Virtue Ethics in Organizations


Sanjon has worked for the South Insurance Company for the past 23 years. He graduated with a top-notch accounting degree and also has his MBA. Bar none, Sanjon is considered by everyone in his organization to be a brilliant accountant. At issue is that Sanjon’s brilliance may be coupled with just a little too much “creativity” when one considers his approach to maximizing the company’s profits.

At the end of every quarter, Sanjon calls up the supervisors of each of South’s insurance branches and asks them to estimate their outstanding insurance claims. These insurance claims represent money that the company likely owes its customers—that is, claims are estimates of money owed at the end of the quarter to South’s customers who are likely to file a claim in the near future, but who have not yet done so. (The total money owed—but still outstanding—is referred to as a “claims lag,” since there is a lag between the date of an insurable event and the date that South becomes aware that a customer has filed a valid claim).

For instance, based on historical experience, at the end of each quarter, Division 1 of South Insurance estimates that 20% of all claims for that quarter are still outstanding (i.e., an insurable event has occurred, but has not yet been reported to Division 1). This is the number (20%) reported to Sanjon. Being the “brilliant” accountant that he is, and in light of his sheer eagerness to maximize profits for the quarter (and because his quarterly bonus is based on each quarter’s profits), Sanjon reduces the outstanding claims reported by all of South’s insurance divisions by 10%. In doing so, he has effectively reduced the company’s quarterly claims expenses by this same 10%—and voila!— Sanjon has also managed a creative increase in his own quarterly bonus.

Sanjon sees nothing wrong in reducing the divisions’ company claims estimates, reasoning, “Look, they’re all a bunch of estimates anyhow!” Sanjon further opines, “Besides, I have a duty to this company and to its stockholders—to maximize profits!”

Consider this situation from a virtue ethics perspective. What virtues are at stake?

Does Sanjon appear to be rationalizing his behavior as a “duty” to others?

On a scale of unethical (1) to ethical (5), where would you rate Sanjon’s practice? Why?

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