Topic 8 - Moral Choices Facing Employees (Week 5)
Topic 8 - Moral Choices Facing Employees (Week 5)
FACING EMPLOYEES
LEARNING OBJECTIVES:
Conflicts of interest
arise when employees have a personal connection to a transaction – one substantial enough
that it might affect their judgment or lead them to act against the interests of the organization.
They are morally worrisome even if the person doesn’t act to the detriment of the employer.
Employees should promptly extricate themselves from such conflicts or avoid them from the
start.
Financial investments:
Conflicts of interest may exist when employees have financial investments in suppliers, customers, or
distributors with whom their organizations do business.
There is no simple answer as to how much of a financial investment it takes to create a conflict of
interest.
Company policy usually determines the permissible limits of such financial interests.
ABUSE OF OFFICIAL POSITION
Using one’s official position for personal gain is likely to violate one’s obligations to the
organization.
Example: Using corporate funds for private purposes such health club memberships, extravagant
parties, vacation travel, etc.
Insider trading:
The buying or selling of stocks on the basis of nonpublic information that is likely to affect their
price.
Inside traders defend their actions by claiming that they don’t injure anyone.
It’s true that trading by insiders on the basis of nonpublic information seldom directly harms
anyone.
But moral concerns arise from both indirect injury and direct injury.
Insiders and “Misappropriation”:
The Securities and Exchange Commission (SEC) has recently argued that people who trade on
confidential information, but are not traditional company insiders, are still guilty of insider trading if
they have “misappropriated” sensitive information.
Critics of insider trading argue that:
(a) It is unfair.
(b) It can injure other investors.
(c) It undermines public confidence in the stock market.
Defenders say that it performs a necessary and desirable economic function.
But executives who do this put their own interests before those of the company and its shareholders.
Proprietary data: Companies zealously guard information that may affect competitive standing.
Patented or copyrighted information: Novel information that it is legally protected but not secret
– others may access it but are forbidden to use it (without permission) for the life of the patent or
copyright.
Trade secrets: Any information that is not generally known, is valuable to its possessor, and is
treated confidentially.
There are at least three arguments for legally protecting trade secrets:
(1) Trade secrets are the intellectual property of the company.
(2) The theft of trade secrets represents unfair competition.
(3) Employees who disclose trade secrets violate the confidentiality owed to their employers.
Employees who join a competitor:
An especially troublesome problem for high-tech firms, where employees are often privy to
sensitive information and are also prone to job-hopping.
Two factors conspire to make this a morally complicated problem:
(1) Individual’s right to seek new employment.
(2) Difficulty of separating trade secrets from the technical know-how, experience, and skills that comprise
the employee’s own intellect and talents.
CONFLICTING OBLIGATIONS
Balancing obligations to employer or organization, friends and coworkers, and outside parties can
create conflicts and divided loyalties.
To resolve such moral conflicts, we must identify the relevant obligations, ideals, and effects –
then decide which area to prioritize.
To reduce rationalization in decision making:
(1) Be willing to publicly defend our moral choice.
(2) Discuss with others to avoid bias.
WHISTLE-BLOWING
Definition: An employee’s informing the public about the illegal or immoral behavior of an
employer or an organization.
One expert’s definition: A practice in which employees inform the public or a governmental
agency about certain organization activities that:
(a) Cause unnecessary harm.
(b) Are in violation of human rights.
(c) Are illegal.
(d) Run counter to the defined purpose of the institution.
(e) Are otherwise immoral.
What motivates whistle-blowers?: They believe that the public interest morally
outweighs their loyalty to colleagues and their duties to the organization.
Often, whistle-blowers are motivated by a sense of professional responsibility.
When is it justified? Norman Bowie says it is morally justified if and only if the whistle-blower:
(1) Is operating from an appropriate moral motive.
(2) Has exhausted all internal channels for dissent before going public, is possible.
(3) Has found compelling evidence of wrongdoing.
(4) Has carefully analyzed the dangers.
(5) Has some chance of success.