Business Ethics? Review the following video Wells Fargo Whistleblower? – Khalid Taha is the whistleblower in the Wells Fargo sales scandal of 2016-2017. John Stumpf was still CEO at t

CHAPTER 10 Moral Choices Facing Employees

Learning Objectives

After completing this chapter students should be able to:

 Understand employees’ legal and moral obligations to the firm and appreciate some of the difficult choices with which employees are faced.

 Identify, avoid, and suggest ways to resolve employment-related conflicts of interest.  Understand employees’ obligation to operate within a legal and ethical framework on behalf of

their employers in ways that protect proprietary data, avoid bribes and kickbacks, and other perceived forms of impropriety.

 Evaluate the options available to employees who need to challenge their employers, as well as their rights and responsibilities if and when they believe that wrongdoing has taken place.

 Distinguish between employees’ obligations to employers and third parties.

Glossary

1. conflict of interest: When someone has an interest that conflicts with the interests of the company and it's significant enough to have a chance of motivating behavior that conflicts with the interests of the company.

2. grease payments: Payments similar to bribes but intended to get officials to do their normal job duties rather than to do something illegal or unethical.

3. insider trading: Buying or selling stock using relevant information that's not available to the public. 4. proprietary data: Information that isn't meant to be used without permission, such as patents,

copyrighted data, and trade secrets. Proprietary date is meant to give people or companies a monopoly over the information so they benefit from their inventions and discoveries. This is expected to encourage people to be inventive by rewarding them for their achievements.

5. whistle-blowing: Alerting the public of illegal or unethical behavior done by a company by those who work for the company or used to work for it.

Chapter Summary Points

1. The employment contract creates various obligations to one’s employer. In addition, employees often feel loyalty to the organization. Conflicts of interest arise when employees have a personal interest in a transaction substantial enough that it might reasonably be expected to affect their judgment or lead them to act against the interests of the organization.

2. When employees have financial investments in suppliers, customers, or distributors with whom the organization does business, conflicts of interest can arise. Company policy usually determines the permissible limits of such financial interests.

3. Insider trading refers to buying or selling stocks based on nonpublic information likely to affect stock prices. Insider trading seems unfair; it can injure other investors and undermine public confidence in the stock market. In practice, determining what counts as insider trading is not always easy, but it typically involves misappropriating sensitive information. Some writers defend insider trading as performing a necessary and desirable economic function.

4. Proprietary data refers to an organization’s information that can't be used by others without permission. Increasingly, problems arise as employees in high-tech occupations with access to sensitive information and trade secrets quit and take jobs with competitors. Proprietary-data

© 2017 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

10-1

issues pose a conflict between two legitimate rights: the right of employers to keep certain information secret and the right of individuals to work where they choose.

5. A bribe is payment in some form for an act that runs counter to the work contract or the nature of the work one has been hired to perform. The Foreign Corrupt Practices Act prohibits corporations from engaging in bribery overseas. Bribery generally involves injury to individuals, competitors, or political institutions and damage to the free-market system.

6. The following considerations are relevant in determining the moral acceptability of gift giving and receiving: the value of the gift, its purpose, the circumstances under which it is given, the position and sensitivity to influence the person receiving the gift, accepted business practice, company policy, and what the law says.

7. Employees have duties to their employers, and they may also have more specific obligations based on the business or professional roles and responsibilities they have assumed. In addition, they have the same elementary moral obligations that all human beings have—including the obligation not to injure others and to be truthful and fair.

8. Balancing our obligations to employer or organization, to friends and coworkers, and to third parties outside the organization can create conflicts and divided loyalties. In resolving such moral conflicts, we must identify the relevant obligations, ideals, and effects and decide where the emphasis among them should lie.

9. Whistle-blowing refers to an employee’s informing the public about the illegal or immoral behavior of an employer or organization. Whistle-blowers frequently act out of a sense of professional responsibility.

10. According to Norman Bowie, an act of whistle-blowing can be presumed to be morally justified if it is done from a moral motive; if the whistle-blower has, if possible, exhausted internal channels before going public; if the whistle-blower has compelling evidence; if the whistle-blower has carefully analyzed the dangers; and if the whistle-blowing has some chance of success.

11. Prudential considerations based on self-interest can conflict with moral considerations, which take into account the interests of others. Some sacrifices of self-interest would be so great that moral considerations must give way to prudential ones. But employees must avoid the temptation to exaggerate prudential concerns, thereby rationalizing away any individual moral responsibility to third parties. Legislation and changes in corporate culture can reduce the personal sacrifices that whistle-blowers must make.

Other Resources

Video  The Human Behavior Experiments, 2006

Documentary by Alex Gibney

Film  The Insider, 1999

Based on a true story of a big tobacco whistleblower

© 2017 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

10-2