What would you do? (Blackley Shipyard Story)

When I came across with this excellent case study in the book of The Ethical Leader, I found it fascinating.

I’ve also realized that leaders encounter many dilemmas day after day from much smaller to sometimes even bigger than this when their integrity and moral compass being challenged and compromised. In our modern society and business world (no matter whether we are talking about a company or a situation from a developing or a developed market) leaders are facing numerous real and perceived ethical dilemmas, where the answers are not so straight forward, because as a matter a fact they are not black and white. Read the story below and let me know what would be your leadership decision.

Blackley Shipyard Story

“The Year is 1931. The place is the small town of Blackley in the northeast of England, population c. 10,000. The main industry in Blackley is a shipyard which builds and repairs ships, and employs around 800 people directly. The rest of the town is entirely dependent economically on the shipyard; the yard's employees spend money in the town's pubs and cafes and laundries and markets, enabling these other business to survive.

The shipyard had been founded in the late nineteenth century and had prospered through the First World War, building warships for the Royal Navy. The post-war recession hit the yard very hard, and in 1922 it was nearly forced to close. This caused panic in the town, for it was recognized that without the shipyard, the town itself was not economically viable. There was little in the way of social safety net in those days, and if the yard closed the population of the town would have to disperse to find work elsewhere. A thriving little community would be broken up, and Blackley would become a ghost town.

Into the breach stepped our hero, Arthur Lawrence, a successful stockbroker from London then in his late 20s. He had fond memories of the area, where he had holidayed with his parents and family for many years, and had a great affection for Blackley. Lawrence had done very well in the markets and had money to spend. A well-educated, honourable young man, he was also restless and looking for something to spend his money on, something that would do good in the world. In Blackley he saw his chance. He bought the shipyard, invested his own fortune in it, and built the yard up again, this time making cargo vessels for the merchant marine. Through the 1920s, Blackley prospered.

Then came the Wall Street crash of 1929 and the Great Depression, and the world market for shipping disappeared almost overnight. Orders for new ships were cancelled. For a tune the yard survived by doing repair and refit work, but these jobs too began to dry up. By the end of 1931, it was clear that the writing was on the wall. Lawrence and his fellow directors calculated that they had enough money to pay the workforce until the end of February 1932. After that, the money would run out. With no bank willing to lend them funds, they would have no choice but to close the shipyard and lay off the entire workforce, with disastrous consequences for Blackley.

Then, at the eleventh hour, a message arrived. The Ministry of Marine in Romania was looking bids to build two small tankers to service the country's burgeoning oil industry. Building these tankers would keep the yard in work for another year, during which time the economy might improve and the demand for shipping revive. There was one problem: the Romanian government was known to be endemically corrupt, but Lawrence was willing to take the risk. He jumped at the offer like a drowning man seizing a lifebelt, and took the next train to Bucharest. On arrival, he was received warmly by officials of the ministry and made welcome. To his surprise, he discovered that he was the only bidder for the contract.

Everything went smoothly. The Romanian negotiators were happy to accept whatever terms Lawrence proposed. At the end of the second day it was announced that the contracts would be signed at the Ministry of Marine at noon the following day.

At ten o'clock that night, two officials from the Ministry of Marine knocked at Lawrence's hotel room door. Their message was simple and blunt. Unless Lawrence provided a bribe of £20,000, half to the Minister of Marine and half to themselves, before noon tomorrow, the contract would not be signed. There would be no deal. A telegraph line would be held open for Lawrence to contact his bank and arrange a wire transfer, but he would not be permitted to make a telephone call or contact his associates back in Blackley. He had only a few hours, on his own, to decide.

The choice was grim. He could pay the bribe, and hope the officials kept their word and the contract would be signed. If he did so, the shipyard would have work and the business and the town would survive. But he himself would have broken the law; then as now, British law forbade the payment of bribes overseas. If he was caught, he would go to prison, and be banned from ever holding a company directorship again. His career would be wrecked. And he himself would have to live with the knowledge that he had broken the law. Finally, he would have been contributing to and reinforcing the culture of corruption in Romania, where a small number of officials were enriching themselves while the mass of the population sank steadily into poverty.

Alternatively, Lawrence could refuse to the pay the bribe. The deal would collapse, and he would return to Blackley empty-handed and tell his directors and his workforce that it was all over. In two months, they would be unemployed and the community would disappear. He would in effect have sacrificed the shipyard and the town to save his honour.”

What was the ethically correct thing to do in these circumstances? What would you do as a leader?

You can find out how the story ends in the book.

Read the case study in Hungarian here: https://www.linkedin.com/pulse/te-hogy-d%C3%B6nten%C3%A9l-az-etikus-vezet%C5%91-beata-kalamar/

Source: Witzel M. (2019) The Ethical Leader: Why Doing the Right Thing Can Be the Key to Competitive Advantage. pp27-29.

Sculpture of a shipyard worker by Walter Rössler

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