The minority enterprise Journal of the International Academy for Case Studies CASE DESCRIPTION The primary subject matter of this case concerns an

The minority enterprise

Journal of the International Academy for Case Studies

CASE DESCRIPTION

The primary subject matter of this case concerns an ethical dilemma faced by an executive assistant dealing with a fraudulent report created by her boss, the CEO of a not-for-profit organization, as well as the fiduciary responsibilities of the board of directors in overseeing the action of the CEO. Secondary issues examined include: emotional intelligence, leadership styles, and politics associated with power positions within a not-for-profit organization. The case has a difficulty level of three, appropriate for junior level classes. The case is designed to be taught in a one hour and fifteen minute class period and is expected to require 3 hours of outside preparation by students.

CASE SYNOPSIS

As the executive assistant to the CEO, Jane Moore is in a unique position to see the changing leadership of the Minority Enterprise from the perspective of many constituents in the organization: clients, employees, and even the board of directors. Because of her association with every CEO of the company from its inception, Moore provides extraordinary insight into the culture of the company through her personal history and viewpoint. A year ago, the Enterprise made a bold move in hiring Melissa Adams, a new and aggressive young marketing manager, to take over the reins as CEO. This new direction was the first step in transforming this not-for-profit organization business model to one that is more sustainable with increased efficiency, higher productivity and less reliance on government support. The case deals with the organization's struggle to change the corporate culture and find a suitable leader with the emotional intelligence competencies to provide flexible leadership as the organization matures. Issues of power, politics and ethics are addressed as Adams attempts to provide leadership for the organization. When some of her tactics were unsuccessful, she got in over her head and was unable to fulfill her responsibilities. As the pressure mounted, she made unethical decisions. In addition to Adams' ethical behavior, the case also addresses the fiduciary responsibility of the board of directors in overseeing the actions of the CEO. The board's pressure to create change in the organization accompanied by its ' lack of supervision of the new CEO created a volatile environment increasing the likelihood that unethical behavior would surface as a way to cope with the pressure. Finding a fraudulent report creates a dilemma for Moore that may jeopardize the reputation of the Enterprise as well as the jobs of both her boss and herself.

CASE BODY

It was the end of the first year of leadership of the new CEO of the Minority Enterprise, Melissa Adams. The Minority Enterprise is a not-for-profit organization that provides technical support and educational assistance to small and minority business owners in the Northwest region of the country. Its services include: financial, accounting, marketing and management assistance for the purpose of starting, maintaining and growing entrepreneurial enterprises. Jane Moore, the executive assistant to Adams was having an exceptionally challenging day. Adams was taking no phone calls and it was Moore's job to take messages and make excuses. This practice had become increasingly the routine. Just today she had taken two calls from Fred Tyler, a client and the owner of Raytech Dynamics. Tyler was an innovator with a background in engineering. He was an experienced business leader well connected and highly respected by the community. This year he had made a life changing decision to move from a corporation job to open his own firm. Although he had the engineering experience, he needed consulting help from the Enterprise for the business and financial side of his new venture. He met with one of the highly qualified consultants at the Enterprise and put together an action plan for developing his business. However, after his initial meeting, he was unable to get any meaningful assistance from consulting staff which seemed to be stretched beyond their capacity. He decided to take his complaints directly to the top. He made several attempts to reach Adams without success. His call this morning revealed his high level of frustration as he demanded to talk with Adams. Moore made her normal excuses that Adams was in an important meeting with donors and could not be disturbed. He demanded to know when she could be reached and indicated that he was through dealing with her stalling tactics. If she did not return his call today, he would take matters into his own hands. Moore relayed the message to Adams who as normal added it to her stack of unanswered client calls. However, later in the afternoon, Tyler called again asking for Adams. Unable to reach her, he left a message with Moore that he had called his friend Jim Jones, one of the members of the board of directors, to complain about the service and to get some resolution. In the past year, Moore had heard a number of threats from clients several of which had made calls to the board of directors. But this time Tyler seem determined to get resolution and he had the connections to get action from the board. Jim Jones was a neighbor and good friend of Tyler. Moore knew from her past experience with Jones that of all the board members, he was a man of action. This issue would be on the agenda at the next board meeting.

It was later that same afternoon when Moore decided to complete some filing before she left for the day. As Moore was filing the "Monthly Client Services Report" she started looking at some of the numbers. These were reports that she had been responsible for creating under the previous CEO, Anthony James. The reports brought back memories. Moore's background which consisted of a bachelor's degree in accounting had been very helpful to her in creating these reports in the early day of the Enterprise. She fondly remembered working with James on the format and how meticulously they worked together to make sure the numbers accurately reflected the work of the consultants. Moore began to realize how hurt she had been when Adams pulled the reports from her purview. However, things change. Adams brought with her a new CFO, John Warner, from the corporate sector who was assigned the responsible of putting together the reports. Moore was no longer involved in the research or compilation of the figures. Although the report was always an item on the boards' agenda, it was moved to the bottom of the list with items the board seldom had time to look at in detail. It seemed Adams saw the reports as a nuisance that got in the way of more important business. The board's agenda in the past year focused more on the flashier marketing slide presentations than the numbers.

As Moore's thoughts came back to her filing and the report, she glanced through the most recent report and noticed some discrepancies in the numbers. How could there be more clients served than there were minority businesses in the region. That's impossible. She began to look for statistics to back up the numbers, but no documentation was provided. In looking over the reports for the past few months, the number of minority businesses stayed the same. In fact, the number of minority businesses had not changed since the last report that she and James had put together a year ago. However, the number of clients served each month had grown significantly. How could that be? The staff had not grown. In fact, several consultants left and had not yet been replaced. The numbers just didn't add up. She checked to see who had signed off on the report. The sole signature was Melissa Adams, the company CEO.

All types of thoughts began to run through Moore's head. She was beginning to suspect that there were other reasons for removing her from participating in the development of statistical and financial reports. Her mind started to race with questions. How had the service level increased so dramatically over the last 12 months? Why had Jack Warner, the CFO, not signed off on the report? Was Adams creating the reports herself? If the consultants were seeing so many business owners, why was she getting so many complaints about the lack of services? Was she misreading some of the numbers? On the other hand, she knew Adams was under a lot of pressure and thing had not gone as smoothly as either the board or Adam had predicted in the beginning. How could she confirm her suspicions and if they were true, what should she do next?

As Moore's focus came back to the room, she noticed that Adams had left for the day. Glad that she did not have to face Adams this afternoon, she began to think about her options. She found herself questioning everything and began to realize the seriousness of the situation. What should be her next move? Should she tell someone about her suspicions concerning the fraudulent reports? If she did tell someone who would it be and what would be the consequence to the reputation of the Enterprise and to her job? Jim Jones was a businessman that Moore respected. They had worked together since the inception of the Enterprise 15 years ago. Was he a person she could trust? Should she go directly to him or should she send him an anonymous letter? Maybe she could go to Anthony James, her mentor and friend for advice. How had the job she loved so much gotten so far off track? How could the events of one day have change everything associated with her life?

Profile of the Assistant

The executive assistant, Jane Moore a multi-talented young accounting professional is a first generation college graduate from a small town; she is the eldest of five siblings in a close-knit, blue-collar family. As the first person to graduate with a college degree, her family stressed honesty and integrity; morals that she stood by her entire life. As a role model for her younger siblings, she felt it was important to "walk the talk." Her goal in life was to make her family, church and community proud.

Upon graduation from college where she excelled, she was recruited by a top notch accounting firm but left a lucrative position within a year because she felt like a "fish out of water" in terms of the company culture. The "dog-eat-dog," "cover your ass" mentality was overwhelming; she was not that competitive and only wanted to do a good job. Questioning the value of her career choice, she wondered whether she should stay on the same career path. A school counselor met with her and through self-reflection and candid conversation she found a viable path for using her accounting degree- the non-profit sector.

Working for a small non-profit seemed to make sense and fit her values. When the opportunity presented itself, she used marketing and branding strategies (online and face-to-face) to highlight her qualifications as a suitable candidate. Once hired by the Minority Enterprise she began the next phase of her career strategy, to gain experience in order to advance into a leadership position.

James, the previous CEO, respected and relied heavily on her accounting expertise to provide monthly reports to the board of directors on client services and accountability reports for several of the grants from which the Enterprise still received funding. That all changed when Melissa Adams took the helm. Never in her wildest dreams could Jane have predicted the turn of events that rattled the very foundation of everything she ever believed.

Throughout her career, Moore respected those in positions of authority, tended to be loyal and not to "speak unless spoken to." But now, although never asked to look the other way, the culture of the organization was one of quiet complacency and she was a key player. In fact, to make matters worse the new CEO promised a huge promotion if funded the next year.

Moore's only connection to the past was an occasionally lunch with James. Respecting her opinion he often asked about her take on the new CEO. Her answer was always neutral and hopeful with responses such as, "she is still new, I think she is on the right track," "she appears to have the talent to get the job done." Moore never wanted a reputation as an infamous whistle blower and was determined to allow someone else to make that call. As the organization continued to spiral downward, she began to experience tremendous anxiety and guilt; however, she insisted it was not her place to point out the "character flaws" of her boss. Moore, a soft spoken person with a very gentle demeanor could not imagine getting tied up in office politics, particularly at this level. Moore was of the mind that it would be best to just, "gaze the other way" whenever possible and "always see the good."

Background with the Enterprise

As she drove home, Moore found herself thinking about 15 years ago when she started as a rooky assistant to the first CEO of the Minority Enterprise. From her perspective up until a year ago, the Minority Enterprise was operated by a group of highly dedicated CEO's mainly from the not-for-profit sector and a highly engaged board of directors dedicated to maintaining high standards for quality counseling for minority businesses. Started with government funding which has been cut little by little over the years, recently the Enterprise is sustained through corporate donations. Back during the early days Moore learned a lot about entrepreneurship and economic development in the region. However, she learned the most about leadership and business ethics from Anthony James, the previous CEO with whom she had worked for the past 8 years.

What made the Enterprise special to Moore was that they serves the most vulnerable small and minority businesses in the region, which were not currently in a position to pay for the assistance provided by the center. However, as the years passed, she witnessed many of the Enterprise's clients grow and provide employment for the region as well as giving back to the community through donations to the center. For the Enterprise, seeing these successes provided a sense of pride and accomplishment for everyone. Moore felt like an active contributing member of the Enterprise team and considered many of the employees, clients, and even her bosses to be friends.

Until the last year, the organizational structure of the Enterprise was relatively informal with a rather flat participative approach in which counselors often went directly to the president and CEO for advice or funding approvals on micro business loans. The counselors although not paid top dollar, pride themselves in the manner in which they respond to the needs of business owners in the community. The philosophy of the Enterprise reflected a belief that change and innovation should come from those closest to the problem; creating a bottom up management perspective. The Enterprise's culture represented an environment where meeting client needs and improving sustainable economic business development are valuable assets. Internal and external stakeholders were enriched by their contributions, and the entire community views the organization as one of its local "treasures."

The success rate among served clients was good; however, the percentage of small and minority businesses served in the region was relatively small. With a tight budget based on some government support, but mostly relying on funding derived from corporations, the Enterprise was constantly seeking funds to keep it doors open and to provide high quality services to its clients. Despite the tight budgets, staff morale remained high, the turnover rate among employees was extremely low and the Enterprise was considered a leader in helping minority business expand marketing opportunities. However, on the financial side, most years the Enterprise operated with a budget deficit due to their insistence upon providing high quality counseling and innovative business initiatives. The low staff/client ratio was very costly, but the success rate with local minority businesses was outstanding.

Before his retirement last year, the past CEO, Anthony James was well known in the community and highly respected. He had an academic background with a Ph.D. in economics. During his tenure as CEO, he served as a role model for other counselors and personally trained many of the current employees. You would often find him working directly with clients. His personal style and focus set the current policies, procedures and direction for the Minority Enterprise. For Moore, he was the ideal boss. He understood client needs and provided an internal atmosphere that fostered creativity and loyalty in employees. She loved her job and enjoyed coming to work every day.

New Leadership

As the Enterprise evolved over the years the character of business changed and matured. This required a new perspective focused more on growing the business client base and funding. Therefore, before he left the Enterprise, James asked the board of directors to investigate the possibility of recruiting a new CEO with corporate business experience and credentials in fund raising and marketing. An outside person from the for-profit sector could provide expertise in moving the Enterprise to more efficient operations through strategies that include: increasing the client/staff ratios, decreasing costs, restructuring financially and redefining the vision, mission and goals. A new leader would have the advantage of entering the enterprise with a fresh eye and more objectivity, and could spot problems that may not be visible to company insiders, including current board members and stakeholders. Moore and James talked about his leaving and how important choosing the right successor was to the Enterprise. Moore knew her role would change. She was both anxious and excited about having a new boss and a new direction for the Enterprise.

The board also knew that their choice of a new CEO would have a major impact on the future of the Enterprise. One of the board members read an article on Emotional Intelligence (EI) by David Goleman (2000) titled, "Leadership That Gets Results." The research indicated a positive relationship exists between EI and successful leadership results. The article went on to define EI competencies to include self-awareness, self-management, social-awareness and social skills. The research indicated that different EI competencies would be needed over time and successful leaders should be able use their competencies and related leadership styles as business conditions change. For example, in a turnaround situation a coercive style may be appropriate whereas a business floundering for direction may need an authoritative style. If morale building is important, an affiliative style may surface; on the other hand, for building innovative ideas a more democratic style may be a better option. Self-motivated employees may benefit most from a pace-setting style where a high performance standard is set or a coaching style that fosters personal development. The board could see that many of these situations could occur as a new CEO transitions into the Minority Enterprise from its origins as a full service hands-on government supported organization to one that focused more on fundraising from corporate donors, increasing its staff/client ratio and other more efficient self supporting activities through the use of technology and other creative options. As the focus of the organization changed it would be important to keep staff motivated and involved in the process. The new CEO would need to be an external fundraiser one day and an internal cheerleader building staff morale the next. This would require a leader with strengths in many of the EI competencies they had identified and the ability to be adaptable to each situation from day to day.

Based on James' advice to bring in someone with more corporate experience and the board's basic although somewhat limited knowledge on leadership style, they interviewed and hired Melissa Adams to head the enterprise. Adams was the vice president of marketing at a major Fortune 500 company and had major responsibility in corporate development in her previous job. Her resume was impressive and her assertive personality was exactly what the board felt was needed at this stage of the Enterprise's development. The perception was that Adams would provide a strong authoritative leadership style. As the new CEO she would need to chart the direction for the Enterprise and mobilize the employees and donors. In the interview she articulated a clear vision that was consistent with the board. Overall, she projected an aura of self-confidence and enthusiasm about the Enterprise and its future direction. Everyone seemed confident that she could provide leadership to the Enterprise that would both increase funding and offer first class client services. As the Enterprise began to meet its initial goals, she could transition to a more democratic or coaching style as deemed appropriate based on various needs and demands of individuals within the company. As part of the interviewing process Moore met with Adams. Although Adams came across as having a more aggressive personality than James, she seemed confident and outgoing. Moore thought she would be a good representative for the Enterprise with the public and donors.

At the time Adams took over as president and CEO, the organization had 10 employees and 6 board members. Although, the organization openly claimed many successes in assisting struggling minority businesses and had an outstanding reputation in the business community, the board identified the most pressing issue was to increase donations from wealthy supporters. Adams directly addressed the funding issues in her initial talks with the board and knew corporate development would be a major part of her new role in the Enterprise. Coming from the corporate sector, Adams felt that changes needed to be made in how the Enterprise approached fundraising. In her evaluation of the current situation, the Minority Enterprise leadership had not embraced the concepts that were important in networking and fostering major corporate contributions. She suggested significant upgrades to the facilities including her office and conference facilities. In addition, she would need a budget for entertaining corporate executives. She insisted that it was necessary to wine and dine corporate executives to get their attention focused on the Minority Enterprise. To generate significant sums of revenue would require spending time and money influencing corporate and wealthy individual donors. Because of her focus on the importance of image, to some she seemed arrogant and extravagant, but her track record with corporate development as part of the marketing team in her previous position was impressive. Her personality certainly captivated the heart of The Minority Enterprise clientele and she seemed to have a good rapport with a majority of the members of the board of directors. Because of her success with past corporate donors, the board trusted Adams to implement these new initiatives without much supervision.

During this first year under Adams leadership the Enterprise underwent significant change. Adams implemented a number of policies that changed the direction of the organization. She brought in several management people from the for profit sector. Their more aggressive manner tended to create internal competition with the current employees. Adams felt that competition was healthy and a competitive environment would improve productivity and foster the more capitalistic structure that she was used to in her previous for-profit organization. To Moore, Adams' managerial style seemed to be more formal and hierarchical, which was a significant change from the way the Enterprise had been operating. But as with any new CEO, change was expected. Moore knew the board felt that change was good and that although a few current employees may leave, after the initial shake up the enterprise would be much better off. However, as Adam's leadership style continued to evolve, Moore became more and more uncomfortable. There seemed to be more conflict, stress, absenteeism and turnover which tended to reduce the flow of information across the organization. Images of success seemed to be more important than actually helping minority businesses that were struggling. Moore noticed that the chatter of her colleagues around the hallways had disappeared and people tended to stay in their own areas and venture out only to grapple for resources or budgets. The new people brought in by Adams did not seem to mesh well with the current employees. One of Adams' recruits from her previous company was John Warner as the new chief financial officer (CFO). His style was very structured to the point of being somewhat aloof. John pretty much kept to himself and followed Adams' directives. His quiet no nonsense demeanor did not seem like a good fit with the rather open unstructured style of the Enterprise. From time to time Moore heard disagreements between Adams and Warner and could sense tension between the two executives, but they always seemed to work things out. She recalled one argument over $300 worth of tickets to football games which Adams insisted were essential to get corporate donations. Another conflict stemmed from meals at expensive restaurants and travel expenses incurred by her family members who were "helping" with transportation of executive she was courting as donors. Moore had a gut feeling that the disagreements between the CEO and CFO were not healthy for the company. Although John seemed to be well qualified to handle the oversight and governance of the company's finances, he always gave in to Adams' demands.

Moore's relationship with Adams was quite different than with James, her previous boss. She felt Adams focused too much on the external donors at the expense of the internal functioning of the organization. Adams spent a substantial amount of time out of the office under the auspices of visiting donors. However, Adams did not always let Moore know when she would be out of the office or who she was visiting. There were parts of her schedule that were just blacked out. At times no one knew whether she has in town or out of town. To Moore, who was used to having open access to her boss's calendar and a more cordial relationship, this veil of secrecy created major issues. When clients called demanding to talk to Adams, Moore was put in a very precarious position. Should she lie or make up excuses? Neither was very helpful for the client. When Adams did take calls her responses were often vague, "It depends on a number of factors, I need to look into that" or "I've been out of the office this entire week, I'm not sure what has happened in that matter." Moore had never heard Adams set up a consulting appointment with a client or give a response that solved the client's issue. These types of issues seldom occurred under the previous leadership and Moore found she was ill-equipped to deal with problems without adequate information. Other procedural changes were also upsetting to Moore. Interim donor reports that Moore had created under previous CEOs were provided directly to the board by Adams. The reports indicated major corporate support for donations that would materialize into funding within the next few months or may take a little longer as funding projects often do. Corporate funding, as Adams often said, needed to be courted and would require some time to actually be seen on the financial statement.

Over time, the bickering between management and consultants continued to grow and clients were adding to the tension with complaints about the level of response and lack of services. Moore, who had loved her job under James, now began to complain to her friends about her work situation. Her co-worker Jill had already moved to another not-for-profit agency and seemed much happier. Moore seemed to have more days filled with client issues and fewer with the satisfaction she felt in helping entrepreneurs succeed. Too often at the end of the day it seemed like she spend the entire day putting out fires for issues that did not exist a year ago under James. And now, if Moore was right about the Client Services Report being fraudulent, the board was receiving falsified numbers. Moore was not sure why, but this incident seemed to have taken her to the limit of her endurance. How had the Minority Enterprise with such good intention for the community gotten so far off course. She wondered how much the current situation was affecting the reputation of the Enterprise in the community. She was also concerned about her own future.

By the time Moore reached home she had formed only one conclusion; her first decision needed to focus on what to do about the fraudulent report. But the answer wasn't that simple. Every option she considered had consequences that may affect her career for the rest of her life. Adams was aggressive and would fight forcefully any accusations against her. The board of directors thus far exhibited a rather laissez-faire attitude and therefore seemed either unable or unwilling to provide the necessary supervision. If she brought the report to their attention would they have the courage needed to deal with the situation. If she decided not to tell anyone could she live with herself and function in her role as an executive assistant daily. She even though of going to Anthony James for advice, but worried that he would overreact in this dedication to the Enterprise and get her into more trouble than if she calmly figured out an option. At this point, sending an anonymous letter sounded appealing based on her other options, but what if someone traced the letter back to her. And to whom would she address the letter? Even if the letter were successful in getting Adams fired, the Enterprise would be in a state of flux and recovery? Moore was sure there must be other options available she just had not thought of yet. However, she knew the report was not the end of her worries. Eventually she would have to answer some very tough questions about the type of environment in which she wanted to work. Should she stay or leave the Enterprise?

Provide a definition of emotional intelligence and how it relates to the case study:

 for example,

what characteristics of emotional intelligence are present in the various players in the case study, go through each person mentioned in the case study at the Minority Enterprise and create an emotional intelligence "profile" for each person;

Consider the role of the Attorney General's office in monitoring and regulating not-for-profit companies;

Consider possible alternatives available: writing a letter to the Board of Directors, writing an anonymous letter to either the Board of Directors or to the CEO or CFO of the company, or simply quitting and leaving the Minority Enterprise in a state of confusion and disarray;

and

Client outreach: how to determine if clients can still be effectively served by the Minority Enterprise-financial as well as workload considerations.