Case Study

The senior leaders of DM Bicycle Company filed into the conference room, their hands full of coffee containers, Black Berrys, and the agenda for that morning’s meeting. With the end of the fiscal year in sight, the CEO, Gino Duncan, wanted to discuss sales projections for FY11, “Good morning, everyone,” he said. “Thanks for coming in early. I know y’all can’t wait to break down the budget, but before we get started, do you notice anything unusual outside? ” He gestured at the window behind him.

Carolyn Bridges, DMBC’s HR director, peered down on what looked from the 1oth floor like a procession of shiny beetles scuttling down the Bicentennial Greenway. They were actually bikers wearing helmets that reflected the bright North Carolina sunlight. “Lots of cyclists out this morning,” she said. Carolyn had ridden the Greenway many times since she joined the company, but she couldn’t remember ever seeing so much traffic. “Bingo! ” Gino said. “More and more people are biking to work, and that’s good news for us. Gino had created DMBC, now a public company, out of his passion for the outdoors and his eye for unique bicycle designs. The company’s 1,500 employees all worked at its headquarters and factory in Greensboro. The bikes were called “Greenies,” as a tribute to their hometown. Everyone in the room knew that orders were coming in at a record rate. Carolyn relished the thought of finally being able to staff up for increased production. She hoped that the strong sales growth meant the company could reinstate the bonus pool that had been discontinued when the financial crisis struck. Bui her excitement was short-lived.

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Gino’s face grew serious. “As most of you know,” he said, his emotion neatly overcoming him, “about eight months ago my nine-year-old daughter, Nicole, was diagnosed with Batten disease. ” His listeners nodded sympathetically. Most of them could remember Nicole and her brothers riding their bikes around the office on training wheels. Gino had taken ‘Lots of companies can do a phys-ed program “Gino said. ”We’re the only one with a wellknown spokesperson who has the disease” Nicole’s diagnosis very hard and had spent several months working from Rochester, New York, while she was undergoing experimental treatment. It’s an inherited neurological disorder that affects two to four children out of every 100,000 born in the LIS each year” Gino continued. “They start exhibiting symptoms between the ages of five and 10, and don’t make it past their early twenties. They go blind, become mentally impaired, and are afflicted with seizures… ” His voice began to crack. After a moment, he said, “As you can see from our projections, we’re about to have the best year in our 23-year history. I’d like to divide the windfall between a new CSR program focused on Batten disease and employee bonuses. The room was silent. Then one of the executives asked the question that was on everyone’s mind: “Just for clarification— by ‘divide between’ do you mean split equally? ” Gino’s eyes flicked toward the speaker. “To be blunt, which do you think is more important? Finding a cure for a devastating disease, or putting a little extra padding in someone’s wallet? ” Carolyn was shocked. The company had not given raises in three years and in some cases had been forced to cut salaries, yet Gino seemed to want to direct the bulk of the expected profits toward fighting for his daughter’s life.

She respected his fatherly feelings, but was this really a corporate responsibility? Make It Happen After the meeting, Gino pulled Carolyn and Dottie Thompson, the marketing VP, aside. “So, what do you think? ” he asked. DMBC’s current CSR efforts focused on combating childhood obesity through its Ride for Life program, which sponsored races and all-day biking excursions for the city’s schoolchildren. The program had been so successful—both in raising employee morale and in creating positive public relations—that Dottie had been working for nearly a year to take the program national.

Now she said, with clear hesitation in her voice, “1 think it’s great. Of course we should support finding a cure for Batten disease. But does this mean the end of Ride for Life? ” Gino seemed puzzled that Dottie didn’t get it. “This company’s CSR efforts have always been directed toward keeping kids healthy,” he said. “There’s nothing healthy about little kids going blind and dying. Ride for Life can be put on hold. ” “Nicole’s picture has been on every girl’s bike we’ve ever sold,” he continued. “Lots of companies can do a phys-ed program.

We’re the only one with a well-known spokesperson who has the disease. I want you two to work together to make this happen. ” Gino looked at Carolyn. “I’d like you to announce this at the production kick off meeting”—which was to be held at Gino’s farm in early July. With that, he fumed and left them standing in the doorway of the now-empty conference room. Carolyn could feel a pit forming in her stomach. The Chief Evangelist Over the next two days Carolyn spoke informally with employees at different levels of the company.

Everyone felt for Gino, but they were already burned out. The upcoming production schedule was aggressive, and, as one employee said, “Putting the whole company through Gino’s personal struggle is not going to make him, his daughter, or the company any better. ” Gino was known as someone who invested considerable personal and financial resources in a variety of social and environmental causes; he acted as “chief evangelist” for each new one that caught his fancy. Some employees found him inspiring and relied on him for information about the next “hot” issue.

Others played along, having found that the easiest: way to get face time with him for business purposes was to feign interest in his cause du jour. whatever their motivations, many employees had contributed time and money to Gino’s crusades. When Carolyn joined the company, four years earlier, Jim Miniter, the CFO, had told her, “Gino is more ‘intuitive’ than ‘structured,’ and he tends to shoot from the hip. He expects the analytical types around him to worry about the details. But DMBC is a family-if you take care of business; Gino will take care of you. He and Gino were old high school buddies, and he had left his job as a Wall Street financial analyst to join his friend’s venture. Carolyn hoped that even though the two were close, Jim would be willing to listen to her concerns about this shift in direction. Family or Big Brother? She caught up with Jim as he was heading back to his office and followed him in. Surprisingly, he seemed to know exactly what was on her mind. “I’m worried, too,” he began. “We’re going to have to present this change in the annual report and at the shareholder meeting—but I guess Gino can finesse those things. DMBC allowed employees up to 20 hours of paid work time each year to volunteer with a program associated with its CSR efforts, and it matched all employee financial contributions to those causes. It also highlighted corporate social responsibility in its annual report. These policies had kept DMBC in the ranks of “most admired” companies, which made the shareholders happy. “What worries me more,” Jim said, “is that Gino has started to cancel or walk out of meetings to talk on the phone with families of other children with Batten disease, or anyone who might have some information relating to the disease or a treatment.

We can’t get anything done. ” “So you’ll talk to him? ” Carolyn asked, relief washing over her. “I can’t,” said Jim. “1 was at his wedding in Trinidad. 1 was there when Nicole and the boys were born. It would be like betraying a brother. ” Carolyn could understand loyalty, but this was ridiculous. “You’re the only one he’ll listen to” she said, “and you’re a major shareholder. Don’t you have an obligation to the company? The folks on the line are already feeling pressure with the ramp-up. Some of them have asked if ifs appropriate for Gino to force the whole company to go on this painful journey with him.

A couple of hourly employees even called him selfish for putting his family ahead of theirs. ” Jim anticipated Gino’s reply in a mock monotone: “The employees will get paid for the work they did to generate the profits, and I would have paid them the same amount even if their efforts were not as successful. In this case they get a bonus and we can give more to CSR. ” He continued, speaking in his own voice, “Also, companies like Starbucks and Sun Microsystems and lots of others support vast efforts aimed at water conservation, recycling, education, wildlife preservation, and so on.

They get awards and recognition for their CSR efforts, not all of which are directly related to their businesses. And I can tell you that universities regularly report—and some accrediting agencies count—the number of faculty and staff members who give money to the university. So this isn’t way out of the mainstream. ” “But you know how it is around here,” Carolyn retorted. “Employees expect that Gino will track who compiles-er, partic-ipates-for the annual report, and they’re afraid of the possible effect on evaluations and promotions. The company could start to feel like Big Brother rather than family.

Bottom line, they think Gino is going to require everyone to contribute money or time to fight Batten disease, and that doesn’t seem right. You need to speak to him. ” “I’m sorry, Carolyn, I just can’t do it,” Jim replied. As Carolyn walked slowly out of his office, she thought back on the past four years. She was an experienced HR manager, having joined DMBC from a Fortune 50 manufacturer. But because of Jim and Gino’s long history, she had been kept on the fringes of the inner circle. Without stronger alliances, she wasn’t willing to rock the boat.

But she was worried that Gino’s grief and concern for his daughter had overshadowed his concern for the company. Discussion Points:1. 2. 3. What is role of stakeholders in influencing the decision making process? Has Gino gone too far, and should Carolyn try to stop him? Is there an ethical dilemma? If so who are the persons facing this dilemma ; what is the dilemma? Is there a personal Agenda for Gino or is there really larger social objective or can his action be viewed as “Conflict of Interest”? Are the perceptions of Carolyn ; others correct? Way out – how to find an answer to this issue? 4. 5. 6.