Ergo: Ethical Crises of a German Insurance Giant

by: Glyn Atwal, Douglas Bryson

Publication Date: April 4, 2014
Length: 8 pages
Product ID#: 1-429-390

Core Disciplines: Ethics, Leadership/Organizational Behavior

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Teaching Note

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What should a company do when it is hit with a corporate image crisis? This question plagued Ergo, a German insurance company, when it’s revealed that they threw a party billed as “Power, Pool & Party in Budapest,” where sexual services were provided for their top-performing agents. This case narrates the aftermath and asks if Ergo handled the situation correctly.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand the ramifications of a public crisis on a company’s image and bottom line as shown by the example of Ergo.
  • Evaluate the proper response of Ergo to the public image crisis and scandal.
  • Discuss the principle of how companies, in general, should deal with public scandals especially in the age of the Internet and 24-hour media coverage.
  • Discuss different strategies of how to communicate and deal with media coverage and public scandals.