Saddle Creek Deli serves fresh sandwiches and hearty salads at moderate prices for skiers in the bustling ski resort town of Vail, Colorado. The deli is known for its cozy atmosphere, Western decor, and two-story stone fireplace. Catering to skiers, Saddle Creek Deli serves fresh meals in a hurry to people taking a break from the slopes and is 10 minutes from a popular ski lift. Large windows provide a stunning view of the   nearby  mountains .

The deli's main attraction, however, is a high-quality old-fashioned soda fountain that specializes in ice cream and superior soft drinks. The business has grown steadily over the seven years of operation. The deli has been so successful that Richard Purvis, owner and manager, decided to hire a manager so he could devote more time to other business interests. After a month of recruiting and quiet interviews, he selected Paul McCarthy, whose previous experience included supervising a small restaurant at a nearby resort hotel.

For the first few weeks, Paul seemed to do his job efficiently. According to his agreement with Richard, Paul was paid a fixed salary plus a percentage of the amount he saved monthly in the business, based on the previous month's operating expenses. All other employees were paid a flat hourly rate. After a month on the job, Paul decided on his own to start a savings program designed to increase his income. He changed wholesale meat and cheese suppliers, reducing both their cost and product quality in the process. He arbitrarily reduced the size and portion of everything on the menu, including the fabulous ice cream and soft drinks. Paul then focused on reducing payroll costs by reducing the number of employees working in a shift and reducing fringe benefits.

During a tense staff meeting to announce these changes, Paul briefly said: “You can expect to see some changes to your hours starting next week. “I see too many people sitting around with nothing to do.” Next, he announced that he would discontinue one-dollar meals for employees who worked more than five hours and eliminate the 20 percent employee discount. As he concluded his announcements, he asked if anyone had any questions. Nobody dared to speak. Paul shrugged and quickly left the meeting.

Frustrated, employees walked out of the meeting and quietly complained about the changes. “Why tell him what we really think?” some reflected. The employees believed that Paul had made a decision, so they prepared for the consequences. Soon after, employees began to notice the negative consequences of Paul's hasty, cost-cutting decisions. During the busy lunch hour, for example, customers stormed out after waiting 20 minutes for a sandwich. Others complain to servers about smaller portions and then leave a meager tip. Many employees heard customers complain about the buildup of dirt and grime in the dining room and bathrooms. Employees began to burn out from listening to constant complaints and trying to do the work of two people. Tension increased and resentment toward Paul grew.

Meanwhile, Richard noticed the check Paul was doing at the deli. When the owner asked him about the impact of his new practices, Paul swore up and down that there would be no negative effect on the business. Rose Sharp, an accounting student at the nearby university, had been a cook on the night shift for five months before Paul arrived. Conscientious and ambitious, Rose enjoyed an excellent work history, and even her new boss recognized

Rose's superiority over the other cooks. One day, Richard saw Rose at the post office and asked her how things were going. Richard was shocked to learn of the cutbacks and employee dissatisfaction. Reluctant to undermine his new manager, Richard said to himself: “I can't understand what went wrong. I wonder what I should do now.

Source:  Adapted from Bernard A. Deitzer and Karl A. Schillif,  Contemporary Incidents in Management  (Columbus, OH: Grid, Inc., 1977), p. 167–168.

Question 1:

Paul's new plans created a crisis situation for the deli. When Paul initially met with his team, he emphasized the importance of pleasing customers, despite the changes he suggested. He describes the work of each team member and the expected result for the next two weeks. At the end of the meeting, it is understood that all the people remaining in the deli will work overtime. No one questions Paul because they feel that his decision cannot be altered. What ethical lines did Paul cross in this situation? What ethical dilemmas did employees encounter with Paul's new plans?

Question 2:

Paul made sure his team was fully aware of the need to reduce costs in the deli. He held a large meeting that all employees were expected to attend, spoke with employees in small groups, hung posters reminding employees of the importance of keeping costs down, and posted reminders on the company intranet. What motivation and empowerment techniques could Paul be using to manage his team more effectively?

Question 3

Explain an ethical dilemma faced by Richard, the owner of the deli, and an ethical dilemma faced by Paul, the manager. How could they both have behaved more ethically in these situations where their ethics were being tested?

Question #4

Richard decides to hold a meeting so the team members can engage in dialogue. This meeting is a success because the team, as a whole, comes up with innovative solutions to fix some of the problems Paul has created. What did Richard do in his communication style to have an effective dialogue with the team?

Question #5

Richard could have created an ethical climate from the beginning that would have ensured that managers like Paul behaved ethically from the beginning. What alternative courses of action could Richard have taken to create a more ethically balanced organizational culture?