Scenario 3: Managing Cogs
Linda, a new employee, asks Steve for advice. Linda is the Project Manager for the Cogs product line as well as three other product lines scheduled to launch at the end of the year.
Linda: Hi, Steve. Do you have a minute to help me figure out a problem I found on the Cogs product line?
Steve: Sure. Tell me what the problem is.
Linda: Last week I got the invoice for the research I requested, and it cost way more than I thought it would. I’m not sure how it happened, but it looks like the Cogs product will be way over budget.
Steve: Hmm. Okay. So how can I help?
Linda: I guess I need to notify Finance and get a bigger budget approved. I’m a little nervous about asking for more money at this point. I was wondering if you would tell me how to do it.
Steve: You don’t really have to do that. When I go over budget on one project, I can usually make up the difference by spending less than what I budgeted on another project. That way the bottom line stays even. The bottom line is all Finance really cares about.
Linda: Doesn’t that make it harder for the people working on the other project, the one with a reduced budget?
Steve: Sometimes, but that’s the way it goes. Anyway, they don’t know why their budgets changed. They just have to deal with it.
As the manager of both employees, you will decide how to respond.
1. Describe your ethical and legal business solution and provide three sound reasons in support of your solution.
2. Describe three actions that you will take to implement your solution.
3. Does the situation make it essential to work with the human resources department? Provide two reasons to support your decision.
4. Does the situation make it essential to seek legal advice? State your decision and provide two reasons to support your decision.