Sears Auto Center Scandal
Managing Business Ethics Text (pp.207 - 210)
Ethical Decision-making Issue:
Should Sears remove its commission-based compensation scheme?
The majority of the group believes that Ellen should be removed from the team.
Support for Motion:
The underlying inequality is that car owners are paying for repair services they do not require while Sears benefits by earning higher profits. This is a result of information asymmetry given that the repair advisors are in a more knowledgeable position regarding the available and required services, and clients act upon their advice. Thus, there is an opportunity for advisors …show more content…
According to the Principal-Agent Relationship between employers and employees, an employee has to be loyal to the company and their goals. As such, we feel the incentive pay system should not be removed because even though this system might not be liked by Sears' workers, it is this system that is used successfully in most service industries to increase sales and profits, which Sears is trying to achieve. Therefore, the workers should push