholders in the loop during the media frenzy which led to a discontented employee atmosphere.
This also leads to question the monitoring and compliance at RadioShack. They had a code of conduct and code of ethics in place detailing the responsibilities of the employees but how realistically this was being followed can be easily criticized based on Edmondson’s case. I believe that company’s code of ethics should be incorporated in its values and system actions. Corporate risk can be reduced and even mitigated if the organization can align values for ethical motivation and action. Edmondson did take accountability of his unethical actions later and RadioShack’s board of directors also learned the hard way that blind support of a CEO without any solid evidence is unwise and can tarnish the reputation of the company. If they had accepted and reacted to responsibility as soon as the scandal broke the company would have been able to save its reputation and maintained credibility.