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Employee Responsibility and Ethical Behavior in Organizational Context

This chapter explores the ethical responsibilities of employees in the workplace, focusing on contractual relationships, agency theory, professional ethics, conflicts of interest, trust, loyalty, honesty, whistleblowing, and insider trading. It delves into the complex dynamics of employee-manager relationships, the importance of moral courage and adherence to ethical principles, and the implications of ethical decision-making on organizational integrity.

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Employee Responsibility and Ethical Behavior in Organizational Context

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  1. Employee ResponsibilityChapter Seven Jerry Estenson

  2. What do I owe other people? • Contractual • Relationships based on love and dependency

  3. Manager as Agent • Milton Friedman • Conduct business in accordance with desires of owners of the business • Agent – A person who acts on behalf of another person • Master – Servant • Master supervises because of expertise • Servant obeys the employer’s direction • Employees owe a legal duty of trust, obedience, and confidentiality

  4. Issues with Agency Theory • Consent - Employee give consent to take the job therefore must follow orders. • Fire folks who do not comply • Reasonable approach – obey the directives of an employer when those directives are job-related and do not violate legal or ethical duties • The party that has greater power and authority has a greater responsibility to the vulnerable party

  5. Professional Ethics • Role in society requires action that may conflict with role in organization • Therefore some professions are seen as “Gatekeepers” or “Watchdogs” • Insure those who enter the marketplace are playing by the rules

  6. Reason for Action • Legitimacy or justification for action • Motivated to act (less logical or cognitive more affective (feeling) • Personal morality and principle based action requires: Moral courage (my term), discipline and willpower. • Each individual is responsible for their own character • Sometimes structural changes are necessary to help people act in ethical ways (rules, policies, expectations, reporting relationships)

  7. Conflict of interest • Managers responsible to act in best interests of company (that means all interests not just financial) • Managerial decisions require costs (one option gains one looses) • Personal interests come second to company interests • Kickbacks • Soft money (research support, trips, expenses covered by contributors, Christmas baskets)

  8. Trust/Loyalty • A trusted person is one who we confident in their judgment • Loyalty (really big deal) • Willingness to make personal sacrifices in interests of the firm • Duska (no responsibility to be loyal to firm since both company and employee are acting in their own best self interest) • Another view is that people want to be devoted and faithful to a common goal

  9. Honesty • Carr – bluffing, lying, manipulation and deception are acceptable practices in business • Another view based on Utilitarian pespective • Dishonesty undermines ability to communicate • Kant • Dishonesty treats people as a means to an end • Human • Dishonesty requires the dishonest person to pay to high a price • Loss of moral wholeness, authenticity and coherence (connection to reality)

  10. Whistleblowing • Action of insider or employee who informs the public or government agency of an illegal, harmful or unethical activity done by business or institution • DeGeorge – Permissible only if meets the following tests: • Real serious harm • Seeks to prevent harm • Exhausted all internal methods

  11. Insider Trading • Buying or selling securities on the basis of nonpublic information. • Unfair to security traders • Information used is really property of firm • Violates trusted implied in fiduciary relationships

  12. Your are …….. Explain your action • Kenneth Lay • Andrew Fastow • Arthur Anderson Managing Partner for Enron Account • Jeffrey Skilling • Clifford Baxter • Sherron Watkins • Board of Director’s Audit Committee • Wendy Gramm • John Wakeham • Phil Gramm

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