An Introduction to Business Ethics

1
An Introduction to Business Ethics

• Chapter 6
• Employee Responsibilities

2
Corporate Responsibility-Employee Responsibility

• We have spent a considerable time trying to
  specify the nature of corporate responsibility.
• This line of enquiry does not exhaust the topic
  of responsibility in business ethics.
• We need to spend some time thinking about the
  responsibilities owed to businesses by their
  employees.

3
Enron and Employee Responsibilities

• Unlike with corporate responsibilities, most
  business people are willing to recognize a set of
  employee responsibilities.
• The disagreements emerge only when it comes time
  to specify the set.
• What employee responsibilities or failures of
  responsibility are evident in the Enron
  discussion case?

4
The Classical Models View Employees as Agents

• Adherents of the classical model of corporate
  social responsibility typically agree that the
  appropriate account of employee responsibility is
  rooted in the employees service as an agent of
  the owners of the business.
• It is thus to the interests of the owners that
  the employees, as employees, are responsible.

5
Employees as Agents Responsibilities and Roles

• On this view, there are a set of general
  responsibilities owed to the business by all
  employees
• Loyalty
• Trust
• Obedience
• Confidentiality
• These general responsibilities are realized in a
  way specific to the employees role.
• Master-servant unskilled or non-professional
  employees.
• Managerial Discretion.

6
Employees as AgentsJustifications

• The justification of this view shares much with
  the justification of the classical view itself.
• Utilitarian justified by the utility of the
  economic system.
• Private Property protect property rights, and
  prevent economic harms.
• Of course, both of these forms of justification
  have significant weaknesses.

7
Criticisms of the Employee as Agent Model

• The classical views account of employee
  responsibility requires a strong disjunction
  between our responsibilities as individuals and
  as employees.
• Generally, it is recognized that such a
  disjunction is irresponsible.
• Armed Service? Following Orders?
• What about consent?
• A better alternative? Obedience within the bounds
  of established legal and ethical duties.

8
Managerial Responsibility

• An interesting example of the how roles can shape
  responsibilities is seen in the case of corporate
  officers.
• The classical model tells us that officers are
  responsible to the interests of the owners, but
  how should we understand their interests?
• Long-term interests seem to favor capital
  reinvestment, which would have the short-term
  consequence of lowering returns on investment.
• Short-term interests seem to favor bolstering
  share price, but as we saw in the Enron case, the
  long-term consequence can be instability.

9
Managerial Responsibility

• Another context for understanding this complex
  situation is Stakeholder Theory.
• According to Stakeholder Theory, corporate
  decision making requires balancing the sometimes
  competing interests of the stakeholders with the
  end of maintaining fiscal stability.
• All decisions impose costs on one or another of a
  companys stakeholders.
• The goal is to balance these costs on the fulcrum
  of the interests of the corporation. Sometimes
  shareholders will bear the costs, sometimes other
  stakeholders will bear them.

10
Managerial Responsibility Some Concerns

• Not all costs imposed by managers are ethically
  defensible.
• Some common problems include
• Conflicts of Interest
• Kickback
• Soft Money Payments
• The difficulty of detecting and controlling these
  problems highlights the importance of trust to
  our analysis of employee responsibility.

11
Vulnerability and Trust

• The authority granted to managers and officers of
  businesses makes owners and employees vulnerable
  and requires trust. What responsibilities does
  such trust impose?
• Development and maintenance of expertise.
• Loyalty
• Limits to the employee as agent model?

12
Responsibilities to Third PartiesHonesty

• In addition to the general responsibilities just
  noted, the vulnerability of others to the
  authority of managers imposes specific
  responsibilities.
• What about Honesty? Isnt it the case that
  business is like a poker game, and that the best
  players are the best liars?
• Enron?

13
Responsibilities to Third PartiesWhistleblowing

• Whistleblowing is an attempt by a member or
  former member of an organization to disclose
  wrongdoing in or by the organization. It takes
  both internal and external forms.
• The difficulty with whistleblowing is that it
  seems in obvious conflict with another
  responsibility loyalty.

14
Responsibilities to Third PartiesWhistleblowing

• The average whistleblower is a 47-year-old family
  man with 7 years on the job and a strong belief
  in universal moral principles.
• Most whistleblowers who work for private
  businesses are fired by their employers, 20
  remain unemployed after 6 months, 25 report a
  decrease in family income, 17 lose homes, 54
  report harassment by their peers at work, 80
  report physical deterioration, 10 attempt
  suicide.
• Despite these figures, most whistleblowers admit
  of few regrets and assert that they would do it
  again.

15
Responsibilities to Third PartiesWhistleblowing

• Whistleblowers are typically pulled in (at least)
  three directions.
• All employees have obligations to their employers
  and their co-workers which are relatively obvious
  and easy to specify.
• However they also have obligations to the
  communities in which they live and work, up to
  and including the global community.
• If this isnt complicated enough, whistleblowers
  obviously have a responsibility to themselves and
  to their loved ones.

16
Responsibilities to Third PartiesWhistleblowing

• The complexity of the situation suggests that
  employees should never take the step to blow the
  whistle casually.
• A case of whistleblowing is justified if
• There is clear, substantiated evidence that the
  organization or its members are engaged in some
  activity that is a serious wrongdoing or poses a
  substantial risk to the community
• Attempts to resolve the problem internally have
  failed
• Blowing the whistle will resolve issue
• The whistleblowing is motivated by the wrong, not
  by some extraneous circumstance.
• The wrong is serious enough to justify taking the
  hit.