Background
for Teachers
The ethical issues facing employees at all levels have grown in significance in the last five years. Much of this resulted from government investigations showing that Enron hid debt and losses, and manipulated earnings reports.. Enron’s unethical behavior resulted in thousands of lost jobs, as well as jail sentences for top management. Many employees and other investors lost all the money they had for retirement.
Stakeholders, including stockholders, customers, and employees are looking more closely at how internal decisions are impacting them. They are also becoming more sensitive to having their names associated with companies that are perceived to be following unethical practices.
Governmental agencies are also becoming involved in ethics issues. Stockholders and citizens are pressuring their congressional representatives to pass laws that will protect stakeholders from managers that may follow unethical, but not necessarily illegal practices. At the federal level, these laws range from Civil Rights laws to a more recent law, the Sarbanes-Oxley Act.
The Civil Rights Laws protect employees from acts of discrimination and harassment based on such things as gender, race, national origin, religion, and age. The Sarbanes-Oxley Act protects employees of any publicly traded company from discharge, demotion, suspension, discrimination, or harassment as a result of reporting evidence of fraud. Other whistleblower laws have been passed at the state level.
As students venture into the workplace they will face various ethical issues. They will witness or be tempted to participate in so-called “victimless crimes.” They will sometimes observe unethical actions being carried out by other employees or even their supervisors. The questions that they will face are: “Do I tell or do I keep my mouth shut, my head down, and do my work?” and “If it really isn’t hurting anyone, why should I cause trouble?” These are not unreasonable questions to ask. The news media has reported stories of employees of major companies, such as Wal-Mart and Trane, who have been fired after blowing the whistle on fraudulent activities.
Ethical Models
There are three ethical models that can be appealed to when evaluating the cases that follow: the consequentialist model, the deontological model, and the virtue model. These can be used to determine whether a decision or a behavior is ethical. Although all of these models are based on related principles, each takes a somewhat different approach to judging ethical behavior. Sometimes these models can lead in conflicting directions. However, if a proposed behavior can be supported by all three models, the decision maker can be confident that he or she is making an ethical decision.
● Consequentialist Model:. The primary goal in this model is for the employee’s behavior to lead to the best consequences, to provide the greatest good for the greatest number of people. When making ethical decisions based on this model, the employee should focus on the needs of the stakeholders – that is, everyone who may be affected by the decision. These include customers, suppliers, employees, shareholders, and the community.
● Deontological or Duty/Respect-Based Model: Rather than attending to the possible consequences of one’s actions, this model asks us to focus on making sure that we are always acting respectfully toward other people (and ourselves). We must make sure that we are respecting others by not misleading, manipulating, or using them. We must also hold others responsible for their actions and make sure that they are treating others with respect. When we knowingly allow someone to be disrespectful of someone else, we are partially responsible because we could have stopped the behavior or reported it so that the situation could have been corrected. Even if our actions lead to the unhappiness of others, we have a duty to follow through because human dignity (the duty of respect that we owe each other) is the most important thing in life.
● Virtue/Excellence Model: Rather than focusing on the consequences an act may have for those involved or on whether an act is respectful of others, this ethical model focuses on the character of the actor. To judge whether an act is virtuous or vicious, we must ask what a good and wise person would do in the circumstances we find ourselves in – and we must articulate the reasons a wise person would appeal to in order to justify his or her decisions and actions. In other words, we must try to be the best people we can be and to act wisely and virtuously. To do that, we must determine whether we are being biased in our evaluations, whether we are doing our best, and whether we are helping others to do their best. We must try to determine what makes our evaluation of the “best” better than others. This requires tha we think through not only the consequences of an action and the respectfulness of an action but also what kind of people we are if we support or oppose an action.
Concepts of Social Responsibility: Stakeholder and Contemporary
Social responsibility is the attempt of an employee to balance his or her commitments to groups and individuals in its environment, including customers, other businesses, employees, and investors.
- The Stakeholder Model of Responsibility
Most companies that strive to be responsible to their stakeholders. They concentrate on five main groups: customers, employees, investors, suppliers, and local communities.
- Contemporary Social Consciousness
Social consciousness and awareness continues to evolve. Companies are moving towards an enlightened view stressing the need for a greater social role for business. For instance, Sears and Target stores refuse to sell handguns and other weapons.
Areas of social responsibility include:
- Responsibility to the employee. This includes protection from discrimination and harassment as well as providing a safe and healthy work environment.
- Responsibility to the customers. This includes fair labeling, safe products, and honest advertising.
- Responsibility toward the environment. This may include using methods of production that do not pollute and recycling.
Whistle-Blowing
A whistleblower is an employee who reports organizational misconduct (unethical or illegal) to his or her supervisors, to a government organization, or to the public. Whistleblowers are protected under Sarbanes-Oxley (see Vocabulary) and under some state laws. However, even with protection, whistleblowers are often afraid to come forward. They fear that they will be labeled a “snitch”, a “rat”, or a “tattletale”. Even worse, they may fear reprisals from their co-workers or the company itself.
David Windhauser was the former controller for Trane, a heating and cooling company. He complained to his supervisor that managers were fraudulently recording expenses on financial statements. A month later, in November 2003, Trane fired Windhauser. The company defended its actions to the Labor Department stating it fired Windhaiser because he was incompetent. Last fall Windhauser became the first employee under Sarbanes-Oxley to obtain a Labor Department order for his former employer to rehire him. But instead of doing so, the company spent months fighting the order before settling with Windhauser in April 2005.
Accountability
Accountability is an obligation or willingness of an employee to accept responsibility for his or her actions. The employee is expected to produce quality work and report the outcomes, both positive and negative, to his or her supervisor. Accountability always flows upward. For example, an employee making burgers at Burger King is accountable to his or her manager. In the wake of corporate scandals such as Enron and MCI, corporate leaders are being held accountable to various stakeholders such as shareholders and employees for their actions.
In Britain, accountability has been formally identified by the government since 1995 as one of the Seven Principles of Public Life. There public officials are held accountable to the public for all of their decisions and subsequent actions.
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