Texaco’s Company Facts: :

Texaco’s Company Facts: Oil and Gas Company Key manager revealed taping of executives referring to African
Americans as f_ _ _ _ _ _ niggers Minority employees felt they lacked equal opportunities of advancement and
promotions Executives were taped referring to African Americans as jelly beans and agreeing to shred evidence
requested during a deposition

Ethical Issues :
Ethical Issues In March 1994, six African American Texaco employees filed a lawsuit on behalf of 1,400 African
American employees claiming discrimination Lawsuit based on allegations that Texaco had discriminated against
them in terms of promotions and fostered a hostile corporate environment Critical documents shredded that related to
the promotion of minority employees

Ethical Issues :
Ethical Issues Executives lacked proper ethical behavior skills and training; which resulted in discriminatory actions
Texaco did not have proper diversity and sensitivity programs

Texaco’s Key Failures: :

Texaco’s Key Failures: Executives and management behavior were unethical and discriminatory Lacked a process
were employees could report unethical behavior discreetly Did not have a ethical process to conduct internal
investigation to allegations. Failed to address the claims in a timely manner; Reactive versus proactive to the situation

Impacts as a Result of the Lawsuit :

Impacts as a Result of the Lawsuit Total cost of settlement approximately, $176.1m – largest settlement for race
discrimination in history. Equality and Tolerance Task Force created to assist with improvements in Texaco Human
Resource Programs

Impacts as a Result of the Lawsuit :

Impacts as a Result of the Lawsuit Nationwide job posting of more senior positions Salary increase of approximately
11% for current African American employees Additional lawsuit filed by shareholders claiming Texaco’s officers and
directors breached fiduciary duty and damaged Texaco’s name.

How should Texaco had responded? :

How should Texaco had responded? Retained all critical documents and evidence versus shredding the information
Immediately conducted an internal investigation into the claims Evaluated their own processes around minority
promotions and advancement within the company

How should Texaco had responded? :

How should Texaco had responded? Established better internal programs that discouraged unethical behavior and
discrimination Developed a program were employees could report unethical behavior discreetly

Courage/Ethical Conviction :
Courage/Ethical Conviction Richard Lundwall, senior coordinator of personnel should have come forward with the
taped conversation of discriminating information much earlier Finance management should have reported demands
by executives not to retain personal copies of vital information of the lawsuit

Conclusion :
Conclusion Texaco initial reactions to this matter were: Lacked urgency Resulted in unethical behavior by executives
and management Failed to address the issue and they did not have a formal ethical decision making framework
process Cost the company shareholders and owners over $176m and put a strain on the company’s reputation

Conclusion :
Conclusion As a result of this case Texaco should look to: Establish programs that address diversity and monitor the
advancement of minorities within the company Develop ethical training programs for all level of employees Create an
annual code of conduct exercise for all employees that address ethical behavior and makes each employee
accountable for their behavior Continuous monitoring of all diversity programs established to avoid future
discrimination lawsuits