Ethical Dilemma #1
(shared with me by a fellow business instructor):
In the mid 1960’s Fred Smith attended Yale University. For one of his classes, he was supposed to write a paper on a new business. He wrote a paper about a business that would overnight letters and packages through a hub located in the center of the U.S. His teacher gave him a grade of C on the paper because it really was not feasible. In 1973, Fred used a $4 million inheritance to start Federal Express. Adjusted for inflation, that is about $100 million in today’s dollars! He was a major shareholder and Chief Executive Officer of this publically traded company. Service was started to about 25 cities. There was a great cost of trucks and flights and advertising. After about a year, the company was just about broke. Truck drivers who drove the company trucks found that gas stations would not honor the company gas credit account. Many employees paid for the gas out of their own money and some even pawned their watches to get enough money to fuel their trucks. Friday, PAYDAY, came. Fred Smith had the company write employees their paychecks. Let’s say it was $100,000 (I don’t remember the exact amount). Fred only had $50,000 cash left in the company checking account. Rather than moving this last $50,000 from the checking account to the payroll account, he flew off to Las Vegas and gambled all weekend. He turned the $50,000 into $200,000. Flew back on Monday, put the money into the payroll account and all the paychecks were honored. What do you think? Was this ethical? Was this legal? Would you have done it?