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Simon Pemberton, a materials chemist at Applied Devices, is escorted by security guards to the company parking lot, where an HR manager tells him he's fired. Until that moment, things seemed to be going well. Simon had known, of course, about AD's zero-tolerance program, but it hadn't occurred to him that he'd violated it--particularly since his unauthorized e-mailing and Internet use were meant to serve the goal of scientific inquiry. Don Hardee, the CEO, strongly believes that deviations from a defined standard of behavior shouldn't be tolerated at AD. The dangers they pose to employees' health, safety, and morale, not to mention the company's productivity and reputation, are too great. Shirlee North, the head of HR, agrees. Ever since the jilted husband of an employee burst into AD's lobby waving a pistol, workers have been clamoring for security, and the zero-tolerance policies provide that. Initially, the program covered only weapon and drug possession, but the list of offenses warranting termination has grown considerably. When Shirlee's second in command argues that such policies are unworkable and unjust, Shirlee points out that the company intervenes only when the action is clearly prohibited, the harm actual or imminent, and the evidence unambiguous. Are Don and Shirlee right to stand firm, or should Applied Devices modify its program? Commenting on this fictional case study in R0611A and R0611Z are Janet Parker, the senior vice president of human resources for AmSouth Bank; Eugene Volokh, a professor at UCLA School of Law; Jean Halloran, the senior vice president of human resources at Agilent Technologies; and Michael G. Cherkasky, the president and CEO of Marsh & McLennan.

Simon Pemberton, a materials chemist at Applied Devices, is escorted by security guards to the company parking lot, where an HR manager tells him he's fired. Until that moment, things seemed to be going well. Simon had known, of course, about AD's zero-tolerance program, but it hadn't occurred to him that he'd violated it--particularly since his unauthorized e-mailing and Internet use were meant to serve the goal of scientific inquiry. Don Hardee, the CEO, strongly believes that deviations from a defined standard of behavior shouldn't be tolerated at AD. The dangers they pose to employees' health, safety, and morale, not to mention the company's productivity and reputation, are too great. Shirlee North, the head of HR, agrees. Ever since the jilted husband of an employee burst into AD's lobby waving a pistol, workers have been clamoring for security, and the zero-tolerance policies provide that. Initially, the program covered only weapon and drug possession, but the list of offenses warranting termination has grown considerably. When Shirlee's second in command argues that such policies are unworkable and unjust, Shirlee points out that the company intervenes only when the action is clearly prohibited, the harm actual or imminent, and the evidence unambiguous. Are Don and Shirlee right to stand firm, or should Applied Devices modify its program? Commenting on this fictional case study in R0611A and R0611Z are Janet Parker, the senior vice president of human resources for AmSouth Bank; Eugene Volokh, a professor at UCLA School of Law; Jean Halloran, the senior vice president of human resources at Agilent Technologies; and Michael G. Cherkasky, the president and CEO of Marsh & McLennan.

Simon Pemberton, a materials chemist at Applied Devices, is escorted by security guards to the company parking lot, where an HR manager tells him he's fired. Until that moment, things seemed to be going well. Simon had known, of course, about AD's zero-tolerance program, but it hadn't occurred to him that he'd violated it--particularly since his unauthorized e-mailing and Internet use were meant to serve the goal of scientific inquiry. Don Hardee, the CEO, strongly believes that deviations from a defined standard of behavior shouldn't be tolerated at AD. The dangers they pose to employees' health, safety, and morale, not to mention the company's productivity and reputation, are too great. Shirlee North, the head of HR, agrees. Ever since the jilted husband of an employee burst into AD's lobby waving a pistol, workers have been clamoring for security, and the zero-tolerance policies provide that. Initially, the program covered only weapon and drug possession, but the list of offenses warranting termination has grown considerably. When Shirlee's second in command argues that such policies are unworkable and unjust, Shirlee points out that the company intervenes only when the action is clearly prohibited, the harm actual or imminent, and the evidence unambiguous. Are Don and Shirlee right to stand firm, or should Applied Devices modify its program? Commenting on this fictional case study in R0611A and R0611Z are Janet Parker, the senior vice president of human resources for AmSouth Bank; Eugene Volokh, a professor at UCLA School of Law; Jean Halloran, the senior vice president of human resources at Agilent Technologies; and Michael G. Cherkasky, the president and CEO of Marsh & McLennan.

Professional services firms were once great models for corporations--until they started to resemble them.

The land of fried chicken and hush puppies likes its snacks steeped in fat, and Southland Baking Co. has always been happy to oblige. Its Chizzlewits are crumbly, full of saturated fat, and delicious. As a result, Southland has a solid foothold in its market. But to Peter Schmidt, Southland's vice-president and general counsel, every day seems to bring more evidence that products like Chizzlewits are becoming the new tobacco. A New York lawyer has just sued a company like Southland for supposedly making his client fat. A House subcommittee is holding hearings on the fat content of baked goods. And Mothers Opposed to Obesity in Kids is lobbying for warning labels on all foods containing sugars and saturated fats. Southland is trying to come up with a leaner version of Chizzlewits, but the results haven't been encouraging. As Arthur, a little boy in a test group, says with a scowl after taking a bite and spitting it out: "It looks like a Chizzlewit, but it doesn't taste like one!" Should Schmidt tell his CEO that Southland needs to recast its product lines? Commenting on this fictional case study in R0403A and R0403Z, are Kenneth B. McClain, a trial lawyer based in Independence, Missouri; Laurian J. Unnevehr, a professor at the University of Illinois at Urbana-Champaign; Pam Murtaugh, a consultant in Madison, Wisconsin; and Richard Berman, the executive director of the Center for Consumer Freedom in Washington, D.C.

The land of fried chicken and hush puppies likes its snacks steeped in fat, and Southland Baking Co. has always been happy to oblige. Its Chizzlewits are crumbly, full of saturated fat, and delicious. As a result, Southland has a solid foothold in its market. But to Peter Schmidt, Southland's vice-president and general counsel, every day seems to bring more evidence that products like Chizzlewits are becoming the new tobacco. A New York lawyer has just sued a company like Southland for supposedly making his client fat. A House subcommittee is holding hearings on the fat content of baked goods. And Mothers Opposed to Obesity in Kids is lobbying for warning labels on all foods containing sugars and saturated fats. Southland is trying to come up with a leaner version of Chizzlewits, but the results haven't been encouraging. As Arthur, a little boy in a test group, says with a scowl after taking a bite and spitting it out: "It looks like a Chizzlewit, but it doesn't taste like one!" Should Schmidt tell his CEO that Southland needs to recast its product lines? In R0403Z, commenting on this fictional case study are Kenneth B. McClain, a trial lawyer based in Independence, Missouri; Laurian J. Unnevehr, a professor at the University of Illinois at Urbana-Champaign; Pam Murtaugh, a consultant in Madison, Wisconsin; and Richard Berman, the executive director of the Center for Consumer Freedom in Washington, D.C. Commenting on this fictional case study in R0403A and R0403Z, are Kenneth B. McClain, a trial lawyer based in Independence, Missouri; Laurian J. Unnevehr, a professor at the University of Illinois at Urbana-Champaign; Pam Murtaugh, a consultant in Madison, Wisconsin; and Richard Berman, the executive director of the Center for Consumer Freedom in Washington, D.C.

The land of fried chicken and hush puppies likes its snacks steeped in fat, and Southland Baking Co. has always been happy to oblige. Its Chizzlewits are crumbly, full of saturated fat, and delicious. As a result, Southland has a solid foothold in its market. But to Peter Schmidt, Southland's vice-president and general counsel, every day seems to bring more evidence that products like Chizzlewits are becoming the new tobacco. A New York lawyer has just sued a company like Southland for supposedly making his client fat. A House subcommittee is holding hearings on the fat content of baked goods. And Mothers Opposed to Obesity in Kids is lobbying for warning labels on all foods containing sugars and saturated fats. Southland is trying to come up with a leaner version of Chizzlewits, but the results haven't been encouraging. As Arthur, a little boy in a test group, says with a scowl after taking a bite and spitting it out: "It looks like a Chizzlewit, but it doesn't taste like one!" Should Schmidt tell his CEO that Southland needs to recast its product lines? Commenting on this fictional case study in R0403A and R0403Z, are Kenneth B. McClain, a trial lawyer based in Independence, Missouri; Laurian J. Unnevehr, a professor at the University of Illinois at Urbana-Champaign; Pam Murtaugh, a consultant in Madison, Wisconsin; and Richard Berman, the executive director of the Center for Consumer Freedom in Washington, D.C.

Former SEC chairman Arthur Levitt talks with HBR's Ben Gerson about investors' eroded confidence and what the SEC, Wall Street, and corporate boards must do about it.