Performance Evaluation: The Illusion of Objectivity

You are a store manager for a large, regional department store chain. Company headquarters has asked you to submit an evaluation of your assistant managers performance. The company is considering promoting one of them to be the manager of another store in the chain. One of the assistant managers heads the Electronics Department in your store. She is a long-time friend of yours, and you would like to see her get the promotion. The other candidate heads the Home and Garden Department. She is a good assistant manager, but you don't know her well. You decide to recommend your friend for the promotion and include the following departmental pro?t numbers for the most recent year:

Electronics Home and Garden

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500,000 $300,000

Net pro?t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000 $40,000

Pro?t percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 13%

On this basis, arguing that Electronics has generated higher sales, higher net pro?t, and a higher pro?t margin percentage, you recommend that the promotion be given to your friend. However,

You are a little troubled by the following two additional pieces of information:

1. The average value of inventory held in Electronics at any given time is $1.2 million. The comparable number for Home and Garden is $250,000.

2. The pro?t percentage in Electronics has been fairly stable over the last ?ve years. On the other hand, the pro?t percentage in Home and Garden is at a 10-year high; the increase coincides with the hiring of the current Home and Garden manager.

Is it ethical for you to recommend the promotion for your friend, the head of the Electronics Department? How should you use the numerical evidence in support of your recommendation?