Case Studies
Janakiraman is an Associate General Manager of a company. The company routinely purchases lot of consumables for use in Headquarter and other offices. Janakiraman looks after this function in the company and reports to the General Manager. Janakiraman has a brother-in-law Varadarajan who has a business of office stationery and consumables. Janakiraman’s wife requests him to place the order on her brother’s firm (X). The company has a policy which specifies that purchases have to be made after getting offers in closed covers from four bidders and by selecting the best offer looking to quality and prices. In case of purchases above a certain limit, open tender is required to be invited through newspaper advertisement. At this time, purchase of a lot is being considered for which Janakiraman is required to initiate purchase process.
The following courses of action come to his mind. What should he do?
1. Anyway he is likely to get a much better job offer compared to his present job in a large multinational company (MNC). The offer has been negotiated and is close to finalisation. He might just place the order directly to firm X.
2. If the policy does not dictate invitation of open tender because of the likely value of order, he might as well directly give the order to firm X.
3. The order quantity is such that there is no need to invite tender through newspaper. He should ask three known dealers to make offers above the range of market prices and ask firm X to submit offer in line with market prices. The desired result will follow.
4. He should not mix up private and official life and advise his brother-in-law to participate in normal course of competition.
1. A professional career is a serious pursuit. This is very different in nature compared to say selling vegetables in urban streets. Vegetables sold today to a consumer may not be remembered by the customer tomorrow. Irrespective of whether tendering in newspaper is required or not, he has to invite at least four genuine offers, compare the offers, negotiate if necessary and then select vendors for supply. If he directly gives order to firm X, that will be a serious violation of Company’s policy. Suppliers working with the company may complain or even whisper in the ears of Janakiraman’s superiors. Then a controversy may arise. MNCs before giving final offer often confidentially verify the background of the candidate. If verification reveals such negligent act, the potential offer could even be in jeopardy. He must resist this temptation.
2. In this choice also, there is a violation of company policy. The policy is easy to understand and no senior manager will be unfamiliar with this kind of purchase process. This violation would definitely, be noticed by his direct subordinates (juniors in department). If known to superiors, this will lower his image of competence if nothing more. Hence an unacceptable choice.
3. The general principle is that what is a wrong action ethically cannot be corrected by manipulative behaviour of making it appear right. A manager is required to act in the best interest of the company. So he should accept only offers that result from competition in marketplace. That is the substance of the policy. Any violation would be unethical. Moreover, he can never be sure that vendors willing to oblige will not become loud mouthed later.They may pass on the message or curiouslyenquireabout whom he is trying to favour. Should the facts somehow come out the façade of propriety that he is trying to create will fall in pieces. He should not think of this manipulation.
4. The lesson is that managerial career and private life should not be mixed up. He should tell his wife that Varadarajan is welcome to compete like any other vendor. We are presuming that thisis a routinekind of decisionwheretherelationshipwillnot be a liabilityforJanakiraman. If that happens and he has to make sharp evaluation of offers, he should give such task to next level in management so that “Not before Me” principle (i.e. not deciding a case which involves conflict of interest) can be followed.