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Managerial Ethics

Managerial Ethics

Managerial Ethics

(OP)
Good People,

So my boss, or I should say one of my bosses, who is the senior mechanical engineer, was in charge of a job a few months ago. It was to modify a balance line on a pump we have onsite. (Keep in mind this pump is critical to plant operations.) A quotation was submitted by a contractor to do the works and then, a few days after, they submitted a change increase in price of approximately $1,100 US. My boss received VERBAL approval on accepting this change and the job was carried out successfully. Last week, management re-examined the issue and decided that they were not going to pay the additional 1100 dollars and that my boss did not get written approval and that he had to pay this money out of his own pocket. I mean yes my boss did not submit the written approval in time but he did get a verbal..he got the job done quickly as every second this particular pump is offline, revenue is lost and he is still being made to do this?! What are your opinions? I think its wrong..  

RE: Managerial Ethics

Your boss was wrong in not getting it in writing (company policy, I assume?), but the company cannot make him pay for it out of his own packet.

Dan - Owner
http://www.Hi-TecDesigns.com

RE: Managerial Ethics

They can deduct it from his paycheck - which amounts to the same thing as paying out of his own pocket.

RE: Managerial Ethics

I think the company will run into legal issues deducting things like that from someone's paycheck...

Dan - Owner
http://www.Hi-TecDesigns.com

RE: Managerial Ethics

This goes beyond ethics and into law.  The company is almost certainly acting illegaly.

RE: Managerial Ethics

I was involved in a similar situation in about 1984.  Someone in higher management approved the change - and nothing was taken from the project manager's paycheck.  Someone at a higher level can approve the change.  These type situations cause sufficient anger for one to quit without notice - in better times.
 

RE: Managerial Ethics

Sounds very unethical and illegal.

If the manager is entitled to make contracts on behalf of the company (and this is implied, since the company apparently knew what was going on with the critical process equipment), then barring any fraudulent conduct, the company is solely on the hook for nonpayment. The contractor is not entitled to recover anything from the manager himself (because the contract was not made on his own behalf). So, if they don't get their money, they sue the company. The company can sue its own manager, afterwards, if it wants the money back that badly.

But generally, barring some very strange (and probably unenforceable) contract of employment between the manager and the company, they're out of luck with regard to directly deducting it from his payroll, or billing him for it. (That's a good way for the company to get itself sued for breach of contract for failing to pay wages.)

And now that they've made that empty threat, if they instead exercise their recourse to fire him, they've also conveniently provided him with a rationale for a wrongful termination suit.

Any way you look at it, the company is screwed now. The best plan is to eat the expense, and admonish the manager for not following the required procedure. Anything else will end up costing more in legal fees. The worst-case scenario would be a court order to pay the contractor or have the machinery seized—a court probably wouldn't go that far, unless there was serious bad faith, and no other prospect for recovering the money.

RE: Managerial Ethics

(OP)
Well at the moment he's considering simply walking out..but i dont think he will as he has a family to care for..

RE: Managerial Ethics

....but I bet he will begin 'polishing' his resume tonight when he gets home. I would!

If this is your companies mentality, then I might begin looking too before something similar happens to you.

RE: Managerial Ethics

also, isn't "managerial ethics" an oxymoron?! LOL!  

RE: Managerial Ethics

Don't know what size your company is or revenue numbers or net income etc., but to do this over $1,100 means something else is at play.
  
Has this happened several times and managment has drawn a line?  Is this a "problem" employee they are trying to get rid of?  Office politics?  Company financial problems?

It just seems like for $1,100, good employee, first offense it would be a slap on the wrist, and a "don't do it again" admonishment.

 

RE: Managerial Ethics

Where is the guy who gave the verbal approval in all this?

RE: Managerial Ethics

I'd say your boss has nothing to worry about, unless there is an explicit policy that he was aware of that said verbal contracts are not OK. Where I work there is a very tedious training course on this and similar commitements, so I imagine if I had done this they could slap my wrist/terminate me with extreme prejudice.

Cheers

Greg Locock

SIG:Please see FAQ731-376: Eng-Tips.com Forum Policies for tips on how to make the best use of Eng-Tips.

RE: Managerial Ethics

"A quotation was submitted by a contractor to do the works and then, a few days after, they submitted a change increase in price of approximately $1,100 US. My boss received VERBAL approval on accepting this change and the job was carried out successfully. Last week, management re-examined the issue and decided that they were not going to pay the additional 1100 dollars and that my boss did not get written approval and that he had to pay this money out of his own pocket."

I find it difficult to believe that this stuff actually happens.  What kind of place does this?  Probably a place run by MBAs.

 

Regards,

SNORGY.

RE: Managerial Ethics

Hi impeller1

Who did your boss get verbal approval off and where is this person now?

desertfox

RE: Managerial Ethics

managerial ethics?  That's an oxymoron.

RE: Managerial Ethics

(OP)
The General Manager gave the guy approval..and yes, the company is a private owned company, owned by a single person so we're subjected to whatever he "feels" like doing at the point in time. Its utter rubbish..I am currently looking for another job as although the work itself is not bad, the company is not a good place to work as what i described above is an example of the sort of nonsense that takes place here

RE: Managerial Ethics

Ron, you and I were beaten to Oxymoron by Eleceng01!

Managers are supposed to be authorised to make deals but in reality they usually have to follow the rule book.

But you have to assume the guy has authority to spend $1100 on paper clips, or sandwiches and soft drinks at lunch time meetings all year long if he chooses and so why not on customer good will? Heck, they probably spend that in a week on dining out with clients and the top boss could probably spend that on a single "business lunch" at the golf club.

So yes, $1100 seems chicken feed over which to either beat up on the manager or create a fuss with the client; its a hell of small amount over which to lose a customer.

So is there some thing behind all this as ImminentCollapse suggests?

Which brings us back to oxymoron; top management are, as usual, behaving in their usual devious unscrupulous ways whichever scenario is true.

By the way, please don't say this is a family run company.



 

JMW
www.ViscoAnalyser.com

 

RE: Managerial Ethics

(OP)
Yes it is a family run company :) ..there is a board of directors but they couldnt care less and would not question the CEO anyway and well my boss and the CEO have not always seen eye to eye..but still..i think it's a harsh thing to do.

RE: Managerial Ethics

My apologies eleceng01....didn't mean to repeat something you had already said!

RE: Managerial Ethics

Impeller1,

There is no legal authority to charge employees for expenses incurred by the company, unless he signed a contract saying that was acceptable. Most employee don't sign those contracts except in specific situations (i.e, tuition reimbursement must be repaid if the employee fails the class.)

The most strict option a company has is to require an employee take time off without pay (suspend them) but they can only do that based on the discipline policy they have in place.

Of course, is this assuming the contractor is independent from the boss. If there was some backroom deals going on, then it changes the situation a bit. I still don't think it's legal to withhold employee salary just because the company felt like it.  

RE: Managerial Ethics

Ron, no apologies necessary - I am glad that others agree with my opinion!

RE: Managerial Ethics

Go for the throat, but only after carefully documenting the situation and notifying the CO by registered letter, how it really went down, why the company's solution was wrong, what he needs the company to do to make it right and a reasonable time deadline to make it happen.  He should not walkout if at all possible.  Simply continue to do his job as best he can until it is rectified one way or the other is the appropriate action IMO.  If the company does not make it right within the reasonable time specified in the letter, go for it.

**********************
"Pumping accounts for 20% of the world's energy used by electric motors and 25-50% of the total electrical energy usage in certain industrial facilities."-DOE statistic (Note: Make that 99% for pipeline companies) http://virtualpipeline.spaces.live.com/

RE: Managerial Ethics

I enjoyed my job in plant engineering, and making general purpose contracts helped take care of miscellaneous jobs. I had a number of trusted contractors who routinely did big and little jobs for us, and they charged against the open maintenance contracts. This solved the problem of figuring how much to charge. Contractors sometimes estimate/charge too much to cover contingencies. Charging against open accts is convenient for everyone.  

RE: Managerial Ethics

I totally agree with you plasgears, but it does involve a good amount of trust from both parties. I am not sure I would want to trust the person described in the OP.

RE: Managerial Ethics

ajack1,
This contractor once returned money from an overbid job, and I respected him for it by writing a maint. contract. Yes, you need to build trust. Some contractors come in high all the time, and they wonder why they don't get jobs.

RE: Managerial Ethics

I am sure that your manager was operating as an agent of the company when that decision was made.  That would place the liablilty for the bill on the company, not him.

Unless there is a written policy that limits him from verbally obligating the company to overages in excess of a certain pre-ordained amount, and in writing, and he exceeded that amount by authorizing the $1100.00 expendeture, he does have legal recourse.  The fact that the pump was critical would have no bearing if a written protocol was not followed.  Should the company become mad that the pump was not fixed in a timely manner tdue to the limit, they would have to raise the limit for him for any future occurrences.  But that should not affect this occurrence.   

Mike McCann
MMC Engineering
Motto:  KISS
Motivation:  Don't ask

RE: Managerial Ethics

Just my 5 cents:
I've worked in maintenance for 9 years so I know what these verbal contracts can lead to. I am not saying that this is the case as I don't know all the details, but in a previous company that I worked for,  we had something like "verbal" contracts with contractors always going on. This reached a situation that in fact almost all contracts were in fact signed after the work was completed and costs already incurred. Until one day the company bosses decided that it was enough and that they wouldn't pay the contracts that were not written prior to the work actually started and they informed the contractors accordingly.
For a time, we struggle a lot because the practice of verbal contract was embedded in our and contractor's maintenance culture and we had some problems. But after a few weeks of adjustment and reorganization, the number of verbal contracts reduced to virtually none.
Was this the case here?
Did the original quotation for the work was 250 US and then the additional was 1,100US?
Either way, unless the manager was warned several times about this, it seems to me highly unreasonable to make him pay for the mistake.

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