ABC learning a CSR Dilemma
ABC Learning was an Australian provider of early child hood education services, founded in Queensland in 1988. Through its 18 child care centres it was the largest almost monopolistic single operator of early childhood education services in Australia by 1997. Led by founder and CEO Eddy Groves, ABC Learning continued to grow, by opening new centres and the acquisitions of competitors both locally and internationally. The company experienced a significant drop in their share price in 2008. Trading in the company shares was suspended in early 2008, closely followed by the company going into receivership in November of 2008.
He behaved ruthlessly in order to gain power and be rewarded financially without punishment or consequence. Groves continuously put himself in a position whereby there was a conflict of interest as the CEO of ABC Learning. For example: Groves engaged in a private property development business with a builder who also constructed US childcare centres for ABC Learning. ABC Learning corporate governance states that executives "must avoid conflicts as well as the appearance of conflicts between personal interests and the interests of the company" (L Walsh, 2008).
Kohlberg’s theory does not identify or help recognise the characteristics of individuals who clearly engage in unethical practice. Benjamin’s Moral Typology identifies four personality types, which are unlikely to uphold integrity (French and Granose, 1995). These four personality types are the moral chameleon, the opportunist, the hypocrite & the self-deceiver. Groves could have fit each personality type in his conquest for power and money, but the opportunist and hypocrite reflect his characteristic best.
The hypocrite characteristic was evident with the corporate governance that Groves put in place which he deemed not relevant to himself. He also showed opportunist characteristics on multiple occasions including the occasion when the board agreed not to purchase anymore centres, yet he ignored the board and continued to purchase more. There was also numerous instances where business transactions were conducted with organisations he had personal interests in (Owens, 2011).
Eddy Groves claimed he relied on professionals such as accountants and lawyers to provide sound advice, the first step in any decision making process. However, there was clear evidence he took council from what he wanted to hear (Owens, 2011) thus, providing him personally with the best possible outcome. Velasquez (2008) decision tree model is a series of questions that assist in determining the ethical validity of a decision or action. Groves would have failed on each of these questions and it is doubtful that he would have revisited a decision or action unless it meant that he would benefit from it.
Organisational ethics can be defined as the natural culture system of shared meaning and beliefs (Robbins, 2006 p 95). There is much evidence to suggest that ABC Learning lacked a clear organisational integrity framework, that considered purpose, principal and people (Paine, p99) the prosocial element of the company. This in return created a limited sense of purpose, responsibility and direction for staff (Walsh, L. 2012).
ABC Learning’s organisational culture was misaligned and one dimensional with a reward system based on takeovers and expansion for personal gain, rather than investing in the development of a strong ethic framework. ABC Learning had lax governance (Walsh. L, 2010) that was inadequate in focussing on day to day operations including integrating new business acquisitions.