Question

BTN 22-3 Super Security Co. offers a range of security services for athletes and entertainers. Each type of service is considered within a separate department. Marc Pincus, the overall manager, is compensated partly on the basis of departmental performance by staying within the quarterly cost budget. He often revises operations to make sure departments stay within budget. Says Pincus, “I will not go over budget even if it means slightly compromising the level and quality of service. These are minor compromises that don’t significantly affect my clients, at least in the short term.”

Required

1. Is there an ethical concern in this situation? If so, which parties are affected? Explain.

2. Can Pincus take action to eliminate or reduce any ethical concerns? Explain.

3. What is Super Security’s ethical responsibility in offering professional services?

Short answer

1. Yes, there is an ethical concern in the above situation that will affect the client and the overall company.
2. Yes, Pincus must take some actions to reduce the ethical concerns.
3. The company has the responsibility to maintain a higher quality of service.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of Responsibility Accounting

The accounting method, under which the revenue and expenses of each responsibility center are reported separately for performance measurement, is known as responsibility accounting. It is done to improve the operations of the business entity.

Ethical concern

Yes, there exists ethical concern because the manager is compromising the quality of service to remain under budget and get higher compensation. The parties that will get affected are the client and the company because it might affect the sales of the business entity by reducing the number of clients, and will affect the comfort and security level of the client. Due to the reduction in quality level, the service client might face insecurities and some uncertainties.

Action to eliminate the ethical concern

The following activities can eliminate the ethical concerns:

1. Hiring security individuals at a lower cost.
2. Charging higher prices and changing the basis for compensation from cost to profit.
3. Increasing the budgeted cost of the business entity.

Ethical responsibility

Super security provides security services to its client, therefore, have the following ethical responsibilities:

1. Protecting clients in social gatherings from crowds and unknown people.
2. Evaluating the security of the accommodation of the client.
3. Evaluating the security of the place where the client is going to perform or attend any program.
4. Reacting in an emergency situation.
5. Helping the client to avoid risk.