Harvard Case - Mountainview Country Club: Who's Minding the Store?
"Mountainview Country Club: Who's Minding the Store?" Harvard business case study is written by Carolyn Conn, Aundrea K. Guess. It deals with the challenges in the field of Business Ethics. The case study is 16 page(s) long and it was first published on : Feb 1, 2016
At Fern Fort University, we recommend Mountainview Country Club implement a comprehensive plan to address the ethical lapses and restore trust among its stakeholders. This plan should include a combination of immediate actions to address the current situation, long-term strategic changes to improve governance and culture, and a robust communication strategy to rebuild trust and transparency.
2. Background
The Mountainview Country Club, a prestigious private club, faces a crisis of trust after revelations of financial mismanagement and unethical behavior by its General Manager, David. The club's Board of Directors, composed of wealthy members, is grappling with the fallout and seeking a solution to restore the club's reputation and ensure its long-term sustainability. This case study highlights the importance of ethical leadership, transparency, and robust corporate governance in preventing and addressing ethical breaches within organizations.
The main protagonists in this case are:
- David: The General Manager of Mountainview Country Club, whose actions have led to the current crisis.
- The Board of Directors: Responsible for overseeing the club's operations and ensuring its ethical conduct.
- The Members: The stakeholders who are directly affected by the club's actions and whose trust has been eroded.
3. Analysis of the Case Study
This case study can be analyzed through the lens of Stakeholder Theory, which emphasizes the importance of considering the interests of all stakeholders, including members, employees, suppliers, and the community. David's actions have demonstrably failed to prioritize the interests of all stakeholders, leading to a breakdown in trust and jeopardizing the club's long-term viability.
Furthermore, the case highlights the critical role of Ethical Leadership in fostering a culture of integrity and compliance. David's lack of ethical leadership, exemplified by his disregard for the club's financial policies and his attempts to conceal his actions, has had a detrimental impact on the organization's reputation and its ability to operate effectively.
4. Recommendations
To address the current crisis and rebuild trust, Mountainview Country Club should implement the following recommendations:
Immediate Actions:
- Suspend David: Immediately suspend David from his position pending a thorough investigation into his actions.
- Conduct a Forensic Audit: Commission an independent forensic audit to investigate the extent of David's financial irregularities and identify any potential breaches of the club's financial policies.
- Communicate Transparently: Communicate the findings of the audit and the actions taken to address the situation to all members in a clear, concise, and timely manner. This transparency is essential for rebuilding trust and demonstrating the Board's commitment to ethical conduct.
- Implement Interim Leadership: Appoint an interim General Manager with a proven track record of ethical leadership and financial management to ensure the smooth running of the club's operations during the transition period.
Long-Term Strategic Changes:
Strengthen Corporate Governance: Implement a robust corporate governance framework that includes:
- Clear and concise Code of Conduct: This code should explicitly define ethical standards and expectations for all employees, including the Board of Directors.
- Independent Audit Committee: Establish an independent audit committee composed of members with expertise in financial management and corporate governance to oversee the club's financial operations and ensure compliance with regulations.
- Whistleblowing Mechanism: Implement a confidential whistleblowing mechanism that allows employees to report any suspected unethical behavior without fear of retaliation.
- Regular Training: Provide regular ethical training programs for all employees to reinforce the club's commitment to ethical conduct and equip them with the tools to identify and address potential ethical dilemmas.
Promote Ethical Culture: Foster a culture of ethical decision-making by:
- Ethical Leadership: Ensure that all leaders, including the Board of Directors, demonstrate ethical behavior and prioritize the interests of all stakeholders.
- Open Communication: Encourage open and honest communication throughout the organization, fostering a culture of transparency and accountability.
- Ethical Sourcing: Implement ethical sourcing policies for all goods and services procured by the club, ensuring that suppliers adhere to fair labor practices, environmental sustainability, and anti-corruption standards.
Embrace Sustainability: Commit to environmental sustainability by:
- Green Business Practices: Implement green business practices throughout the club's operations, reducing its environmental impact and contributing to a more sustainable future.
- Environmental Stewardship: Promote environmental awareness among members and employees, encouraging them to adopt sustainable practices in their daily lives.
Communication Strategy:
- Rebuild Trust: Develop a comprehensive communication strategy to rebuild trust among members by:
- Transparency: Continue to communicate openly and honestly about the situation, including any corrective actions taken.
- Active Listening: Engage with members, actively listening to their concerns and addressing their questions.
- Regular Updates: Provide regular updates on the club's progress in implementing the recommendations and restoring ethical conduct.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations align with the club's core competencies of providing a high-quality experience for its members and its mission of fostering a welcoming and inclusive community.
- External Customers and Internal Clients: The recommendations prioritize the interests of all stakeholders, including members, employees, and suppliers, ensuring that their needs are met and their trust is restored.
- Competitors: The recommendations aim to differentiate the club from its competitors by demonstrating its commitment to ethical conduct and sustainability, enhancing its reputation and attracting new members.
- Attractiveness: The recommendations are expected to improve the club's financial performance by restoring member confidence, attracting new members, and reducing the risk of future scandals.
6. Conclusion
Mountainview Country Club faces a significant challenge in restoring trust and rebuilding its reputation. By implementing the recommended actions, the club can demonstrate its commitment to ethical conduct, strengthen its corporate governance, and foster a culture of integrity and transparency. This will not only ensure the club's long-term sustainability but also pave the way for a brighter future, where all stakeholders can feel confident and valued.
7. Discussion
Other alternatives not selected include:
- Dismissing the situation: This would be a short-sighted approach that would further erode trust and could lead to legal repercussions.
- Replacing the Board of Directors: This could be a drastic measure that might not address the underlying issues of ethical conduct and governance.
The key risks associated with these recommendations include:
- Resistance from members: Some members may resist the changes, particularly if they are perceived as being too drastic.
- Cost of implementation: Implementing the recommendations will require significant financial resources.
- Lack of commitment from leadership: The success of the recommendations depends on the commitment of the Board of Directors and the new leadership to implement them effectively.
8. Next Steps
The Board of Directors should immediately implement the recommended actions, including suspending David, conducting a forensic audit, and communicating transparently with members. They should also establish a timeline for implementing the long-term strategic changes, including strengthening corporate governance, promoting an ethical culture, and embracing sustainability. Regular progress reports should be shared with members to demonstrate the club's commitment to ethical conduct and transparency.
This case study highlights the importance of ethical leadership, transparency, and robust corporate governance in ensuring the long-term success of any organization. By addressing the current crisis and implementing the recommended changes, Mountainview Country Club can rebuild trust, restore its reputation, and create a more sustainable and ethical future for its members and stakeholders.
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Case Description
After five years of working at the Mountainview Country Club, Sandi Lane must decide which of several courses of action to take in response to financial improprieties committed by her supervisor and some co-workers. The Club's general partner has refused to act on Lane's concerns. Her supervisor's wife who also worked at the Club has just threatened Lane: "I'll see to it that you don't work here anymore!" As Controller of the Club, Lane was responsible for all aspects of the accounting functions -- but, with no staff. She handled payroll and tax preparation, human resources, budget and financial statement preparation, membership tracking, and cash flow forecasting. She spent much of her time at the Club trying to implement basic accounting procedures. Cash flows were precarious with one of the partners in the Club making expenditures of $20,000 and more without regard to budgets or cash availability. The food/beverage area had losses of $60,000 annually and inventory shrinkage in the Pro Shop was more than $100,000 each year.
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