GM Quits Facebook Advertising, But Why?

Ad Age and others are criticizing General Motors, not for quitting Facebook but for failing to get the most from the social network. The timing was unfortunate for Facebook, in the midst of its initial public offering, but there's little evidence that the withdrawal impacted Facebook's IPO success.

Ad Age calls GM's Facebook presence, for which the company spent $30 million, "wrong" and "boring," with the following examples of posts:

• We're excited to announce the return of a V-8 powered, rear-wheel-drive performance sedan to our robust U.S. lineup, the Chevrolet SS!" (Well, of course you are. Maybe you should ask us if we're excited.)
• "Check out this picture of our Chairman and CEO, Dan Akerson." (Don't know about you, but I go to Facebook hoping to see the Chairman of GM's picture.)
• "Just wanted to let our millions of Facebook fans know, we're still here, and we 'like' you back!" (OK, thanks for checking in.)
• "GM is full of history and classic cars that we all know and love." (Uh huh. That's so exciting.)
• "Check out our latest Faces of GM video to find how John uses what he does at the race track to make the cars he works on even better." (Wake me when it's over)
• "Ever wonder what happens with leftover scrap metal from our vehicles?" (Umm, no, can't say that I have)
• "Happy Administrative Professionals Day to the women and men who keep our offices and dealerships running all across the globe! Thanks for all you do each and every day." (I'm sure they felt very rewarded by this post.)
• "We're thrilled to announce that Chevrolet sold 1.18 million vehicles worldwide in the first 3 months of 2012." (Of course you're thrilled. But we don't really give a damn.)
• "Hey GM Fans! Let's have a little fun before the weekend begins... What's your favorite current GM vehicle and why?" (Whose idea of fun is this? And the reason we have to have this fun is that GM is not online during the weekend, even though the Internet is, and always has been, 24/7, 365 days a year. Yes, even weekends. Hint: you want to make some trouble for GM? Post on Facebook and Twitter during the weekend. They won't see it til Monday.)
• "It may be Friday the 13th, but we think of it as just another day for you to drive your GM vehicle." (We live to drive our GM vehicle.)
• "One in four Buick Veranos sold have worn the most colorful hue offered, Crystal Red Tintcoat." (If that's not thrilling, tell me what is.)

For another view, Reuters critized Facebook, saying that the company didn't adequately sell GM on the benefits of paid ads. The article explains GM's decision this way:

"GM dropped its Facebook ads because they were less effective than other options such as Google's AdSense, the sources said. Facebook's ads garner about half the clicks per page view, a measure of effectiveness, compared with the average website.

"Moreover, Facebook's ad prices were expected to rise after the company's IPO. Ad prices are set in auction and vary depending on the target audience."

 Discussion Starters:

• What's your view? Did GM fail to take full advantage of social networking on Facebook, did Facebook fail to deliver, or is there another story here?
• Regardless of the decision, how could GM have done a better job engaging customers on Facebook? Rewrite a few of the company's posts, above.

Sponsors of an Award Demand that They Receive It

In an odd turn of events, the 2012 BII Scotland Annual Awards ceremony surprised attendees. The British Institute of Innkeeping Scottish Awards includes "Bar Operator of the Year," a prize that judges say was slated to go to BrewDog, a brewery in North East Scotland. However, at the last minute, the award went to Diageo, one of the event's main sponsors.

On its blog, BrewDog had quite a bit to say about the situation. From the company's perspective, BrewDog was the clear winner, in part because of comments made by Kenny Mitchell, BII's chairman of the award committee: 

"Diageo (the main sponsor) approached us at the start of the meal and said under no circumstances could the award be given to BrewDog. They said if this happened they would pull their sponsorship from all future BII events and their representatives would not present any of the awards on the evening.

"We were as gobsmacked as you by Diageo's behaviour. We made the wrong decision under extreme pressure. We should have stuck to our guns and gave the award to BrewDog."

A Diageo spokesperson issued a simple statement in response to the controversy:

"There was a serious misjudgement by Diageo staff at the awards dinner on Sunday evening in relation to the Bar Operator of the Year Award, which does not reflect in any way Diageo's corporate values and behaviour.

"We would like to apologise unreservedly to BrewDog and to the British Institute of Innkeeping for this error of judgement, and we will be contacting both organisations imminently to express our regret for this unfortunate incident."

BrewDog was unsympathetic to the apology:

"As for Diageo, once you cut through the glam veneer of pseudo corporate responsibility this incident shows them to be a band of dishonest hammerheads and dumb a** corporate freaks.  No soul and no morals, with the integrity of a rabid dog and the style of a wart hog.

Discussion Starters: 

• How do you asssess Diageo's response to the situation? What is missing from the company's response statement?
• Identify the number of words in the quotes, above, that are uncommon in the United States. What do they mean?

Let the Commencement Speeches Begin!

Politicians, CEOs, actors, comedians, and others are taking flight to speak at colleges throughout the States. A partial list of 2012 speakers is at Graduation Wisdom, a site that also lists one view of the "Top Ten Speeches" from years past.

President Obama delivered the commencement speech at Barnard College today. Of course, he focused on equality for women, encouraging the 600 Barnard graduates to "fight for a seat at the head of the table."

Mitt Romney, the President's likely Republican competitor, delivered the commencement speech at Liberty University. Romney's conservative views, according to the Huffington Post, were "well received at the Christian university."

Discussion Starters:

• Compare these two speeches. Other than the political messages, how do you assess the delivery of each? Which do you think is more effective?
• What do you expect from a commencement speech? Who is delivering the speech at your university this year?

Retailer CFO Loses Job Over Social Media Posts

Maybe this is why so few CFOs use social media. Women's clothing retailer Francesca's fired its CFO today for his tweets and Facebook posts that revealed too much about the company.

Francesca's issued a press release announcing the decision but didn't mention which posts, specifically, were of concern. However, the statement said that Gene Morphis had "improperly communicated Company information through social media." Below are two examples of Morphis's Facebook posts.

 

In another post, Morphis criticized co-sponsors of the Sarbanes–Oxley Act, a law that defines financial reporting standards: 

"Audit committee. Damn you Paul Sarbanes! Damn you Michael Oxley!"

Discussion Starters:

• What should be the social media guidelines for corporate CFOs? Should they differ from guidelines for all employees?
• Was the Board right in terminating Morphis?
• What could have been done to prevent this situation?

Facebook's IPO Video Focuses on Emotional Appeals

This is not your grandmother's IPO video. Facebook has taken a unique approach in luring investors to buy a stake in the company's initial public offering. 

Staff members tell the Facebook story through a 30-minute video that the CFO says is consistent with their "focus on authentic, engaging communications." Mashable agrees that the video is a different approach to IPO communications:

"It's an interesting take on the normal business investment pitch video-instead of a heavy emphasis on dry finance numbers, Facebook plays to the heartstrings.

"Soft lighting, multiple interview angles and background music fit for sunrise in a nature show combine to make a clear emotional pitch to potential investors."

A theme throughout the video, as you might expect, is connecting people and "changing within a generation, the fabric" of how people communicate. In simple language, Facebook executives explain their platform and how their product functionality makes the web social. They compare Facebook to a game.

Section 3, Advertising, begins to cover financial information. The section profiles Ben & Jerry's, who claim that every dollar spent on Facebook returns $3 in incremental sales. Sheryl Sanberg, Facebook's COO, claims that online advertising will increase, in part because of Facebook's value proposition of "reach, relevance, engagement, and social context."

Section 4, Finance, starts 23 minutes into the 30-minute video. In this section, CFO David Ebersman reviews the number of users (including global penetration rates) revenue (advertising and payments), capital expenditures, operating margins, and future investment plans.

The video ends with Mark Zuckerberg claiming that almost every app will be connected to Facebook in some way.

Discussion Starters:

• Watch the entire video. Does it convince you to invest? Which are the most and least convincing arguments?
• What are the advantages and disadvantages of Facebook's approach compared to more traditional IPO communications?

JPMorgan Chase Loses More than $2B

JPMorgan Chase is trying to explain how the bank lost $2 billion and may lose another $1 billion as it settles a trade. In just six weeks, the bank's Chief Investment Office, a group that invests extra assets to hedge risks, lost this extraordinary amount of money.

In a conference call, Jamie Dimon, CEO of JPMorgan Chase, called the situation "self-inflicted":

"We're accountable, and what happened violates our own standards and principles about how we want to operate the company. This is not how we want to run a business."

Liz Rappaport, a Wall Street Journal reporter on PBS NewsHour questioned the terminology that Dimon used, specifically that the Chief Investment Office was intended as an "economic hedge." According to Rappaport, this was an "unclear thing to say": a hedge typically is used to protect against a specific investment, but "exactly...what this group actually hedges against is unclear, and the fact that this was such a large and outside position in one direction, and they got caught...flat footed with it, also doesn't sound like a hedge-it sounds like a bet." The distinction is important: did the investments hedge against risk or create more risk for the bank?

Rappaport also said that this wasn't really a "rouge trader" situation, as we saw at UBS in September 2011. Rather, at the center of the controversy is a London trader nicknamed the "London Whale" for his large investment positions. Unlike the UBS situation, the Chief Investment Office's trades were apparently "run up the flag pole," according to Rappaport.

Discussion Starters:

• What do you see as the distinction between a "hedge" and a "bet"? 
• How do you assess Jamie Dimon's response to the situation?

Is This Newcastle Brown Ale Ad Sexist?

Newcastle Brown Ale is taking some heat for a new commercial that some believe is sexist. Created by ad agency Droga5, the "No Bollocks" spot ends with the punchline: "Why do we focus so much on our brewmaster's hands? Because she is not an attractive woman."

Charles Van Es, brand director for Droga5, explained the rationale for the ad:

"With this campaign we are going to be very honest with our consumers. Our guys know it when they are marketed to, so we believe it's time for a beer brand to give it to them straight, just like their best mates would do. The people of Newcastle, England—Geordies—don't take themselves too seriously, love a good joke, and most importantly, they tell it like it is. Our ads celebrate these traits by using a no-nonsense approach, where we are not over promising anything."

Here are the top YouTube comments about the ad:

Discussion Starters:

• Why would some people consider the ad to be sexist? Do you agree with this view? Why or why not?
• The brand manager for ad agency Droga5 described the brand strategy. To what extent does this explain the commercial?

Resume Trouble for Yahoo's CEO

Did Scott Thompson purposely misrepresent his degree on his resume, or was it, as he says, an "inadvertent error"? In a recent regulatory filing, Thompson's qualifications included a Bachelor's degree in accounting and computer science from Stonehill College. However, Stonehill didn't start its computer science program until the early 1980s, and the school's records indicate that Thompson earned a"Bachelor's of Science in Business Administration (Accounting)" on May 20, 1979. This major also is conveyed on Stonehill's website:

Daniel S. Loeb, hedge fund manager, wrote a letter to the Yahoo board of directors, calling for Thompson's termination.

Yahoo is at a crucial point now and is relying on Thompson to move the company forward. According to The Wall Street Journal, someone close to the company said, "Maintaining him as CEO of Yahoo at this time is more important than whether he had a computer science degree or not."

In response to the controversy, Yahoo issued this statement: 

"Scott Thompson's degree at Stonehill College was in bachelor science in accounting. There was an inadvertent error that stated Mr. Thompson also holds a degree in computer science. This, in no way, alters that fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies. Under Mr. Thompson's leadership, Yahoo! is moving forward to grow the company and drive shareholder value."

 Thompson also sent an email to Yahoo employees, trying to keep everyone "focused":

Update: Thompson has resigned. He also told the Board that he has thyroid cancer. 

Discussion Starters:

• How do you assess the controvery over Thompson's resume: career-ending misrepresentation, innocent mistake, or something else?
• If you were a member of Yahoo's Board of Directors, how would you handle the situation?

Reflections on the White House Correspondence Speeches

As usual, the White House Correspondents' Association Dinner was filled with laughter and high-powered guests. The annual star-studded event hosts celebrities, journalists who cover the White House and president, and other heavy-hitters in the media.

This year, talk-show host Jimmy Kimmel poked fun at the Secret Service, whose agents where caught with prostitutes during a recent trip to Columbia. Kimmel took frequent shots at the president as well:

"Mr. President, I know you won't be able to laugh at any of my jokes about the Secret Service, so cover your ears, if that's physically possible."

Not to be outdone, the president had the crowd going, too. Here's my favorite line, with the president referring to the recent Secret Service transgressions:

"Four years ago, I was locked in a brutal primary battle with Hillary Clinton. Four years later, she won't stop drunk-texting me from Cartagena."

The dinner has the feel of a roast, and the president insulted Donald Trump, Arianna Huffington, Sarah Palin, Mitt Romney, and others. About Romney, President Obama implied that his life mirrors The Hunger Games:

"I guess Governor Romney is feeling pretty good about things because he took a few hours off the other day to see The Hunger Games. It's a movie about people who court wealthy sponsors and then brutally savage each other until only one contestant is left standing. I'm sure this was a really good change of pace for him. I have not seen The Hunger Games - not enough class warfare for me."

Discussion Starters: 

• Do you find President Obama's speech funny? What, if any, parts were over-the-top? What about Jimmy Kimmel's speech?
• What delivery tactics do the President and Kimmel use? How do they encourage and manage laughter from the audience? 

Kraft Mac & Cheese Thanks Facebook Fans

Kraft Macaroni & Cheese hired an a capella group to show appreciation for the 4,632 fans who "liked" its Facebook page. Sung by The Yellow Jackets from the University of Rochester, the song is a great example of connecting with customers in a creative way.

The video is cute, but so far it has only 11,000 views after a week. Why hasn't it been more popular? Will it go viral still? 

Another Restaurant Serves Alcohol to a Child

Within the past year, at least three restaurants have mistakenly served alcohol to children. This time, an Olive Garden in Indianapolis gave a 10-year-old boy a rum drink.

The boy drank half of what he thought was a non-alcoholic Wildberry Frullato drink before his family became concerned. After seeing his "increasingly strange behavior," he was taken to the hospital.

In a statement, Olive Garden said that the server had been fired:

"We find this situation completely unacceptable and we are extremely upset that this occurred. We have a zero-tolerance policy for any violation of our responsible alcohol service policy, and the employee who served the wrong drink has been terminated. We are thankful that the child is OK, and we will continue to work with the family to resolve this issue."

About a year ago, an Olive Garden in Orlando served sangria in a sippy cup to a two-year-old. This incident was just days after an Applebee's in Detroit accidentally spiked a 15-month-old boy's apple juice.

Discussion Starters:  

• How do you assess Olive Garden's statement, particularly the part about their "zero-tolerance policy"?
• In your opinion, was the restaurant's termination of the server appropriate? Why or why not?

Marco Rubio Misses the Last Page of His Speech

Florida Senator and potential Romney running mate Marco Rubio forgot the last page of his speech at the Brookings Institution. Fortunately, someone nearby had a copy, and he quickly recovered, but the incident raises other issues about his presentation style. 

One media coach also criticized Senator Rubio for his reading, his lack of passion, and that he just kept going once he found the missing page. Instead, he suggested that Rubio make light of situation: "Well, since this moment will end up on YouTube, it's a great chance to tell people about our vision for the 21st Century."

Others criticized Rubio partly because of a comment he made about President Obama's delivery style in 2010. The New York Times reported that Rubio referred to the president as, "the most articulate and talented teleprompter reader in America." Of course, a teleprompter can go down, too.

Discussion Starters:

• Watch more of Marco Rubio's speech. What does he do well, and what would you suggest he change?
• What advice would you give Rubio to avoid losing a page of his speech? Stapling isn't a great option-anything else?

Google Drive for Team Projects

Google has introduced an evolution of Google Docs: Drive, a service that stores photos and videos in addition to documents. The new service will likely compete with both Dropbox for cloud storage and Microsoft's similar product, SkyDrive.

The advantages of Drive over Dropbox are clear: in Dropbox, users can only store files; they can't edit documents as they can in Google Docs and Drive. The tougher choice is between Google Drive and Microsoft SkyDrive. PCWorld compared the services in these articles:

• Four Reasons Google Wins Out
• Five Reasons Microsoft SkyDrive is Better Than Google Drive

For students, the decision may come down to ease of access (Drive doesn't require another login if they're already on Gmail) versus software (SkyDrive uses Microsoft files, which are more standard and feature rich than Google Docs). A minor issue for students is privacy. People have expressed concern over Drive's "terms of service," but the risks may be exaggerated, and I'm not too worried about my students' revealing trade secrets during their team projects.

Discussion Starters:

• What are the advantages of Google Drive over Google Docs?
• Which service would you prefer: Google Drive or Microsoft SkyDrive? Why?

Jimmy John's Will Rehire Employees Who Put Up Posters

Sandwich restaurant Jimmy John's had disappointing news this week: a federal judge ordered the company to rehire and pay lost wages to six employees. The employees were fired after they posted 3,000 notices implying that sandwiches could be made by sick workers.

The employees claimed that if they called in sick but couldn't find a replacement, they feared being fired. In the court decision, the judge ruled that, by removing the posters, Jimmy John's violated workers' rights under the National Labor Relations Act. This decision was based on a labor dispute under way at Jimmy John's: a union held an election to organize workers and, although the union was narrowly rejected, it filed unfair labor practices, claiming that Jimmy John's interfered with the election process.

The union perspective is that the workers were terminated "for blowing the whistle on company policies that expose customers to sandwiches made by sick workers." 

MikLin Enterprises, which owns Jimmy John's, will appeal the decision.

Discussion Starters:

• What is your perspective of the posters? What is the company's perspective?
• How does this case relate to comments in social networking sites, a hotly debated topic for the National Labor Relations Board?

Apple's Impressive Second-Quarter Results

With strong sales of iPads, iPhones, and Macs, Apple reported a 94% increase in year-over-year sales (compared to second-quarter a year ago).

In a company news release, CEO Tim Cook said, "We're thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter. The new iPad is off to a great start, and across the year you're going to see a lot more of the kind of innovation that only Apple can deliver." The news comes within a month of reports that Tim Cook is the highest paid CEO, raking in $278 million last year.

The news sounds good, but a closer look at the data shows that sales are down from the first quarter (click for the PDF).

Discussion Starters and Assignment Ideas:

• Do you believe that Tim Cook's salary is justified? Why or why not?
• Rewrite Apple's news release for employees. How would you adapt this message to an  internal email?
• Imagine that you're presenting the second-quarter results as part of a PowerPoint presentation to shareholders. Convert the table to a few charts to show the results more visually. Which data would you choose to include?

Heineken Responds to Dog Fighting Accusation

Bad timing for Heineken: banners were left up after a company event at a Mongolian nightclub. Unfortunately, next on the schedule was dog fighting. Outrage quickly ensued on Heineken's Facebook page and elsewhere.

Heineken responded quickly with this statement:

"Heineken is aware of a shocking photo of what appears to be a dogfighting match in a foreign country with Heineken branding visible in the background. We'd like to thank the community for bringing this issue to our attention.

"We are as appalled by this image as you are and have asked the Heineken Global Office to immediately investigate the circumstances of this event and whether Heineken was involved in any way.

"If you have any further information regarding this picture, such as the source, or the venue where it was taken, please let us know in this thread."

In a follow-up statement, Heineken denied association with the event and explained the situation:

"Images continue to circulate in social media channels showing a dog fight, with Heineken banners clearly visible in the background. This is very distressing and totally unacceptable. As a company and a brand owner, we do not and would never knowingly support any event, outlet or individual involved in this type of activity. It is against our company and brand rules and - more important - against our company values. . . ."

The statement goes on to explain that the banners were left from a previous event and that the company has "ceased" its relationship with the club.

The situation follows a July 2011 Heineken commercial that compares the beer to a snakeskin jacket: "It's not right for every occasion. Unless, of course, you find yourself attending a secret, offsite, charity snake-fighting event." Weird.

Discussion Starters:

• How do you assess the social media response? Were people right to question Heineken's involvement, or did they overreact?
• How do you assess Heineken's response to the criticism?
• What do you make of the snake commercial? Is it just me, or is it weird even if the dog-fighting controversy didn't happen?

Communications in the Wal-Mart Bribe Inquiry

With a New York Times headline that reads, "Vast Mexico Bribery Case Hushed Up by Wal-Mart After Top-Level Struggle," news can only be bad for the world's largest corporate employer. Of course, the evidence is that revealer of so many corporate secrets: email.

The New York Times article reports the severity of the situation:

"Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico's top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart's headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart's lead investigator, a former F.B.I. special agent, summed up their initial findings this way: 'There is reasonable suspicion to believe that Mexican and USA laws have been violated.'"

"The lead investigator recommended that Wal-Mart expand the investigation.

"Instead, an examination by The New York Times found, Wal-Mart's leaders shut it down."

The article also points to several internal communications about the situation:

• Rather than hire outside, independent investigators, Wal-Mart leadership decided that its own legal counsel would oversee a "preliminary inquiry." 
• In what is referred to in the article as a "terse report," the director of corporate investigations for Wal‑Mart in 2005, says that the situation is "not looking good."

Apparently, more than $16 million dollars was paid in "donations" or "contributions" to the Mexican government since 2003 to secure permits and build several stores in Mexico.

The first comment selected by the NY Times staff reflects public cynicism about the company:

Discussion Staters:

• Does the news about Wal-Mart in Mexico surprise you? Why or why not?
• Once again, how can people protect their communications from becoming public?
• How, if at all, should Wal-Mart respond to this situation?
• A follow-up NY Times article says that "...Bribery Is Taken in Stride" in Mexico. How, if at all, does that affect your perspective of this Wal-Mart situation?

Secret Service Responds to Scandal

While in Columbia planning for President Obama's arrival, 11 U.S. Secret Service agents and 10 military personnel were involved in a scandal: 21 prostitutes were hired to entertain the fellas. A hotel manager learned of the situation when an argument over payment ensued between one of the prostitutes and an agent.

 

Image source.

Although prostitution is legal in parts of Columbia, other issues help us determine whether this behavior was ethical. One issue is that hiring a prostitute was been banned for military personnel in 2006. This ruling was put in place during the Bush Administration, partly to address human trafficking, a practice in Columbia as well.

In addition, a writer of an Atlanta blog sums up potential risks and consequences of the situation:

"Most importantly, while there is no evidence that the security of the president of the United States was endangered in this incident, an agency with this kind of internal culture could be easily manipulated by those with reason to do so. At the very least, the scandal has created a significant embarrassment for the U.S. government and put at risk the generally good reputation of the Secret Service."

How has the Secret Service handled the response? One PR and marketing manager gave the Secret Service an A- for its response-not a bad grade for handling a difficult situation. Here's his analysis (a rubric, of sorts): 

1. Communication. Following the breaking news of the scandal, the federal government appeared to work fast to alleviate concerns about a widespread issue. Many, however, feel this incident is possibly symbolic of a bigger cultural issue in the Secret Service. Grade: B+

2. Acknowledgement. When the story broke on April 13, Edwin Donovan, a Secret Service agency spokesman addressed the rumors by stating that an unspecified number of agents had been recalled and replaced by others. Army Gen. Martin Dempsey and White House Spokesman Jay Carney acknowledged the incident and have already voiced deep concern, plus several members of Congress have spoken out to defend the Secret Service vowing to launch a full investigation. Grade: A

4. Accountability. By all accounts, the military and Secret Service have appeared to take accountability. Although the story broke via a Washington Post reporter, the federal government has taken full responsibility for the agency's actions. Grade: B+

5. Timely updates. Following the news, the federal government steered the conversation to itself and became the irrefutable source of timely updates. Grade: A

6. Rectification. U.S. Secret Service agent Mark Sullivan swiftly announced that he is leading an investigation of the incident with support from Congressman Peter King, Chairman of the Homeland Security Committee, and Senator Susan Collins, the ranking Republican on the Homeland Security Committee. By all accounts, it appears that the Secret Service, military and Congress wish to assuage any concerns that this incident somehow compromised national security. Grade: A 

Overall grade: A-

Discussion Starters:

• How do you assess the response to the scandal? Do you agree with the "A-" grade?
• What else does the Secret Service agency need to communicate at this point? How should its leaders provide updates to rebuild confidence?

Study: 98% Are Tethered to Email

According to a new study of more than 500 executives, people check email often. When not at work, 98% of people check email. Authors of the study conclude, "Work is not a place anymore. It's a state of mind." 

Discussion Starters: 

• Are you in the majority of people who check email every 1 or 2 hours? 
• Organizations benefit from people checking email often and when on vacation, and the consequences to people personally may be obvious, but what are the potential negative consequences to organizations? 

GSA Overspending Scandal: "Aggrieved by the Gall"

The General Services Administration (GSA) is under investigation for spending $823,000 at a Las Vegas conference in 2010.  The GSA is responsible for purchasing products, transportation, and office space for other government agencies, and ironically, is charged with developing cost-containment policies.

Martha Johnson, head of the GSA as of February 2010, has resigned amid the controversy.  In her testimony to Congress, Johnson admitted that the Western region training conference "evolved into a raucous, extravagant, arrogant, self-congratulatory event that ultimately belittled federal workers and would stain the very work that other committed staff and I were preparing to do." She also said that "[T]he expensive planning for that conference was well under way when I entered GSA, and I was unaware of the scope" and that she was "extremely aggrieved by the gall of a handful of people to misuse federal tax dollars, twist contracting rules and defile the great name of the General Services Administration."

Johnson's strong statement was in sharp contrast to that of Jeffrey Neely, a GSA executive who evoked his Fifth amendment right not to answer any questions. As reported by CNN, Rep. Elijah Cummings of Maryland criticized Neely specifically:

"'In one e-mail...Mr. Neely invited personal friends to the conference, writing, and I quote -- and this is simply incredible -- quote: "We'll get you guys a room near us, and we'll pick up the room tab. Could be a blast." End of quote. He then went on and wrote this -- "I know I'm bad, but as Deb and I often say, why not enjoy it while we have it and while we can. Ain't gonna last forever." End of quote. Well, Mr. Neely, it stops now.'"

Included in the evidence of the overspending scandal is this video, showing a GSA employee's joke about perks and then an award given to that employee at a GSA dinner at the conference.

Discussion Starters:

• Review the steps for ethical decision making. Which would have helped these administrators re-think their choices?
• How do you assess the GSA employee's video and award? Is this incriminating, just office fun, or something else?
• Grammar Check: The section above about Rep. Cummings has a quote within a quote within a quote. Is it punctuated correctly?