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This week we will analyze a case study by John Minahan and Cate Reavis, Harry Markham’s Loyalty Dilemma.

SUMMARY 

Harry Markham, a pension fund investment advisor, is torn about whether to tell the board of trustees of the pension fund he is advising that he believes the value of their projected liabilities are actually much larger than what the actuaries say they are. Confronted by the differing viewpoints held by economists and actuaries on how to value liabilities, Markham wonders, in light of the CFA Code of Ethics and Standards of Professional Conduct that he attests to on an annual basis, what are his duties and responsibilities as a professional and to whom—the trustees, his firm, the pensioners—he owes his loyalty. 

Learning Objective 

• To introduce students to differing views between actuaries and economists on pension fund liability valuation, and how these views can create conflicts of interest; 
• and get students to think about how they might practice values-based leadership in a business setting. 

Instructions: 

• Follow guidelines for writing a case study analysis are provided in the Course Resource module. These guidelines were adopted from the Ashford University Writing Center 
• Case analysis report must be written according to APA standards. 
• Submit case analysis report in Microsoft Word format. 

Case Study Analysis Grading Rubric 

CRITERION 

STRONG 

3 Points 

AVERAGE 

2 Points 

WEAK 

1 Point 

SORE 

Identification 

Of Main Issues/Problems 

Identifies and 

Demonstrates a 

sophisticated 

understanding of the main issues/problems 

in the case study. 

Identifies and 

Demonstrates an 

accomplished 

understanding of 

most of the issues/problems. 

Identifies and demonstrates 

Acceptable understanding of 

some of the 

issues/problems 

in the case study. 

Analysis 

And Evaluation of Issues/Problems 

Presents an insightful 

And thorough 

Analysis of all 

Identified issues/problems; 

Includes all 

Necessary calculations. 

Presents a thorough 

Analysis of most 

Of the issues 

identified; missing 

some necessary 

calculations. 

Presents a 

Superficial or 

Incomplete analysis of Some of the 

Identified issues; 

Omits necessary 

calculations. 

Recommendations on Effective 

Solutions/ 

Strategies/Biblical Perspective 

Supports diagnosis 

And opinions 

With strong 

Arguments and 

Well documented 

evidence; presents 

a balanced and 

critical view; presents a biblical perspective; 

interpretation 

is both reasonable 

and objective. 

Supports diagnosis 

And opinions with 

Limited reasoning 

And evidence; 

Presents a somewhat one sided argument; presents a biblical perspective; demonstrates little 

engagement with 

ideas presented. 

Little or no Action suggested, and/or inappropriate solutions proposed 

to the issues in 

the case study. 

Links to Course Readings and Additional Research 

Makes appropriate and Powerful connections between identified 

issues/ problems 

and the strategic 

concepts studied 

in the program/ course readings and 

lectures; supplements case 

study with relevant and thoughtful research and 

documents all 

sources of 

information. 

Makes appropriate 

But somewhat 

Vague connections 

Between identified 

issues/problems 

and concepts 

studied in program/ course readings 

and lectures; 

demonstrates 

limited command 

of the analytical 

tools studied; 

supplements case 

study with limited 

research. 

Makes inappropriate or little connection 

Between issues 

Identified and 

The concepts 

Studied in the program/course readings; supplements case 

study, if at all, with incomplete research and documentation. 

Writing Mechanics 

And Formatting 

Guidelines 

Demonstrates 

clarity, conciseness 

and correctness; 

formatting is 

appropriate and 

writing is free 

of grammar and 

spelling errors based on APA style manual 

Occasional grammar 

Or spelling errors, 

But still a clear 

Presentation of ideas; lacks 

Organization based on APA style manual 

Writing is unfocused, rambling, or contains serious 

errors; poorly 

organized and 

does not follow 

specified guidelines based on APA style manual. 

In Harry Markham’s Loyalty Dilemma, Markham, an investment advisor for pension funds, is torn about whether or not to tell the board of trustees of the pension fund he is advising that he believes the value of their projected liabilities are actually much larger than what the actuaries say they are. The actuaries’ valuations rely on what Markham believes to be an inflated discounted cash flow rate of 8%, a rate which is consistent with the Government Accounting Standards Board (GASB) rules. Economists and financial analysts like himself, however, believe that low-risk pension cash flows should be discounted at a low-risk rate, say 3% to 4% in the current environment. Confronted once again by the differing viewpoints between economists and actuaries on how to value liabilities, Markham wonders what, in light of the CFA Code of Ethics and Standards of Professional Conduct that he attests to on an annual basis, are his duties and responsibilities as a professional. Does he also wonder to whom he owes his loyalty? To the board of trustees of the pension fund, considered to be the client by many of his coworkers? To his firm? To the pensioners themselves whose financial future rests on the long-term health of their pension? 

I want to get you to think about how you might practice values-based leadership in a business setting. 

Your analysis should include: 

1. Why is Harry Markham so conflicted? 

2. Why do we have codes like the following in business? 

• Code of Ethics 
• Standards of Professional Conduct 

3. What do you think Harry Markham should do? 

This is not an all-inclusive list but your case should at least answer these three questions? Please follow the rules for completing a case study analysis. 

REQUIRED READING 

Read Minahan, J., Reavis, C. (2012). Harry Markham’s Loyalty Dilemma. MIT Sloan School of Management, Case Study.

• Introduction
  • Identify the key problems and issues in the case study.
  • Formulate and include a thesis statement, summarizing the outcome of your analysis in 1–2 sentences.
• Background
  • Set the scene: background information, relevant facts, and the most important issues.
  • Demonstrate that you have researched the problems in this case study.
• Evaluation of the Case
  • Outline the various pieces of the case study that you are focusing on.
  • Evaluate these pieces by discussing what is working and what is not working.
  • State why these parts of the case study are or are not working well.
• Proposed Solution/Changes
  • Provide specific and realistic solution(s) or changes needed.
  • Explain why this solution was chosen.
  • Support this solution with solid evidence, such as:
    • Concepts from class (text readings, discussions, lectures)
    • Outside research
    • Personal experience (anecdotes)
• Recommendations
  • Determine and discuss specific strategies for accomplishing the proposed solution.
  • If applicable, recommend further action to resolve some of the issues.
  • What should be done and who should do it?
  • And a Summary