Employee Responsibility: Trust, Loyalty, and Ethics in the Workplace

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