ETHICS AND EMPLOYEES

The individual in the organization

What is conflict of interest and how can it be avoided

What factors should be considered when determining a “ fair wage “

Rational Model of a Business Organization

The organization as a structure of formal ***relationships designed to achieve some technical or economic goal with maximum efficiency.

***explicitly defined and openly employed.

contd

Formal hierarchies of authority Operating layer Middle managers Top management

review Formal hierarchies of the organizational

chart are the firm’s fundamental realities. Organizations coordinate the activities of

members to accomplish a goal with maximum efficiency

Information rises from the bottom of the organization to the top

Employee is obligated to pursue organization’s goals and employer to provide fair wage and working conditions

The employee’s obligation to the firm

The employee’s main moral duty is to work toward the goals of the firm and avoid any activities that might harm those goals.

“Law of Agency”-law that specifies the legal duties of the agents ( employees) towards their principals( employers)

- An agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with is agency

- An agent is prohibited from acting for persons whose interests conflict with those of the principal in matters in which the agent is employed

There are several ways an employee may fail to live up the duty to pursue the goals of the

firm

The employee might act on a conflict of interest

The employee might steal from the firm The employee might use the position as

leverage to force illicit benefits out of others through extortion or commercial bribery

Conflicts of Interest

It occurs when employee(s) in a certain job have an “interest “ that might motivate them to do that job in a way that may not be in the best interests of the firm.

Necessary conditions for a conflict of Interest to arise :

1. When the employee or officer is engaged in carrying out a certain task on behalf of the company.

2. The employee has an interest in the outcome of the task.3. The interest does or reasonably might affect the

judgment the employee is obligated to exercise on behalf of the company

Types of Conflicts

1.Objective Conflicts of Interest2. Subjective conflicts of Interest3.Potential Conflicts of Interest4. Actual Conflicts of Interest5. Apparent Conflict of Interest.

Objective Conflict of Interest

Conflict of Interest that are based on financial relationships

Subjective conflicts of Interest

Conflicts of interest that are based on emotional ties or on relationships

Potential Conflict of Interest

Occur when an employee has an interest that could influence the judgments made for the employer if the employee were performing a certain task for the employer but has not yet been given the task to perform.

Actual Conflict of Interest

When an employee has an interest that might influence the judgments she makes for the employer when performing a certain task for the employer and has actually been given that task to perform.

Apparent conflict of Interest

A situation in which an employee has no actual conflict of interest, but in which other people looking at the situation may come to believe ( wrongly ) that there is an actual conflict of interest

Conflict of Interest can be created by different kinds of situations and activities

Commercial Bribes Commercial Extortion Gifts

Commercial Bribes

A consideration given or offered to an employee by a person outside the firm with the understanding that when the employee transacts business for the firm, the employee will deal favorably with that person or that person’s firm.

Commercial Extortion

Occurs when an employee demands a consideration from persons outside the firm as a condition for dealing favorably with those persons when the employee transacts business for the firm.

Gifts

Accepting gifts may or may not be ethical.A potential conflict of interest, however

may exist and the act may encourage a practice that in some instances becomes an actual conflict of interest or that may be subtly affecting the independence of a person’s judgement.

Following factors should be considered when evaluating the morality of accepting the gift

Value of the Gift Purpose of the Gift Circumstances under which the gift was

given The position of the recipient of the gift. The accepted business practice in the

area Company policy The law

Employee theft and Computers

The employee of a firm has a contractual agreement to accept only certain specified benefits in exchange for labour and to use the resources and goods of the firm in pursuit only of the legitimate of the firms.

Hence if the employee for appropriate additional benefits or to convert company resources to the employee’s own use are forms of theft because to do either is to take or use property that belongs to another ( employer) without the consent of its rightful owner

Computer Theft

Trade Secrets Proprietary information or trade secrets consists of non

public information that

(a) Concerns a company’s own activities, technologies, future plans, policies, or records and that if known by competitors would materially affect the company’s ability to compete commercially against those competitors

(b) Is owned by the company ( might not be patented or copyrighted) because it was developed by the company for its private use from resources it owns or was purchased for its private use from others with its own funds.

(c) The company indicates through explicit derivatives, security measures , or contractual agreements with employees that it does not want anyone outside the company to have that information

Contd…

Skills that an employee acquires by working for a company do not count as trade secrets because trade secrets consists of information and not skills.

Skills that an employee develops are considered part of his or her own and not the property of an employers or as proprietary information.

Insider Trading

The act of buying and selling a company’s stock on the basis of “ inside” information about the company.

The firms Duties to the Employee

Wages Working Conditions: Health and Safety Working Conditions : Job Satisfaction