You have read chapters 9 Foundations of Group Behavior, 10 Understanding Work Teams, and 11 Communication. Read the case study on Holacracy and answer the question at the end of the case study. "Should Derek fight the holacracy initiative?" based on what you have learned in the three chapters and outside research on the topic. Describe and justify in not less than 300 words (support with research from the textbook and at least one outside source) you position on holacracy. 1 Business Ethics Task 1: Organizational ethics and Corporate Social Responsibility SCHOOL University MILKMAN / Student ID #: XXXXX A. Corporate Policies To restrain from any misuse of TechFite funding, the human resources department will implement the following policies. · Requirements of full-time employees: All employees with a full-time status are required to work a minimum of 36 hours per week; this is not to exceed more than 40 hour per week. If an employee works more than 40 hours per week, he/she is eligible to receive overtime compensation at indicated in the employee handbook. All full-time employees are eligible to receive company employee benefits. Any employee working less than 36 hours per week will be classified as a part-time employee and will be required to sign a change of status form acknowledging change of benefit. · Bonus Distribution to Employees: TechFite will prohibit the distribution of bonuses to executive and leadership of the company. The company will use revenue assets to compensate all employees at the same percentage increase regardless of job titles and status. This will assist of equal opportunities within the company. · Sponsorship and Company Participation of Community Events: The company will mandate the sponsorship of all community organizations. This policy will assure all executive attendance and sponsorship is present for organizations that would benefit from TechFite. A1. Rationale · The policy, Requirements of Full-Time Employees, will serve as a protection of all employee status. This policy will outline that full-time employees will no longer have a decrease of hours which could potentially harm the security of their employee benefits. This policy will also outline the proper communication and documentation required for any status changes. This will assure employee awareness of any benefit changes due to their status. · The Bonus Distribution to Employees policy will grant equal opportunities and equal compensations to all employees. This policy will fully detail no preference will be given to higher executives for bonus compensations. · The policy, Sponsorship and Company Participation of Community Events, will assure all executive attendance and sponsorship is present for organizations that would benefit from TechFit, which in return will increase the moral of the company within the community. This policy will indicate that sponsorship is not optional, yet mandatory. A2. Ethical V.

1. You have read chapters 9 Foundations of Group Behavior, 10
Understanding Work Teams, and 11 Communication. Read the
case study on Holacracy and answer the question at the end of
the case study. "Should Derek fight the holacracy initiative?"
based on what you have learned in the three chapters and
outside research on the topic. Describe and justify in not less
than 300 words (support with research from the textbook and at
least one outside source) you position on holacracy.
1
Business Ethics Task 1:
Organizational ethics and Corporate Social Responsibility
SCHOOL University
MILKMAN / Student ID #: XXXXX

2. A. Corporate Policies
To restrain from any misuse of TechFite funding, the human
resources department will implement the following policies.
· Requirements of full-time employees: All employees with a
full-time status are required to work a minimum of 36 hours per
week; this is not to exceed more than 40 hour per week. If an
employee works more than 40 hours per week, he/she is eligible
to receive overtime compensation at indicated in the employee
handbook. All full-time employees are eligible to receive
company employee benefits. Any employee working less than
36 hours per week will be classified as a part-time employee
and will be required to sign a change of status form
acknowledging change of benefit.
· Bonus Distribution to Employees: TechFite will prohibit the
distribution of bonuses to executive and leadership of the
company. The company will use revenue assets to compensate
all employees at the same percentage increase regardless of job
titles and status. This will assist of equal opportunities within
the company.
· Sponsorship and Company Participation of Community Events:
The company will mandate the sponsorship of all community
organizations. This policy will assure all executive attendance
and sponsorship is present for organizations that would benefit
from TechFite.
A1. Rationale
· The policy, Requirements of Full-Time Employees, will serve
as a protection of all employee status. This policy will outline
that full-time employees will no longer have a decrease of hours
which could potentially harm the security of their employee

3. benefits. This policy will also outline the proper
communication and documentation required for any status
changes. This will assure employee awareness of any benefit
changes due to their status.
· The Bonus Distribution to Employees policy will grant equal
opportunities and equal compensations to all employees. This
policy will fully detail no preference will be given to higher
executives for bonus compensations.
· The policy, Sponsorship and Company Participation of
Community Events, will assure all executive attendance and
sponsorship is present for organizations that would benefit from
TechFit, which in return will increase the moral of the company
within the community. This policy will indicate that
sponsorship is not optional, yet mandatory.
A2. Ethical Versus Legal issues
· Not all ethical issues are illegal, as some do not cause a
violation of governing law. The issues discussed were only
unethical for employees and the community, but not criminal
acts upon anyone. Unethical issues only become illegal actions
when a legal law has been broken. In the case of TechFit only
ethical beliefs were broken that affected employees and the
community.
A3. Ethical Issues in the Scenario
· TechFite is currently experiencing the ethical issues
concerning the organization’s core values, morality, and
integrity. The company is not following by it’s standards and
values towards their employees and the community. The core
values of the company are being challenged by not assuring that
all employees are one of the company’s top priority. Not
providing them the appropriate compensation and decreasing the
opportunity to receive all of the employee benefits challenged
the loyalty of the company to their employees. The company’s
morality towards employees and the community was not
appropriate and did not look towards the best overall. The
company itself only looked towards benefit the executives with
higher positions. Each unethical decision made by TechFite

4. will unfortunately play a role on the company. Many employees
will assume that the company will not provide them t he best
opportunities. The employees will be insecure about the
company’s loyalty and whether it is capable of following the
standards and core values it stands for.
A4. Purpose of the Ethics Officer
· The ethics officer serves as the leaders of an organization
capable of identifying ethical and unethical issues within an
organization. The duties and responsibilities of an ethics
officer is to provide leadership for ethical concerns, to assure
compliance is being followed by all members of the
organization, as well as serving as a liaison between the
organization, affiliates, and employees. The ethics officer
contributes to assure that the company’s mission and vision are
being met and no illegal acts are taking place. The ethics
officer can ensure that a safe and professional environment is
being provided to all of its employees. The ethics officer can
assure compliance within an organization policies and standards
by providing training to all of its employees including
executives and leadership. The ethics officer can also
implement deadlines for policy implementations as well as
reviewing of existing policies. All policies can be written in
terms for all employees to easily understand and follow.
B. Corporate Social Responsibility
· Corporate Social Responsibility (CSR) is a business practice
which is incorporate into the business model of a company that
can give a positive impact to the company itself, community,
and environment. This is important as it provides the company
an improved image and brand building. TechFite would benefit
from being socially responsible, as it will give employees a
sense of compliance of its core values and engagement within
the community. The City of Dellberg and the TechFite
employees benefit from the practice of CSR by being allowed
the opportunity of growth and improvement of the environment
and society. CSR will provide more work opportunities and
better engagement and salary to their employees.

5. B1. Community Reputation
· TechFite did not provide all full-time employees their full-
time scheduled hours, which in return placed at risk all
employee benefits and compensations, and violations of
company HR compliance.
· The company allowed for budget earnings to be used as
bonuses to higher executives, which limited resources to its
employees and the community.
· Techfite also failed to provide the assistance with monetary
funding during and for community organizations and
sponsorships.
B2. Course of Action
· In order to prevent from any violation of human resources
compliance, the company will adopt a policy that clearly
elaborates the requirements of all full-time employees,
minimum hours, and employee compensations. This will assist
with employee retention and recruitment.
· TechFite will have to implement a policy that fully executes
no bonus pay for any higher executives from company earnings,
which could lead to community growth as well as advancement
for its employees.
· TechFite will be mandated to attend and sponsor all
community events and youth programs that would benefit from
its support. A policy will be created to assure that this is in
compliance and that community involvement and engagement is
present.
B3. Course of Action: Explanation
· TechFite can provide an ethical responsibility assuring that
human resources compliance is met by securing the status of all
full-time status employees and their benefits, based on their
policy. This will aid in the ethical commitment of the company
towards its employees.
· A social responsibility TechFite can provide is utilizing
earnings to develop better resources for its current employees
and the community rather than using the money as bonuses for
higher executives.

6. · By committing its community involvement and engagement
through sponsorship, TechFite will be environmentally
responsible, as it will support influential growth. This will add
acceptance of the company as a benefit to its community.
BUSINESS MODELS
Case Study: Is Holacracy
for Us?
by Erik Roelofsen and Tao Yue
DECEMBER 08, 2016
Rogier Maes, the CEO of Contect, wrapped up his year-
beginning speech to all the company’s
employees. Listening, Derek Melis, his friend and CFO, was
relieved. Rogier hadn’t once mentioned
holacracy or self-managed teams, even though the executive
team and the board had been talking for
months about transitioning to just such a system at the global
construction company.
Editor's Note
This fictionalized case study will appear in a forthcoming issue
of Harvard Business
Review, along with commentary from experts and readers. If
you’d like your comment to be
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PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
considered for publication, please be sure to include your full

7. name, company or university
affiliation, and email address.
Derek still hated the idea; it was just too risky to let 200 offices
and subsidiaries around the world call
the shots without permission or approval on major decisions
from headquarters in Eindhoven. But
Rogier thought it was the key to boosting engagement and
performance, and he had hinted that he
might use Contect’s 2017 annual all-employee meeting—his
chance to announce new goals and
celebrate the previous year’s accomplishments—to roll out the
change.
Instead, to Derek’s relief, he’d stuck to the traditional rallying
cry: “We’ve had double-digit growth
again. Our revenue is up by 14%, EBITA by 12%, and order
intake by 13%. Our performance has
exceeded all shareholder expectations. We could never have
achieved it without all of you!
Remember: No matter how large Contect gets, it will stay agile
and motivated. Thank you. And here’s
to an even better 2017!”
Rogier handed the microphone over to Henning Haas, the CEO
of Contect’s Germany group, and
came backstage where Derek was waiting. “That seemed to go
well,” he said. He and Derek could
hear people still clapping and cheering in the auditorium. “Of
course,” he added, “I think the
applause would be even louder if I’d talked about the holacracy
initiative.” His tone was teasing, but
with a serious edge.
“You were right to hold off,” Derek said.

8. “Yes, and I take your cautions very seriously. But I still believe
that self-governance is the way
forward. People want to be their own bosses, responding to
local circumstances but working for the
common good. If we give talented people the best opportunities,
they’ll stay with us forever, and
we’ll keep growing at the rate we want to.”
“Let’s just wait until we iron out more of the details,” Derek
said.
“Or until you finally get on board, my friend,” Rogier replied.
Getting Used to the Idea?
The next morning, as Derek was driving to the office, he mulled
over his relationship with Rogier.
The two men went way back. They’d met at university, and
although Derek had gone on to graduate
school and a career in banking, while Rogier had joined his
family construction business and then
founded Contect, they’d never lost touch. Derek had helped
Rogier stay anchored when Rogier was
going through a brutal divorce. And when Derek had lost his job
during the financial crisis, Rogier had
invited him to join Contect.
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PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
Although they didn’t always see eye-to-eye at work—Derek was
far more conservative than Rogier—
they had tremendous mutual respect and could usually
compromise. But the decentralization debate
was different. In Derek’s view, the subsidiaries already had far

9. too much power.
Although Contect had launched as a specialist in small but
steady installation jobs with high margins
and low risk, it was now a full-service construction company
that did design, construction, lighting,
ventilation, water, waste processing, and IT infrastructure for
much bigger, more complex projects.
Rogier’s strategy since 2000 had been to grow through
acquisitions and to give a long leash to all the
businesses he’d bought. The smaller ones could keep their own
names, leadership teams, practices,
and policies for the first five years. And although senior
managers’ remuneration was tied to
Contect’s overall sales and operating profits, the head office
had relatively little control over the
30,000 projects the company had underway at any given time.
Rogier liked this system for three reasons: It freed him from
having to manage all the disparate
businesses, so he could focus on additional acquisitions. He felt
it wouldn’t be cost-effective to add
more controls at the group level. And he thought independence
was a great motivator. “I’m an
entrepreneur through and through,” he would say. “I want my
company to be just as
entrepreneurial.”
Derek understood all those points, but he still thought Contect
was too lax. Inconsistent policies put
the company at greater risk of lawsuits. The lack of control
meant that the leadership team had little
say in how the Contect brand was being managed at a local
level. And without centralized oversight
of projects, any single subsidiary’s missteps risked taking down
the entire company. Rogier knew

10. Derek’s position—but he had gone to an executive training
course on holacracy in Las Vegas and had
come back so fired up that he was now pushing for self-
managed teams at headquarters and
complete decentralization at the country level.
Derek had held him off by insisting that he get the board more
involved in the decision, but Rogier
had managed to align directors on his side. He now had only
one major—and very vocal—opponent:
Vera Hoch, the head of the audit committee.
Vera’s Perspective
Walking into the office, Derek checked his phone and saw that
he had five e-mails from Vera. He
called her right away, and she explained that Rogier had
suggested she reach out. “I tried to talk to
him about this whole holacracy nonsense last night, and he told
me to check in with you,” she said.
Derek smiled. This was an old trick of Rogier’s: He would align
two people who disagreed with him,
knowing that the more moderate one (Derek in this case) might
temper the other’s view.
“I don’t need to remind you what happens when we give so
much power to the subsidiaries,” Vera
said. “I’ve seen firsthand how ugly it can get. Rogier has too,
which is why, frankly, his position on
this stuns me.”
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11. Just after Vera had joined Contect’s board, the company had
been hit by a huge scandal. The project
—Park 007—was a James Bond–themed amusement park with
artificial ski slopes, cliffs for bungee
jumping, roller-coaster rides, indoor water sports, casinos,
cinemas, and two five-star hotels. The
Russia office had contracted to build it but hadn’t done so. For
two years the subsidiary had recorded
revenue from the proposed €650 million mega-resort. Contect’s
head office had discovered the fraud
only after someone anonymously sent Rogier thumb drive
containing a Russian news report that the
park was still barren land, despite what the Russia office’s
books said. Everyone involved had been
fired, but cleaning up the firm’s reputation in Russia and in
Europe had not been easy.
Vera had led the subsequent charge to strengthen the internal
audit system. After Derek joined,
they’d worked together on further risk management—
establishing a central division to set policy,
ensure compliance, and evaluate projects worth €100 million or
more and creating an executive
council of market and industry experts to advise on budgets and
other strategic issues.
Now Vera was getting worked up. “He’s calling it ‘holacracy,’”
she said, “but that’s still just
decentralizing, which we can’t do any further. We have to take
back control at the top—not give the
subsidiaries more power. Rogier has set some ambitious growth
goals this year, and without
oversight I’m worried they’ll incentivize the wrong behaviors.
Does he really want us to roll back all
the work we’ve done and give the groups free rein? Why
haven’t you been tougher with him on this?

12. Is it your personal relationship? Please don’t let that cloud your
judgment as CFO. You need to tell
him that from a risk perspective, full decentralization is out of
the question.”
Henning Weighs In
Derek couldn’t stop thinking about Vera’s admonition, but he
tried his best to focus on the earnings
report he needed to finish. Unfortunately, just before lunch,
Henning Haas knocked on his door.
“I thought you’d be on your way back to Frankfurt already,”
Derek said.
“I’m leaving tomorrow. I wanted to see a few people first—
including you.”
Derek knew that this would be yet another conversation about
decentralization. Henning was a big
proponent of greater freedom for the groups, and as leader of
the company’s largest country group,
he held a lot of sway with Rogier and the board.
“You’ve always been very careful around risk, and we
appreciate that, but this company won’t
continue to grow if we hinder it. The success you see in
Germany, France, the UK, even Central
Europe—it’s because we have increasing autonomy and
freedom.”
“And Russia?” Derek asked.
“You can’t punish us all because of one bad apple. Designing
policy around the lowest common
denominator is a bad strategy, and you know it.”

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PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
“As the CFO, I can’t lose sight of what’s going on in each
country.”
“I’m not suggesting complete anarchy,” Henning said.
“And I’m not suggesting we spy on everyone 24/7. But we’re a
global company. Our projects aren’t
isolated. You saw what happened with Park 007. If one office
does the wrong thing, we all suffer. It
hits our collective reputation and our finances.”
“Just don’t forget we’re in construction, not banking, Derek.
Decentralization is the norm in this
industry. We’re all organized around projects. And we should
be able to contain risk at the local level.
You have to admit that it would be a far more efficient
approach, whether you call it holacracy or not:
Faster decisions, made by the people who are most affected by
them and know the ins and outs of the
specific project, will make us much more agile. My peers and I
will be able to bid on projects more
quickly, get them done faster, and book more revenue if we
aren’t hindered by needless
bureaucracy.”
After Henning left, Derek found that he was too distracted to
get back to work. He believed that if he
was truly determined to, he could probably persuade Rogier to
abandon his holacracy plans. But it
would take a lot of social capital.

14. Was this the issue over which to put his friendship—and his
job—on the line?
Should Derek fight the holacracy initiative?
If you’d like your comment to be considered for publication in a
forthcoming issue of HBR, please
remember to include your full name, company or university
affiliation, and email address.
Erik Roelofsen is a professor of international financial reporting
and capital market communications at the Rotterdam
School of Management.
Tao Yue is the managing editor of the Rotterdam School of
Management Case Development Centre.
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