The Business Ethics Blog

May was a busy month for me, so I missed this story until now.
Back in May, a furor arose when an employee at Tim Hortons — Canada’s iconic donut chain — was fired for giving away a “Timbit” (that’s the trademark name for the treat made from frying the ball of dough punched out of the centre of a donut. ) (In fact, the firing was done by managers at a franchise store, not by Tim Hortons Inc.) Here’s the story:

Tim Hortons fires single mom over free Timbit

Giving a free Timbit to a baby has cost a single mother of four her job.
Nicole Lilliman, 27, was fired yesterday from her Tim Hortons job for giving one of the 16-cent blobs of fried dough to a tot.

Of course, when the story hit the news, all hell broke loose.
And almost immediately, Tim Horton’s head office intervened:
Tim Hortons rehires fired woman

A Tim Hortons employee fired Wednesday for giving a free Timbit to the child of a regular customer has been rehired.
Nicole Lilliman, 27, a single mother of four in London, Ont., was reinstated Thursday after intervention by the chain’s head office.
In a terse press release, the company blamed an overzealous manager for the firing, which threatened to become a public relations nightmare as the story gained traction in the media Thursday.

“Unfortunately the action of the manager of this location was not appropriate nor grounds for dismissal. With an apology from management, Ms. Lilliman has been rehired by the franchisee,” it states.

Two issues here, which must be kept separate.
One issue is fair treatment of employees: clearly it’s rather unfair, bordering on insane, to fire someone over 16 cents (especially when the 16 cents weren’t stolen, but given away in a well-intentioned effort to do something nice for a loyal customer.) An extreme punishment for a minor violation of the rules is a genuine business ethics issue.
Another issue is about good business sense. Many of the reader comments following the news stories focused on how silly it was for Tim Hortons to punish an employee for doing something that’s good for business. And, that’s probably right. (Some other coffee stores have a policy that basically says “if a customer is unhappy, give them something for free.” It’s good business.) But as always, it’s important to keep the “good business” argument and the “good ethics” argument separate. Even if giving away freebies (in certain circumstances) is good business, that doesn’t mean a company is unethical for punishing an employee for doing so in violation of policy.
The final thing worth pointing out here is that the story is a good illustration of some basic agency problems. Store managers punished Ms. Lilliman for using her judgment in violation of company policy; and Head Office overruled the store managers for making (what seemed to Head Office to be) a silly managerial decision not in the the best interests of the company. At both levels, managers found out that delegating authority is a perilous business necessity.