Dilemma of Ethical Issues and Whistle Blowing in Business - Case Study Example

Dilemma of Ethical Issues and Whistle Blowing

• Introduction

Ethics is defined as a set of moral values or right conduct. The word ethics originated from the Greek word ‘ethos’ which means character (Cory, 2012). Business ethics are the moral principles or values that are used to administer a business (Brenkert and Beauchamp, 2012). It is a very general approach of business governance based on right and wrong. The greatest dilemma that organisations face is that who decides what is right, what is wrong and whose values are being referred to. Whistle blowing is the act of drawing attention to any immoral or unethical conduct of any company or organisation by an employee of the same organisation or company (Vandekerckhove, 2012). It is the result of a conflict between the personal values of a person and the company objectives. During the past few decades, there has been a remarkable rise in the number of whistle blowing activities around the world, which only shows a significant rise in the ethical issues faced by the companies. In this paper, an analysis is done to understand the dilemmas of ethical issues and whistle blowing that an individual faces in an organisation and how whistle blowing affects the ethical issues of an organisation.

• Ethical issues in the corporate

Corporate these days follow codes of ethical practice. These codes are often created after discussion with the employees, government, stakeholders and local communities (Brenkert and Beauchamp, 2012). Collectively, these codes provide the guidelines to understand if the actions being taken are right or not. For example, promotion of child labour and bribery are considered to be illegal. It is important for a company to follow an ethical system in order to ensure certain level of trust between the business and the consumers (Brenkert and Beauchamp, 2012). This mutual trust is one of the main factors that help the company grow in the industry.

Theories of Business Ethics

Over the years, many theories about business ethics have been developed. The most prominent types are the descriptive and normative theory (Cory, 2012).

Image 1: Components of Ethical Theories

(Source: Cory, 2012)

Descriptive theory: The descriptive theory describes the belief of people in morality. It does not suggest the right or the wrong way of behaving (Cory, 2012). It is merely an observation, which leads to revealing of the belief system of people.

Normative Theory: The normative theory suggests the right way of behaving. It provides a set of theories which help in understanding how should people behave in general (Cory, 2012).

The Traditional ethical theory has an absolute way of determining what is right, what is wrong and how the world should be (Brenkert and Beauchamp, 2012).

Importance of ethical behaviour

Ethical behaviour is important in order to create a trustworthy relationship between the customers and the business, which is essential in generating a constructive public image. This in turn helps the company in creating a strong market presence, which is very essential in a competitive business environment.

Major ethical issues for Corporate

The major ethical issues that corporate face these days are:

Diversity issues: Diversity issues refer to discrimination against people based on gender, race, country, age etc. Not providing people with equal opportunity and not having a diverse workforce in the organisations are two of the major ethical issues that corporate face these days (Jamnik, 2011).

Fundamental issues: Trustworthiness and integrity are the two fundamental factors that are required to run a business successfully. These two factors cannot be compromised on, as they determines the relationship of a business with its customers (Jamnik, 2011).

Decision making issues: Ethical dilemmas are encountered when a person is faced with a difficult decision. The harder a decision is, the more compromising the person becomes with his or her ethical values (Jamnik, 2011). Many a times, the companies ignore unethical conducts of their employees as long as their actions bring desirable results. In certain cases, the management take a step forward and even cover up the whole act.

Compliance and Governance issues: The businesses are required to comply with government norms, environmental laws, safety norms, civil rights laws and fiscal and monetary statutes under all circumstances (Jamnik, 2011). The companies cannot ask the employees to break the laws at any cost, which sometimes are not adhered to.

Whistle Blowing

Whistle blowing is the act of bringing attention of the government or authority to the unethical or unlawful conduct of the organisation, usually by an employee of the organisation (Vandekerckhove, 2012).

• Relationship between Ethical Issues and Whistle Blowing

Often regarded as an ethical act, Whistle Blowing occurs because of the conflict between one’s own moral values and the objectives of the business (Vandekerckhove, 2012). With the rise in unethical conduct by the companies in the past few decades, the cases of whistle blowing have also increased.

The whistle blowers can only report an act of misconduct, with tangible proof available (Vandekerckhove, 2012). Sometimes getting acceptable proof is a difficult task. Also, the fact that whistle blowers are often outcast for brining attention to unethical conduct of the business, puts most people in the dilemma if it is worth taking all that trouble.

• Consequences of Whistle Blowing

Whistle blowers are often outcast by their own company and treated as renegade by their own peers or superiors. Whistle blowing is not treated as a trustworthy act by the companies in the present day, in spite of being done with social benefit in mind.

The following are the consequences that the whistle blowers face these days:

• Loss of trustworthiness: Companies often prefer their employees to report any wrong doings in the organisation to the authority within the organisation, rather than taking it out in the public. In such cases, people with a background of whistle blowing are often questioned on their trustworthiness (Vandekerckhove, 2012). Whistleblowers are often treated as unreliable, not just in the professional life, but also in the society,
• Hostility: Their colleagues and superiors often subject Whistleblowers to offensive behaviour (Vandekerckhove, 2012). Despite the fact that there exist many laws at present for the protection of whistleblowers but they are often subjected to harassment.
• Affects the chain of command: This is a negative consequence of whistle blowing. The act of whistle blowing occurs because an employee feels the need of going beyond his/her superior and reports an action publicly (Vandekerckhove, 2012). Occurrence of such activities on a usual basis often leads to a turmoil within the organisation.
• Organisational Outcome: Whistle blowing brings up the unethical and unlawful means that an organisation uses. Often it leads to degradation of the image of the organisation. This affects the credibility of the organisation and the relationship it has with the customers and its investors, which in turn has a negative effect on its position in the market (Vandekerckhove, 2012).
• Protection for Whistle Blowers

Over the years, different countries have formed different regulations to protect whistle blowers from facing discriminations in the companies and in the society. Although these laws signify a remarkable initiative taken by the government to protect and encourage the act of whistle blowing, many of these laws are only good on paper and are not properly implemented to fulfil their cause (Whitaker, 2007).

The Whistleblower Protection Act, 1989 which is a United States federal law is one such act. It was a great initiative taken by the US government to provide legal protection to the whistle blowers against ill treatment and retaliatory treatment by organisations (Whitaker, 2007). Another regulation, the Public Interest Disclosure Act, 1998, an act of the UK, provides similar protection to the whistleblowers (ICAEW, 2016). Despite of so many protective measures, the whistleblowers’ security has degraded over the years.

• Historical Cases of Ethical Issues and Whistle Blowing:

The world has experienced many cases of whistle blowing in the past few decades. One of the biggest names here is of that of Julian Assange, an Australian Computer programmer, who founded the organisation called Wikileaks in 2006. The organisation publishes classified media, secret information and news leaks through anonymous sources (WhistleblowingToday, 2016). Wiki leaks was criticised by many for putting the security of the nation in jeopardy. Many appreciated it, for taking the brave step of disclosing unethical activities (WhistleblowingToday, 2016).

Another recent whistle blowing activity was the Panama Papers leak. The 2.6 terabyte of leaked data contained the names of many influential people from around the world, who had invested hugely into a law firm known as Mossack Fonseca, for receiving tax benefits (Durando, 2016). The panama paper leaks were criticised for not providing the complete picture and only letting people see only one side of the story. Investing in off shore companies is not illegal if it is done under proper norms. The paper mentioned all the names that had investments with Mossack Fonseca and did not specify the illegal investments. (Durando, 2016).

• Dilemma of Ethical Issues and Whistle Blowing
  • Ethical issues

Dilemma in ethical issues is the situation when a person has to choose between a moral and an immoral act. This dilemma occurs when there is a tough decision to make and the easier way out of it seems to be unethical.

The following situations give rise to dilemma in business ethics:

Pressure from management: Some companies are very profit oriented and do not mind the employees choosing any means as long as they achieve the results (Jamnik, 2011). In such cases, the employee is often under pressure by the management to achieve results and faces the dilemma of following the unethical means.

Ambition and discrimination: Often, ambitious individuals end up going for unethical means if they are not able to find recognition or reward through the appropriate means (Jamnik, 2011).

Negotiation tactics: Doing business with other companies can also present situations where the employee can face situations to follow the unethical path. The pressure from the management to get the best deal or grab an important contract can make the employee resort to solutions like bribery etc.

Misunderstanding of Guidelines: Sometimes the employees are unaware of the company guidelines and end up breaching a code (Jamnik, 2011).

Whistle Blowing:

The Whistle Blower’s dilemma is the situation when a person confronts a wrongdoing in his or her company and is not sure if it should be brought out to the outside world.

The following are the reasons of whistle blowers’ dilemma:

• The main reason for this dilemma is the discrimination that the person faces afterwards from the fellow employees and the superiors. The person is outcast and is often treated as a tattle (Jamnik, 2011).).
• Often the trustworthiness of such people gets questioned.
• Such actions put the career of the whistle blowers at risk as most of the companies are reluctant in hiring them.
• Often they are denigrated for their decision of coming out in the public and not approaching the authority within the company first, breaking the chain of command.

The whistleblowers dilemma can be significantly reduced by increasing the protective measures. The regulations should be enforced appropriately and anybody violating the acts should be penalised (Cory, 2012).

• How Ethical Issues can be reduced with the help of Whistle Blowing

Over the years, the government has taken measures to provide ample protection to the whistle blowers. Many companies these days are using various unethical means to achieve their goals. The whistleblowers, in such situations, are proving to be an important asset to the government and government agencies, by bringing such unlawful activities into their notice. The companies are now more careful about what methods they use to achieve their objectives due to the fear of getting exposed. Whistle blowing keeps these unethical activities in check. In addition, it is encouraging the investors to perform a background check before investing in any company. People are becoming more aware of the various unethical conduct of the company and gathering proper knowledge before getting involved with any company. In short, whistle blowing is increasing transparency in the world.

• Recommendation:

Ethical issues can be kept under check by making proper guidelines available to the employees. The company should try to achieve its goals without compromising on its integrity. Also, the higher management of companies should take specific efforts to try and solve any ethical issues brought into its notice, as per the company guidelines as soon as possible.

• Conclusion

The ethical conduct of a business decides its reputation amongst the consumers, which further decides its position in the market. The companies these days face many ethical issues in order to find an easy and effective way of dealing with difficult circumstances and achieving its goals. As the ethical issues have been on a rise, so has whistle blowing. It not only has kept the ethical issues in check, but also has helped in spreading a transparency in the organisational conduct all over the world.

• Reference List

Brenkert, G. G. and Beauchamp, T. L., 2012. The Oxford Handbook of Business Ethics. London: Oxford University Press

Cory, J., 2012. Activist Business Ethics. Berlin: Springer Science & Business Media

Durando, J., 2016. Panama Papers: What we know now. [Online] USA Today. Available at: <http://www.usatoday.com/story/news/world/2016/05/09/panama-papers-leak-documents-tax-shelters/84132964/> [Accessed 10 May 2016]

ICAEW, 2016. The Public Interest Disclosure Act (PIDA) 1998. [Online] Available at: < http://www.icaew.com/en/technical/legal-and-regulatory/information-law-and-guidance/whistleblowing/the-public-interest-disclosure-act-pida-1998> [Accessed 10 May 2016]

Jamnik .A, 2011. The Challenges Of Business Ethics –Management and the question of ethics. Tourism and Hospitality Management, 17(1), pp.141-152

Vandekerckhove, W., 2012. Whistleblowing and Organizational Social Responsibility: A Global Assessment. Farnham: Gower Publishing, Ltd.

WhistleblowingToday, 2016. Julian Assange “arbitrarily detained” by UK and Sweden a UN panel concludes. [Online] Available at: < http://whistleblowingtoday.org/ > [Accessed 10 May 2016]

Whitaker, L.P., 2007. The Whistleblower Protection Act: An Overview. [PDF] CRS report for Congress. Available at: < https://www.fas.org/sgp/crs/natsec/RL33918.pdf> [Accessed 10 May 2016]