Scenario:
You are the HR Manager at a mid-sized manufacturing company, reporting directly to the owner. Recently, it was brought to your attention that the owner’s son, who serves as a mid-level manager in the company, has committed a serious violation: misappropriation of company funds. This is a clear breach of company policy and is grounds for immediate termination, as outlined in the employee handbook. Similar violations have resulted in terminations for other employees in the past, making this a highly sensitive issue.
You bring the issue to the owner, providing all the evidence and explaining the potential risks of not addressing the misconduct—such as employee dissatisfaction, legal implications, and reputational harm. However, the owner firmly instructs you to close the case and assures you that his son will never be terminated, stating, “Family is more important than business.” He explicitly orders you not to inform anyone else and to let the matter drop. Employees in the accounting department are already whispering about the incident, which threatens to erode trust in leadership and the company’s values.
As HR Manager, how should you handle this situation?
Multiple-Choice Options:
A. Respect the owner’s instruction and close the case as directed, ensuring you document the conversation in case the issue arises again.
B. Escalate the matter to the company’s external legal counsel or a third-party compliance officer to ensure the issue is addressed without bias or favoritism.
C. Speak confidentially with key employees in the accounting department to reassure them that the company is handling the situation internally, without implicating the owner or his son.
D. Submit your resignation, as continuing to work in an environment where ethical standards are compromised could damage your professional integrity.
Correct Answer:
B. Escalate the matter to the company’s external legal counsel or a third-party compliance officer to ensure the issue is addressed without bias or favoritism.
Rationale:
- Option A: While respecting the owner’s authority may seem logical, it compromises your ethical responsibilities as an HR professional. Ignoring the misconduct sets a precedent of favoritism and undermines trust in HR and company policies. Documenting the conversation does not actively address the risks posed by the violation.
- Option B (Correct Answer): Escalating the matter to external legal counsel or a third-party compliance officer ensures the issue is handled impartially. It protects the company from legal risks and upholds ethical standards. This approach demonstrates that you are fulfilling your duty as an HR professional to ensure compliance and protect the organization’s interests, even in difficult situations.
- Option C: Speaking confidentially with employees in the accounting department may seem like an attempt to manage the fallout, but it risks further eroding trust and escalating rumors. It also violates the owner’s instruction and does not resolve the underlying issue.
- Option D: While resigning may protect your personal integrity, it does not fulfill your professional obligation to address the issue. Resignation should be a last resort after all other avenues have been exhausted.
Explanation:
As an HR professional, your role includes safeguarding the organization’s values, ensuring compliance, and mitigating risks. By escalating the matter to external legal counsel or a third-party compliance officer, you ensure the situation is reviewed impartially and resolved in the company’s best interest. This approach protects the organization from potential lawsuits, preserves employee trust, and reinforces the importance of adhering to ethical standards, even when dealing with sensitive family dynamics.
Elga Lejarza
Lejarza HR Consulting
