Virtues Ethics

Jim Smith has worked
for the ABC Insurance Company for the past twenty-three years. Jim
graduated with a top-notch accounting degree and he also has his MBA.
Bar none, Jim is considered by everyone in his organization to be a
brilliant accountant. At issue is that Jim’s brilliance may be coupled
with just a little too much “creativity” when one considers his approach
to maximizing the company’s profits.

At the end of every quarter, Jim calls up the supervisors of each of
ABC’s insurance branches, and asks them to estimate their outstanding
insurance claims. These insurance claims represent money that the
company very likely owes its customers – i.e., claims are estimates of
money owed at the end of the quarter to ABC’s customers who are likely
to file a claim in the near future, but who have not yet done so (the
total money owed – but still outstanding – is referred to as a “claims
lag”, since there is a lag from the date on which an insurable event has
occurred to that point in time at which ABC has become aware that a
customer has filed a valid claim).

For instance, based on historical experience, at the end of each
quarter, Division 1 of ABC Company estimates that 20% of all claims for
that quarter are still outstanding (i.e., an insurable event has
occurred, but has not yet been reported to Division 1). This is the
number (20%) reported to Jim. Being the “brilliant” accountant that
he is, and in light of his sheer eagerness to maximize profits for the
quarter (and because his quarterly bonus is based on each quarter’s
profits!), Jim reduces the outstanding claims reported by all of ABC’s
insurance divisions by 10%. In doing so, Jim has effectively reduced the
company’s quarterly claims expenses by this same 10% — and voila! — Jim has also managed a creative increase in his own quarterly bonus.

As you might guess, Jim sees nothing wrong in further reducing the
divisions’ company claims estimates, reasoning: “Look…they’re all a
bunch of estimates anyhow!” Jim further opines: “Besides, I have a duty
to this company and to its stockholders – and that is to maximize
profits!”

Consider this situation from a virtue ethics perspective. What virtues are at stake?