A Case of Business "Ethics"

So, friends and neighbors, let me pose for you a question. Please respond, if you desire, in the manner required by my Organic Chemistry professor, Dr. Robert Schmidgall. Years and years ago, he required that we write essays about balancing equations “in illuminating detail.”

A man has a Personal Investment Plan portfolio as part of a 401(k). The method for receiving distributions from this PIP is to fill out the required paperwork and wait 5-10 business days. One day, the man gathers the paperwork (it’s all sent to him, after all), fills it out, places it in an envelope, addresses the envelope, and sends it on its way. The materials arrive and the investment managers remove the paperwork and manage to fail to scan all of the documents into their system. The policy in the event of an incomplete distribution request (and let us assume for the sake of argument that there are 8 pieces of paper in such a request) is to notify the person requesting the distribution by phone or email immediately. Now, add this to the mix. The request is incomplete because one of the eight pieces of paper is not on file. All were sent, but one has gone missing. Thus, it is incomplete. Let us assume that the sender made a mistake and only sent seven pieces of paper. Still, it would be incomplete. So, whether the error was at the sender level or at the manager level, the file is incomplete. Thus, the policy kicks in and the sender should be contacted immediately by phone or email. Time passes……


Time passes…...

Time passes……

Two months pass. The man calls the managers’ offices and asks for an update. He is told the file is incomplete. He receives an email with the paperwork to be filled out attached. He fills it out (and, just so that we have some numbers to play with, let’s assume that the figure is $15,000). He faxes it in immediately (indeed, the same day). Time passes…..

Time passes…….

Twelve days after the call, he notes that the distribution has been made. For $11k. He calls back. The very nice person on the line takes the story and looks at the file. The phone worker at the managers’ offices then becomes very apologetic because the policy doesn’t appear to have been followed. He connects the man with his team leader. She is very nice and is even more apologetic and promises that it will never happen again. This is obvious as the distribution has cleared the account and so will never happen again. The man asks if there is something that might be done about the error to make it right. He gets the following story.

We are very sorry for the error, but there is no way we could rectify it. It really is our mistake and we made a very bad error and we are very sorry, but we can’t fix it. The markets are volatile and we couldn’t go back and figure out how we could change the error so we will try to make sure it doesn’t happen again.

Now, friends. Responses?