When Is a Deal a Deal?

3.5 When Is a Deal a Deal?

Controversies: 3.11 Key Words: contract, promise, verbal agreement, legal, city manager Case Complexity → Moderate CD: 3.8 Ethics Test and 3.81 Ethics Test Answers CD: 6.2 International City/County Management Association Code of Ethics

You are the city manager of a suburban community of 20,000 residents and have been the manager for ten years. You receive a salary of $109,000 but believe you can do better in a larger (38,000 residents) neighboring community whose city man- ager with a salary of $117,000 has just retired. You apply for the job and receive an offer of $125,000. You verbally agree to take the job. In the meantime, your current employer decides to counter-offer, promising to increase your salary to $156,000 over the next three years. Although you have agreed to accept the larger city’s offer, no contract has been approved or signed.

46 ◾ Ethics Moments in Government: Cases and Controversies

Discussion Questions

1. Should you back out of the offer and accept the counter-offer?

2. Would you violate your profession’s ethics if you renege on the verbal agreement?

3. What is the right thing to do?

Case Assessment

Henry Marcy, (former) Deputy Commissioner for Administration and Finance of the Division of Employment and Training, State of Massachusetts:

Yes, there is a deal, but there are a number of issues at play here. Is the verbal acceptance of the offer a contract? I believe that the ver- bal acceptance does constitute a contract. However, my argument is not from a legal perspective; it’s from the ethical context. In other words, the manager who has verbally accepted the neighboring com- munity’s offer has entered into an ethical contract or relationship. One can argue that the neighboring community’s hiring manager should follow up the verbal offer with an offer letter and require the manager’s signature on the offer letter. (Indeed, this letter may be in the mail.) Yet, the notion of a formal offer letter following a verbal offer sug- gests that the neighboring community can renege on the verbal offer. Would the manager feel that the verbal offer, in that case, was not a contract? No. At the least, the manager would consider the verbal offer to be an ethical contract and expect the neighboring community to honor that ethical contract.

Furthermore, if either the manager or the neighboring community reneges on the ethical contract, that manager or that community gov- ernment may become open to ridicule, damage to reputation, censure, etc., both in the short term and, potentially, in the long term. The city manager world, at least in Massachusetts, is a very small world. Everyone knows everyone else. The damage could be considerable, even resulting in the manager or the community government being characterized as unemployable or unworthy as an employer, respec- tively, by the Municipal Management Association (as it is called in Massachusetts).

If the manager in this case seriously considers reneging on the verbal offer, he or she should first, outside of the strictly ethical context, care- fully analyze the two offers. It is easy to jump to the conclusion that the promised stay-where-you-are increase to $156,000 in three years is more money than the offer of $125,000. Yet, that may not be the case. At the very least, I would want to know what the $125,000 had the potential of

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becoming in three years. More to the point is the question of whether the difference in the money is worth the risk of alienating others (especially the neighboring community). Even more critical, despite the emphasis on money as the decision-making factor, is the careful assessment of all the factors (e.g., the ability to continue to contribute meaningfully to the current community versus the ability to contribute meaningfully in the neighboring community, the particular challenges in the respective com- munities, the opportunity to learn new things from new people versus continuing to develop staff in the current community, etc.) that ought to go into a change in employment decision.

Finally, if the manager reneges on his acceptance of the offer, is he required (ethically) to recompense the employer for damages incurred by the employer? Such damages might include the cost of communications (letters, e-mails, etc.) sent by the neighboring community employer to the other (unsuccessful) candidates telling them that the position has been filled, the cost of a new hiring process if one should be necessary, the cost of the additional time lost (prior to the filling of the position) that might transpire, etc. I believe that he should offer to do so.

William Horne, City Manager, Clearwater, Florida:

I could not in good conscious back away from a verbal commitment

I made to the larger neighboring community. I intentionally explored

a city manager position that paid me more money than my current salary and was fortunate to get an offer from a nearby community. Although the counter-offer is considerably higher than what the larger city offered me, I feel an obligation to act consistent with my original intentions. My word is my bond. The right thing for me to do is take the $125,000 offer and move to the neighboring community. I would violate the spirit and intent of my profession’s code of ethics if I reject the larger city’s offer.