In a recent Wall Street Journal article (July 20, 2014), it was revealed that a US attorney in California is investigating allegations that workers at Progress Rail, a subsidiary of Caterpillar, cheated railroad companies by engaging in fraudulent repairs. The alleged purpose of such unnecessary “green repairs” was to boost revenue that Progress Rail charged the railroads. [Boosting repair revenue charged to railroad companies has the impact of increasing the operating costs of the railroads which, in turn, has an upward pressure on prices that the railroads charge companies that depend on them to transport goods across the country. This can mean higher prices charged to consumers.]
Progress Rail contracts with railroad companies to inspect railroad cars that are parked at the Los Angeles terminal while the cars are waiting to be loaded with containers arriving on ships from foreign ports. The Los Angeles terminal is just one of several places around the country where rail cars are inspected. Railroad companies would conduct their own repairs except that outsourcing the work to a contract company is less expensive.
When rail cars come into port and wait to be loaded, the “car men,” the workers who are responsible for finding cars that need repairs, scurry about the rail yard as quickly as they can. Their main focus: rail car wheels, and brake systems. In order to manage their risks, railroad companies must have a high degree of reliability and safety for the long journeys.
One person who is familiar with rail car inspection and repair work stated that he is sure that managers at Progress Rail didn’t know anything about the alleged cheating. Workers who spoke with WSJ reporters stated that they were not explicitly instructed to generate revenue by damaging rail cars or removing parts (and in some cases allegedly throwing the parts into the ocean so that they could not be inspected). However, some managers made it clear to car men that if they did not produce enough repair revenue, they would be fired.
Newer workers allege that they learned to cheat from more experienced workers.
Someone close to the industry for several years (but who worked for a different rail car repair company in a different state), stated that the whole industry has improved its standards in recent years. This implies that cheating rail road customers may have been an industry-wide problem.
This case can be discussed when covering material on managerial ethics, corporate culture or managerial control. Here are some of the questions that the Christian manager should consider:
• If you were a manager at Progress Rail Services and you knew that you had never asked employees to cheat by damaging rail cars or conduct unnecessary “green repairs,” what would you do if you saw the Wall Street Journal article about your company?
• If the investigation finds that cheating occurred, how is a manager to keep productivity high (to boost repair company profits) without encouraging cheating?
• How could a Christian argue that it is not appropriate for a manager to tell employees that higher productivity is expected?
• Is it appropriate to make workers responsible to produce repair revenue when the need of repair is really outside the control of a worker or manager?
• If managers do not communicate productivity expectations, won’t employees gradually adjust their work habits so that their life at work is increasingly more pleasant and less stressful? If so, doesn’t this mean that over time productivity will decrease?
• How does a top-level manager know when encouragement for higher productivity will trigger unethical behaviour? If you don’t know when this trigger occurs, how does the Christian manager avoid contributing to unethical behaviour of subordinates at the same time as increasing productivity?
• If management did not know anything about cheating, can they be held accountable for cheating? If workers are fearful of losing their jobs because of managerial pressure for higher productivity, is this the responsibility of management or of the subordinates?
• Would a Christian executive ever openly threaten workers that they might be fired if productivity does not increase? Would it be acceptable for a Christian manager to insinuate that workers might be fired if productivity does not increase?
• If you were a manager in an industry where you knew cheating was going on by many companies, how would you bring your Christian faith to your work to counteract this? Under what circumstances is it appropriate for the person of religious faith to “resist the Devil” at the level of industry-wide practice? Or is an industry-wide practice something that the Christian should simply “don’t ask and don’t tell?”
• How might the railroad change the structure of its out-source agreement with Progress Rail to avoid unnecessary “green repairs” at the same time as insuring safety and reliability of its equipment for cross-country journeys?