2016 H. BYRON HUBBARD PRIZE IN BUSINESS ETHICS
$1,000 ESSAY COMPETITION
ROMAIN COLLEGE OF BUSINESS
UNIVERSTIY OF SOUTHERN INDIANA
Student must complete and return this form, essay, and letters of reference to Dean Khayum (BEC 1015)
by Friday, February 12, 2016. The essay and applicant information should also be sent electronically to
mespahn@usi.edu
REQUIREMENTS:
1. Applicant must be a JUNIOR OR SENIOR in the Romain College of Business or fully admitted
to the Master of Business Administration program at the University of Southern Indiana.
2. Applicant must be in good academic standing at USI.
3. The prize is based primarily on an essay (1000 to 1500 words) written in consideration
of the attached case study.
a) The essay should offer a recommendation to the problem described in the scenario.
b) Be supported with reasoning that clearly identifies the problem.
c) Identify the groups that would be impacted by your decision.
d) Discuss the potential consequences for alternative courses of action.
4. Two letters of reference, at least one from a business relationship, attesting as specifically
as possible to the applicant’s ethical concern and awareness.
___________________________________________________________________________
APPLICANT INFORMATION
Last Name___________________First___________________________MI______________
Student ID #_________________________________________________________________
Permanent Address___________________________________________________________
City______________________State__________________Zip Code_____________________
Email Address_______________________________________________________________
Major in RCOB_________________Cell #__________________________________________
Romain College of Business
2016 H. Byron Hubbard Prize in Business Ethics
COLIN WATSON CASE
“Shut that stupid TV off and get out of my hair,” Colin yelled, completely losing his temper.
“I’m sick and tired of the Bananas show, and I’ve told you a hundred times to keep the sound
down. Go to your room….I’ll deal with you later.”
Tears filling her eyes, the eight-year old walked over to the television, clicked it off, turned and
bolted out of the room without saying a word.
“Finally, some peace and quiet.” Colin’s voice lowered and he looked over at his wife. “It’s not
my fault, you know. I’ve told her to keep the volume down, particularly during that silly
“Bananas in Pajamas” song. I just have to get this report finished by tonight.”
“I know, dear, but you really have been angry with Krissy since that new computer project was
started. Late night phone calls, early morning trips into the office, working on Saturdays and
Sundays…is everything OK?” His wife looked at him anxiously.
“Everything’s just fine, Betty,” Colin replied, but the emphasis on just told both of them that he
was lying. Tomorrow was the big day when he, as Divisional Controller, was required to present
the previous quarter results to corporate staff. The Corporate Controller was coming, along
with the Senior Vice-President, Automotive Group. This could make or break his career, he
thought.
“Well, everything would have been fine, except for that silly manufacturing cell that we put in
two quarters ago. You remember the one, Jeff Culver was responsible, and it’s just not
working out.” Colin’s voice was tinged with bitterness.
“But you were so excited about that one, weren’t you? Isn’t that the one that you thought
would get you noticed by corporate? What went wrong?”
“Well, Jeff and the boys in engineering decided that to maximize our flexibility, they would
need to have a new ABB manufacturing cell. The word was out that we had to cut our staff by
20% to meet staffing constraints, and we really wanted to get the new contract that DaimlerChrysler was offering. We knew that we could meet the quality and delivery requirements, and
we would scoop the other divisions. It would be our division maxing our ROI this time, not
Springs, and we’d all be in a position for hefty raises. We had to have the flexible cell to be able
to do it.”
“Well, that’s great, but if it didn’t work out, doesn’t Jeff take the fall?” Betty recalled meeting
Jeff at the Christmas party. He was young, aggressive, and was rumored to be a fast tracker to
the divisional manager’s position. She really didn’t like him.
“Yes, there’s no question that he’s a goner,” Colin said glumly, “but I could go with him.”
“Why would they pick on you?” Betty asked. “You simply report the facts…Jeff made the
decision to purchase the machine.”
“Well, it’s not quite that simple,” Colin responded. “They’ve got me too. See, back about a
year ago, Jeff brought the proposal over to me. They had found a machine cell that Magna had
ordered and then declined to accept delivery on. ABB was anxious to sell the machine as long
as we could come up with the money quickly. The cell would normally have cost about
$450,000 and they were prepared to let us have it for $250,000, without technical support. We
had to make a deal quickly, so Jeff discussed it with me. If we followed normal capital
budgeting channels, it would have taken at least 9 months to get the machine approved and we
would have to pay the full price. So Jeff proposed that we do it out of our maintenance and
supplies budget, instead of the capital budget. ABB was willing to take 5 installments of
$50,000 each, so it was pretty easy to hide it in on-going operations as repairs, maintenance,
and upgrades to our existing equipment.”
“Why do all that?” Betty looked bewildered.
“Our normal capital budgeting process requires us to get projects greater than $50,000
approved at corporate. They also would have required us to get the technical support that
would have pushed the price tag up to at least $400,000. We could never have snuck that one
through!”
“What did Ross Johnson think?” Betty asked. “He’s always been good with advice. I think he
wants you to take his job when he leaves.”
“Betty, you don’t go to the corporate controller with something like this, for Pete’s sake. I think
he would have understood why I was doing it, but he couldn’t tell me to violate a policy that he
helped put in place.”
“You were just audited last month. Didn’t they ask any questions?”
That question brought a wry smile to Colin’s face. “No, they were easy to con. We were most
anxious about internal audit, but they rarely walk the shop floor. They’re much more
interested in our expense accounts. I don’t think that they could have comprehended the size
of our ‘project’.”
“So what went wrong? What’s the problem?”
“It turns out that Jeff didn’t understand how difficult the installation of this cell would be
without technical support. He can’t call corporate, because they don’t know about it. The cell
is still sitting idle and we’ve been hiring consultants to get this white elephant underway. I’ve
been hiding the costs, charging them to our other production lines. As a result, we’ve run up
big negative variances. I’m on the hook for that…and that jerk Jeff wants to replace the whole
software interface with our other lines. He says that will finally take care of the problem, but
I’m not sure I trust him.”
Betty hesitated and spoke slowly. “How about discussing it with Ross and coming clean on the
problem? He’ll give you good advice.”
“Are you kidding? He’s likely to fire me on the spot. He was constantly warning me to stay
aloof from the division management but, since they determine my bonus based upon their
performance, I wanted to help in any way I could. Jeff keeps telling me that the former
divisional controller walked close to the edge and managed to get that plum job down in North
Carolina. I guess that I just wanted the best for you and Krissy.”
“Well, Colin, what are you going to do?”
“I don’t know. If I tell Ross, he’ll probably fire me. On the other hand, it seems that we’re
going further and further into the deep stuff. I don’t know how long I can keep this hidden.”
“Well, I’m not sure that Krissy and I can handle it either, Colin. How about going up and tucking
her in and telling her you’re sorry.”
If you were Colin, what would you do? Write an essay (1000 to 1500 words) explaining what
you would do if you were Colin Watson. The Essay should contain the following:
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Clear identification of the problem
Recommendation to the problem described
Reasoning supporting the recommendation
Identify groups that would be impacted by your decision
Potential consequences for alternative courses of action