About John Daniels Chemicals Inc.
This business case is about John Daniels Chemicals Inc., which is one the most respected and elite chemical research organization in the industry, operating since 1991, with the headquarters in Tanzania, Africa.
Organizational Structure and Culture at John Daniels Chemicals Inc.
Organizational culture in John Daniels Chemicals Inc. is an open and less rigid one, unlike the other usual corporations in the market. The scientists selected to work in John Daniels Chemicals Inc. are top of the top and they go through an exceedingly selective procedure to be considered for a job at John Daniels Chemicals Inc.
The formal hierarchy that is present at John Daniels Chemicals Inc. is as follows. Chemical research scientists report to Chemical Research Managers who, in turn, report to Director of Projects, Chemical Division, who reports to Director of Projects, General, who in turn reports to Vice President John Daniels Chemicals Inc., who in turn reports to John Daniels Chemicals Inc. President. Vice President and President function from the corporate office., which is in the Johannesburg, South Africa. Rest of the employees work in the lab based in Tanzania, Africa. Interaction between lab employees and corporate office is very rare.
Researchers’ Profiles at John Daniels Chemicals Inc.
John Daniels’s research scientists are at least Doctorate (PhD) in their formal education, usually in an area of their specialization, such as Biochemical, organic and physical chemistry, from a top research university, published in top journals in their field, and received wide recognition for their accomplishments before they are considered for a position at John Daniels’s. They are exceedingly committed to their occupation and their research. They think through themselves real scientists who are at a mission to fulfil the research task assigned to them. Because of all the achievement that have to present before being part of John Daniels, all the recruited chemical researchers are of the age 40 or more.
Extremely selective recruitment procedure, the chemical researchers’ extraordinary commitment to their research work, and very focused nature of their work consequently results in exceptionally low turnover rate among chemical researchers, with an average stay at John Daniels’s for at least 20 years. Among the most frequent reasons for them for leaving John Daniels, are coming to the retirement or researcher being appointed as Lead/Head of a prominent research lab at another prestigious organization.
Security Policy and Protocol at John Daniels Chemicals Inc. Research Lab (at Tanzania)
The John Daniels’s research lab is situated on a separate site with only one entrance, secured by the security staff. All the designated buildings on site have on-duty security staff which operate for 60 hours per week. Any access beyond these 60 hours is strictly permitted to designated buildings through electronic ID- cards. An additional layer of access is implemented and further controls are required for entrance in specific chem-rooms, chem-floors, chem-labs, and chem-storage areas, and so on. In short, at all times, electronic access is vigilantly governed so that employees are given access only to the buildings and areas for which employees can justify the need for access.
The utmost critical access had been granted to research scientists, who frequently work sporadic or prolonged hours. The research scientists at John Daniels’s research lab has been using various kinds of equipment and research materials to conduct their chemical research. Some of these possession of equipment worth quite expensive, that’s the reason that John Daniels’s research lab has placed quite careful controls over possession and terminus location of equipment, for instance, research scientists and employees are not permitted for taking the equipment out of the facility purely designated for the equipment until a written approval has been sought for this purpose; At large, only types of equipment sanctioned for use off-site are electronic gadgets such as laptops, tablets and computers.
Most stringent control is placed over the expensive materials such as silver, gold and platinum. These are the kind of materials which can be used/sold outside the John Daniels’s research lab. Hence it was evident that the control, check and balance was mandatory for the preservation of such materials at the John Daniels’s research lab vicinity. As a result, these three materials were stored in a purpose-built-spoof-free safe referred to as “Hot safe”, placed in a locked room, referred to as “Hot room”.
Only 6 members of special chemical research scientists team named “Energix” were authorized to utilized these materials as their research was pertaining to that, as well as access to the “Hot safe” and “Hot room”. Energix team is as follows
All the records for these expensive material had been and are kept quite diligently, along with the requisite documentation. The Energix team typically used only a small amount of these expensive material, most commonly only in milligrams. The protocol was that a weight must be measured and record about the use of all such expensive materials through signing a log book that comprised of usage date, name of material used, and consumed amount in milligrams, and the Energix’s member signature, who is using it. The same information had to be entered, except the signatures, in a computer, placed in the “Hot room”. This computer could be accessed only with a special password, only know to Energix plus and an individual password of the authorized Chemical research scientist who used it.
After entering the amount consumed, an especially purpose-built computer program calculates the amount remaining for each of the expensive material in the inventory, automatically. The same information is, hence, recorded for all transfers of these materials along with any damaged materials that has to be discarded. An important feature of this software was that if the remaining amount falls below the minimal amount considered necessary to keep on hand for expected lab use, it would give a warning message instantly on screen.
An audit is conducted each year, by the Chemical Research Manager and this too, in the presence of an authorized security officer. The Chemical Research Manager would conduct a weight remaining amount in inventory of these expensive material in the “Hot safe” and would match it with the weight registered by the computer program. Ideally, these two amounts must match.
In the past, these inventory checks and computer program’s amount had always been matched. The Chemical Research Manager is fully authorized to conduct and additional inventory checks at any point during the year, but it was never a case such an additional inventory check were conducted at any time other than the required end-of-year inventory checks. Chemical Research Manager would include these amounts in an annual report that describing all the conducted research by Energix team during that specific year. That annual report would then be submitted to John Daniels’s President in Johannesburg.
An unexpected security scenario happened
Around four weeks ago, Mikael Cox started a new research task that required the use of gold and silver. As per the protocol, he dully recorded the pertaining information each time he took these specific materials s from the “Hot Safe”. After a couple of weeks, he observed the amount of the gold and silver inventory listed in the computer program total and realized that the amount appeared higher than the amount he saw in the “Hot Safe”. He did not consider this matter further until he had to obtain some of these materials again a week ago. He thought that the amount in the safe looked significantly less than the amount the computer reported. He compared the handwritten log with the computer information to see if he could find an explanation for the discrepancy. For example, it was possible that someone entered information in the handwritten log and forgot to enter it into the computer program (or entered differing amounts in the computer program and the written log). He looked back at all listings since the last inventory control and could find no information to explain the discrepancy.
Mikael Cox recalled the instances in the past when there were statements provided by individuals who considered these security protocols as “hassle”, as for security officers it was an overprotection and for chemical research scientists, it was redundant. Some scientists also exhibited the “lack of trust “from the John Daniels’s research lab management and administration.
When Mikael Cox arrived the following day, he observed some of the scientists gathered in the coffee room of the lab having a dynamic conversation. He assumed this was the typical morning chatter about weekend plans or something of this sort. As he poured his coffee, he overheard the conversation. One of the Lab scientist was showing the others a gold-plated ring he had just purchased. He described his trip to Lena Marry Smith ’s house, who was one the chemical research scientist a part of Energix team. That lab scientist further shared the “amazing” workshop that Lena had in her basement. Lena Marry’s hobby was making jewelry. She had made the gold-plated ring for that Lab scientist who further said “Lena Marry can make anything you want, and she does inscriptions too! whatever you want. She does great work, and charges much less than any of the mall stores here.”
Lena Marry was a great and competent chemical research scientist, with a great track record of achievements, patents and awards. She had been well-respected in the field of chemistry and research and evidently one of the most senior colleagues attached to John Daniels’s research lab for over 15 years.
Mikael Cox finally decided to contact Energix team’s Chemical Research Manager, James Reed.
Mikael Cox described his concerns to James Reed, who became instantly uncomfortable as he spoke. If Mikael Cox’s suspicions were correct, he knew that this was a serious problem; and he did not know what he should do. He remembered his concerns when he was offered the position of Chemical Research Manager. He remembered that the concerns like this made him wish he had not accepted this management position. He was a scientist with extensive training in the lab and an excellent reputation in the scientific community. None of his past training ever prepared him for anything like this. He could not even imagine a reputed scientist stealing valuable lab materials, and a respected scientist doing this seemed totally impossible.
James Reed thought about what he could do. He certainly could not imagine confronting Lena Marry or anyone else, with such problem as he respected all members of team Energix. Every memberin Energix team was highly accomplished scientist, He feared with the thought of speaking to them about this problem. If he suspected anyone wrongly, he knew the person would be greatly disrespected. What impact would this have to their working-relationship, after all? This was the question in James Reed mind the whole night when he was in bed.
What is next and what to do?
As you have read the case and situation with keen observations, please address the following questions
The 4 options which James Reed can pursue to solve the issue in hand, are as follows:
· James Reed can get the structure of the lab revamped so as to get a role dedicated simply to handle the Hot Safe. The person will be responsible for the contents of the Hot Safe and will have sole access to it. He will be in the final layer of approving the material taken from the same. This way, the inventory can be accessed sole-handedly and inventory balance can be managed effectively.
· James Reed can get an ERP software which will have various layers of protection and approval. This will help in keeping a check on the content of Hot Safe and transparency can be maintained. The software will release reports on monthly basis regarding who accessed the inventory, at what time and for what purpose.
· James Reed can conduct a round table conference with the primary stakeholders and contemplate ways in which this mismatch can be avoided. This will also warn the employees who have been taking advantage of the system and have been conducting fraud with the content balance of the Hot Safe.
· James can get more proof about Lena Marry Smith and others, doing the fraud. He then will have to confront the concerned person with proof to stop this fraudulent activity.
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