SWOSU Business Ethics Unethical Behavior in Small Business Discussion

For this quiz, please do the following:

Congratulations! You have been appointed to the board of a local nonprofit! What a great honor. As a business professional, giving back to your community by serving on a board is super important. You have serious skills in (accounting or finance or marketing or management or entrepreneurship or fundraising…choose your area). This nonprofit subsists on donations only. You know you are expected to be a good steward of the donated funds.

One of the first things on the agenda after you have been approved as a board member is the Fiscal Year 2021 compensation package for the Executive Officer. The board is wanting to raise the Executive Officer’s compensation to $60,000/year, plus an annual bonus. The next meeting is November 19th.

It just so happens that the Executive Officer is your best friend’s spouse’s uncle. You’ve met him a few times. Recently, you met your best friend for lunch. During your lunch, your friend starts talking about the Uncle/Executive Officer. The Uncle/Executive Officer is really wanting a raise to $70,000 (according to your friend). His reasons included wanting to take a nice vacation in Hawaii, but also that he was the sole wage earner in their household of four, with one heading to college soon.

You’ve done a little research and have discovered that Executive Officers in similar nonprofits (with similar experience) are paid between $55,000 and $65,000 annually. Some receive annual bonuses, some do not.

Now you are thinking about the November 19th meeting and trying to determine what will you say to the rest of the board. Will you advocate for the higher amount? Consider the following:

• What are your fiduciary duties and your legal duties (there were three legal duties noted in the readings) to the nonprofit? Be specific in your examination.
• Is there a conflict of interest? (You’ll need to know, and tell me, what a conflict of interest is to answer this question.)
• Considering the skill set you have brought to the board (are you an accountant? financial advisor? marketing professional? etc.), what ethical or professional component would come into play for you as a board member? (Yes, this question is a little vague, but so is ethics. We’ve been here for 10 chapters, though. What have you learned about ethics/professional ethics that would impact your ultimate decision in this matter?)
• How do you justify advocating or not advocating (whatever you’ve decided) to yourself, the rest of the board members, and to your friend?