Case Analysis: Ethical DilemmaMASICAP II MSME Development Foundation, Inc.

Point of View

Businesses nowadays are often faced with various ethical dilemmas. Some have triumphantly succeeded while others failed. Oftentimes, the barriers in adopting a sound ethical behavior are caused by the policies and regulations made by the business itself. As cited by authors Max Bazerman and Ann Tenbrunsel in their article “Ethical Breakdowns”, organizations often failed to conduct businesses in an ethical manner due to the following barriers: Ill-Concieved Goals, Motivated Blindness, Indirect Blindness, The Slippery Slope and The Overvaluing Outcomes... The authors explored the question of why good people allow bad things to happen in the business setting. They begin their article by noting that they believe “the vast majority of managers mean to run ethical organizations”  and while there are some “out and out crooks,” the majority of ethical lapses in companies occur because of either the blinders of leadership or that business leadership may “unknowingly encourage” unethical behavior in their companies. 

Con’t...

Taking things on hindsight, placing one’s personal vested interest on top of what is the right thing to do has been the main culprit for Ethical Breakdowns. The said culprit has been directly or indirectly pointed out when the authors explained the five (5) barriers to ethical organizations. In an ethical organization, one of the guiding principles why it existed and/or will continue to exist is for its noble purpose of being in the service for the common good. It has never been for the benefit of certain individual, key personnel, or groups. Once there is that shift of paradigm to personal interest, instead of sticking to the common good principle, it is expected that the organization would be vulnerable to numerous ethical breakdowns.

Con’t...

Moreover, it is very important for any organization to adhere to common good principle, in order to maintain the high standard of ethical behavior and core values. Upon facing an ethical issue, as it draws its decision, an ethical organization considers the impact of that decision to the welfare of all the stakeholders involved. There is that entirety approach wherein all individuals are regarded as part of a larger community. As such, we share certain common conditions and institutions upon which our welfare depends. For society to thrive, we need to safeguard the sustainability of our community for the good of all, including our weakest and most vulnerable members. Later on, we come to realization that our individual pursuit for happiness is made possible by the sustained welfare of our community life. It invites us to ask what kind of society we are and want to become, and what actions we need to take to achieve that end; a society that strongly holds and promotes ethics... 

Case Background

This is an ethical dilemma involving a Non-Government Organization (NGO) based in Davao City, MASICAP II MSME Development Foundation, Inc. The MASICAP II Program assists micro, small and medium enterprises (MSMEs) in accessing financial assistance from different funding institutions through the preparation of Project Feasibility Studies and other pertinent loan documents. Specifically, MASICAP provides these services to MSMEs free of charge. The program recruits graduating college students from the various colleges and universities within the Mindanao region to work as Project Development Analysts. The recruited students will still be considered as officially enrolled in their respective universities or colleges. The foundation will be the one to give grades for the students’ subjects in their graduating year; ratings that will be based on their work performance while they are in the foundation. As for the basis of work performance evaluation, the foundation had set quotas that are based on the total number of assisted projects/entrepreneurs at the end of every quarter. These numbers were increasing for every quarter.

In its third year of operations (2005), most of the Project Development Analysts have unintentionally deviated the noble cause of the foundation in order to hit the set targets at the end of every quarter. One usual incident was when Project Development Analysts have already identified entrepreneurs to assist and quarterly meeting was fast approaching. While they were in the middle of completing the Project Feasibility Studies, there were several instances wherein the financial ratios of the project did not work on the favor of the entrepreneurs (if ever to be evaluated right then and there by the funding institution representative). As a remedy, teams would more likely to adjust the figures and reflect the ratios that are acceptable upon evaluation. The common rationale for committing this unethical practice were the following: These were also being done by the rest of the groups; If we would not do this, we would not reach our quota...what would happen to our grades back in the university?; We are only helping our client to access fundings... It is a noble cause... Thus, in the end, the core values of the foundation (integrity, work commitment, honesty and concern for others) have been tainted.

Statement of the Problem

How can MASICAP II MSME Development Foundation, Inc. ensure that all assisted projects/business plans/proposals shall be carried by its Project Development Analysts in accordance to set guidelines outlined by the foundation?

Actions Taken: With the rampant manipulation of Project Proposals/Business Plans among the Project Development Analysts, the Program Coordinator (PC) (in coordination with the Board of Trustees) took the following steps: •Reorientation among the Project Development Analysts regarding the noble cause of the foundation; its purpose, core values, past achievements, guiding principles and the like. This was conducted in the 2nd Quarterly Meeting.

•Workshop seminar on how to conduct Pre-Feasibility Studies for prospect proponents/clients before the full-blown proposals will be made. This will give the team an overview on whether such project is viable or not, before giving any commitment for assistance to the said client. Thus, lessening the effort that will be wasted from both parties (client and the PDAs) if in case full-blown proposals were made. This was conducted in the 2nd Quarterly Meeting by one of the Board of Trustees of the foundation. 

 •Revision on the basis on how the Project Development Analysts shall be graded on their work performances... Instead of the previous clear-cut number of projects assisted in a given quarter, the foundation started giving due credits to the efforts exerted by the PDAs in unsuccessfully filed projects for as long as the group could present justifiable reasons why such projects are not filed. The revised basis of evaluation was implemented starting 3rd Quarterly Meeting onwards.

•Scheduled on-site visits of the Assistant PC and PC among the groups in the area. Aside from checking their living conditions and relationships among team members, the Assistant PC and PC could also help out the groups in evaluating the current projects the latter are screening; allowing the groups to present credible and honest business proposals/studies in quarterly meetings.

Ethical Check

The corrective actions taken by the foundation were all ethical. None of which resulted to ethical cynicism; accepting that the previous practices were acceptable and the management could not do anything about to change them. The management changed/polished its operating guidelines in order to answer to the concerns/dilemmas faced by their colleagues, without jeopardizing the noble cause/purpose of existence of the foundaton.

Thanks Much!