Transcript Massey Energy Case BUS 303 GROUP T Presenters: Theresa Chong

Massey Energy Case
BUS 303 GROUP T
Presenters:
Theresa Chong
Kathrene Genosa
Tracy Leung
Chitra Ramdoyal
Brian Harrison
Kelvin Ling
AGENDA
1.
2.
3.
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6.
Case analysis
Underlying issues
Concepts
Application to the case
Alternatives and evaluation
Conclusion
INTRODUCTION
Company: Massey Energy
 Founded in 1920 by A. T Massey and started as a coal
brokering business in Richmond, VA
 produces, processes and sells coal

Competitors: Arch Coal, CONSOL Energy and Peabody
Energy

Known for several lawsuits, bad environmental record and
poor mine safety. Past cases:
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deaths of miners
waterway pollution in Kentucky and West Virginia
mine placement near schools
INTRODUCTION
Upper Big Branch: Massey Coal Mine
 Located in Raleigh County, West Virginia
 In production for
 Coal mining is one of the key industries in West Virginia
 Don Blankenship, CEO responsible for this case
CASE ANALYSIS
Event
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April 5, 2010: Mine explosion disaster at UBB mine
29 workers killed
Greatest mine disaster since 1970s
Company is being sued for homicide (federal and state)
Prior to explosion
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Signs of danger
Wrong direction of air flow of deadly gases and coal dust
Workers told “not to worry”
Whistle blowing was not present
Internal environment
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Vertical structure, hierarchy
Workers conform to rules and regulations (‘loyal’)
STAKEHOLDER ANALYSIS
Don Blankenship
 Massey President, CEO and Chairman (since 1992)
 Recently stepped down December 30, 2010
 Money and profit goal orientated
 1100 safety violations in the past
three years
"If any of you have been asked by your group presidents, your supervisors,
engineers or anyone else to do anything other than run coal you need to
ignore them and run coal. This memo is necessary only because we seem
not to understand that coal pays the bills." - Don Blankenship
STAKEHOLDER ANALYSIS
STAKEHOLDER ANALYSIS
Everett Hager
 Superintendent
 Told Massey workers “not to worry about the unsafe
conditions”
 Possible involvement with company politics
Terry Moore
 Mine Foreman
 Felt unsafe about the mine conditions
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brought issue to superintendant
Almost internal whistleblower
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wanted to remain loyal
consequences of losing his job
STAKEHOLDER ANALYSIS
Workers/Miners
 Without a union
 Psychological instinct
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pressure to obey instructions
Community
 Successful local business owners
 Coal is the only thing that brings money into the area
 Did not do much to raise issue about poor working
conditions, assuming:
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lack of knowledge of conditions in the mind
did not want to lose those jobs
Frame of reference: sustainability, economic ties
STAKEHOLDER ANALYSIS
MSHA
 Safety governmental agency
 Flagged Massey Energy Co. for not obeying
standards
 Frame of reference: politics
Shareholders
 Investors of the company
 Interested in revenues, profits
QUESTION IN CASE:
Should Massey Energy be held liable or
responsible for the death of the mine workers?
ETHICAL ISSUES
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Whistle-blowing
Rights of employees within a firm
Equal treatment
Employee duties
Unions
The right to strike
UNDERLYING ISSUES

Changes in society which partially caused this
problem
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The economic downtown which causes the town to
depend on the mines as a major source of income.
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there has been a lack of internal whistle-blowing since
employees did not want to risk loosing their jobs due to this
economic downturn
The MSHA did not want to lose a section of the major source
of income of the West Virginia state, the coal industry
Massey sued MSHA because they needed better ventilation
MSHA confuted by saying that the equipment Massey wanted
to use for ventilation only increased coal production which
Harvey denied
EMPLOYEE DUTIES
Workers have rights, but also have tasks they were hired to do
 Varies for every job position but there are basic obligations
that apply to every worker
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For example, morally obligated to follow moral law, and legally
bound to civil law
Employees must think about the good of the company that
they work for.

For example, should not work/leak secrets to the competitor
Often, workers are told more often what they must do rather
than their rights so workers learn their expectations quicker
than knowing when their rights are violated.
WORKER OBEDIENCE
"No one is morally obliged to do what is immoral"
Corporations expect that workers are obedient and follow
orders as they are told to.
 But limits to which orders to follow - moral or immoral?
However, habitual obedience occurs often.
 Possibility why miners at the Upper Big Branch mine
obeyed orders even though they knew that their safety
was compromised
RIGHTS OF UNIONS
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Stems from the rights of individuals to attain their
own goals and rights to associate with others to
achieve common ends
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Unrestricted membership for workers to a union
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Morally obligated to protect the interests of
members
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Prioritizes good for all workers before good of society
UNIONS IN MASSEY ENERGY CASE
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Almost no mention of the miners' union, United
Mine Workers of America, in the Upper Big Branch
articles
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Unions should have renegotiated until working
conditions have been improved for the miners in
the Upper Big Branch mine
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Possibility of corruption within the union, threats
and intimidation
RIGHT TO STRIKE
Freedom to refuse employment under certain
conditions
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Exceptions: for example, national army draft
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Two moral restrictions:
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Respect for valid contract
Consideration of rights of general public to necessities
of life
RIGHT TO STRIKE
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Striking employees run the risk of being
replaced
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Techniques to ensure that employees are not
replaced
•
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For example, solidarity of workers
Ceasing mining would not be life-threatening
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Non-public sector industry
WHISTLE-BLOWING
Varying definition depending on moral values
and point of view
 Several types:
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Internal
Personal
Governmental
Non-governmental, impersonal, external
Popular references to whistle blowing: Erin
Brockovich
WHISTLE-BLOWING
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Determining moral status of whistle-blowing
Five conditions that, if satisfied, change the moral status of whistle blowing:
1. The firm will do serious and considerable
harm to employees or to the public if left to
their own devices
2. The employee has reported the problem in
question to his immediate superior
3. The superior has not been effective and no
other alternatives are internally available
4. The employee has strong and valid evidence
of the case
5. The employee believes that by whistle-blowing, it
is worth taking the risk so that necessary changes
are made for successful implementation
WORKER’S RIGHTS AND DUTIES WITHIN A FIRM
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Civil right: legal right that entitles each person covered
by them to certain treatment or that guarantee noninterference in their acting in certain ways
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Moral right: does not have to be based on law, but a
moral right may also be a civil right.
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"If you have construction jobs at your mine that need to be done to keep it
safe or productive, make every effort to do thos jobs without taking
members and equipment from the coal producing sections that pay the
bills"
- From Don Blankenship's memo
RIGHTS OF EMPLOYEES WITHIN A FIRM
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Employees only have rights and duties that they
negotiate with their employers as conditions of
employment. However,
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This can be misleading
bounded not only by law but by by moral obligations
and other conditions such as local custom and existing
social circumstances in which the contract is made
Rights of employees who are more skilled than
others- they demand certain rights and privileges
APPLICATION TO CASE
The Central Ethical Dilemma
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Negligence about miners' safety- money over safety?
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Miners' safety at the workplace is a moral right even if it is
not explicitly mentioned in the conditions of employment
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By whistle-blowing, we are ensuring that these rights are
protected
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Internal whistle blowing occurred but was ignored even though it was
permissible and morally justified
"When questioned, Terry Moore, mine foreman, said he knew of [the]
condition and that he asked Everett Hager, superintendent, about it
and he was told not to worry about it
ALTERNATIVES
Our solutions are based on the goal of saving
workers and the community rather than punishing
the executives because:
1.
corporate personhood (corporation shield)
2.
it is hard to see who is to blame for what
3.
ultimately if we hurt the executives then we hurt
the workers
ALTERNATIVES – STRICTER ENFORCEMENT
MSHA use power to enforce existing regulations:
 More frequent & detailed inspections
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increase budget
Surprise checkups
MSHA in closer contact with miners
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MSHA reps working at company to act as + support
whistle blowers
ALTERNATIVES – NEW REGULATIONS OR LAWS
Change the mentality of the company
 Help subsidize the proper safety equipment
 Harsher laws and greater penalties
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Give incentives to change
Meetings/mine tours every quarter
Improve Law system
 Shorten
the appeal process
ALTERNATIVES – CHANGE INDUSTRY CULTURE
Unite miners across to prevent another tragedy
 Annually/semi annually conference with union
reps from all over the country
 Closer ties to union (UMWA)
 Increase exposure of current issues
 Ads
 Social
media
ALTERNATIVES SUMMARY
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2.
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Stricter enforcement (MSHA)
New regulations and law(government)
Change industry culture(union)
RECOMMENDATION
Industry evolution (union)
 There is limit of what MSHA and Government
can do
 Miners should take charge over their own
health and safety
 Correspond to the key ethical issues
 Focuses on the whole industry
CONCLUSION
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Address the dependency of community
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balance between economy and safety issues
Case is an on-going process
 Ethical issues in this cases apply to other
businesses as well
 Employees have to step up against immoral
actions
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