Business 303 Sheppard Business Society & Ethics, Week 9: Breakdown in the firm: Whistleblowing Business Society & Ethics, Week 9: Breakdown in the firm: Whistleblowing

BUSINESS ETHICS WEEK 10: MAIN QUESTIONS 1.How does our notions of loyalty impact our likelihood of blowing the whistle? 2.What is loyalty? 3.Can one be loyal to a corporation? 4.What is whistleblowing? 5.When should one blow the whistle? 6.What are the consequences of blowing the whistle? Wk. 9-2

1. Is the workplace Private? Rights of EmployersRights of Employers –Libertarian At-will employment –Managerial Employee loyalty –Stakeholder Benefits of productivity Rights of EmployeesRights of Employees –Libertarian At-will employment –Managerial Proper Agents Actions –Stakeholder Public protection Wk. 9-3

2a. What’s the problem? Loyalty? What is Loyalty?What is Loyalty? –A voluntary duty –Seen as owed to another. –A passion (Neither virtue nor vice) We may have multiple loyaltiesWe may have multiple loyalties –The trick is to balance them with some degree of integrity in reality [424]. –The loyal opposition [418]  Loyalty is not blind trust Wk. 9-4

2b. Types of Loyalty (1 of 2) Idealist account [414]Idealist account [414] –A cause to be loyal to –Willing & thoroughly devoted –Expresses devotion in a Sustained & practical way Common Sense Conception [415]Common Sense Conception [415] –Viewing something as ‘Mine’ –Positive attitude; you ‘care about’ it. –Obliged to serve the interests of it. –Personal relationship. Wk. 9-5

2b. Types of Loyalty (2 of 2) Loyalties as norms [418]Loyalties as norms [418] –Loyalty to a community or those in it;  Thus loyal to the norms they hold dear. Minimalist Account [419]Minimalist Account [419] –Restatement of the Law of Agency  May act against principle’s interests to protect their own or others. –E.g. can reveal info acquired for protection of a superior interest of himself or another  No obligation to do illegal / unethical acts.  May act in good faith outside employment even if it hurts principle.

2c. Loyalty to the Company [409] Companies aren’t the kind of things properly the objects of loyalty.Companies aren’t the kind of things properly the objects of loyalty. –You can be loyal to individuals (co- workers or bosses) but not an entity. –Their goal is not human fulfillment but a profitable arrangement (Duska) –For you & it to perform its econ. function both must be self-interested Do we expect devotion as on P.415.Do we expect devotion as on P.415. Changing Jobs? (Case 11-3 [429])Changing Jobs? (Case 11-3 [429])

2d. Blind & Earned Loyalty [417] Solomon & Martin’s ‘New Loyalty’Solomon & Martin’s ‘New Loyalty’ –Values & Standards  Clearly defined & challenging –Clear Expectations  Forthright in expectations –Frequent Feedback  On where one stands –Respect for the Individual  Trust & consistency –Long-Term Commitments  Hard with downsizing Wk. 9-8

3a. What is Whistleblowing? (1 of 3) A action involving dissent.A action involving dissent. –Must lose an argument with the Corp. Breach of Loyalty:Breach of Loyalty: –How can this be minimized?  Effective search of other alternatives;  Particularly internal ones if time allows. Accusation:Accusation: –Free from a desire for  Self defense / Revenge  Aggrandizement  Personal gain

3a. What is Whistleblowing? (2 of 3) Serious act committed in the firm.Serious act committed in the firm. Info. one has been entrusted with that is not ordinarily revealed. [403]Info. one has been entrusted with that is not ordinarily revealed. [403] A threat [399]:A threat [399]: –Present or imminent; –Specific & concrete. Affecting the public [401, 404]:Affecting the public [401, 404]: –Capable of articulation; –Not lurid or malicious / –Not erroneous or otherwise private.

3a. What is Whistleblowing? (3 of 3) Prevention of harm [404]Prevention of harm [404] Public’s right to know [401]Public’s right to know [401] –Not private matters Matter of public recordMatter of public record ‘Neither referee nor coach’ [398]‘Neither referee nor coach’ [398] Wk. 9-11

Current & AlumniCurrent & Alumni Private & PublicPrivate & Public Group & IndividualGroup & Individual 3b. Types of Whistleblowing Need to exhaust internal procedures (as time & power allow)Need to exhaust internal procedures (as time & power allow) Your complicity in actions that may contribute to a wrong [406]Your complicity in actions that may contribute to a wrong [406] 3c. Legal Status of Whistleblowing Wk. 9-12

4. Why do people Whistleblow? Wk Motives & ResultsMotives & Results –Preventing harm? –Exposing wrong-doing (Challenger)? –Creating change in decision systems? 5a. What stops people from Whistleblowing? Misplaced sense of LoyaltyMisplaced sense of Loyalty Costs & Complicity [405-6]Costs & Complicity [405-6] –See neutralization below.

5b. Public Opinion & Whistleblowing Producing an image.Producing an image. –Jeff Wigand & big Tobacco [397]. –Erin Brockovich [397]? –Watkins at Enron [426-27]. Is the public informed?Is the public informed? Wk. 9-14

5c. Whistleblowers get Neutralized. Corporation may:Corporation may: –Make the whistleblower the issue; –Isolate the whistleblower; –Destabilize whistleblower’s support; –Eliminate the whistleblower's job; –Prosecute the whistleblower; –Bring experts to counter whistleblower; –Make token & delayed actions to fix the problem. Wk. 9-15

6. Stages of Whistleblowing (1 of 2) DiscoveryDiscovery –The importance of facts & documents –The A-7-D Aircraft Brake Decision (best to Seek advice [402])Decision (best to Seek advice [402]) –Chose to either:  Comply with norms / maintain status quo  Refuse to comply / Whistleblow

6. Stages of Whistleblowing (2 of 2) ActionAction –Who to report to / Outlets?  Internal –Know the chain of command  External –Regulators / Agencies –Customers –Media AssessmentAssessment –Did you have an impact? ResultsResults –How far to pursue? Wk. 9-17

Wk How to Whistleblow? Group vs. individualGroup vs. individual Anonymous vs. self-identifiedAnonymous vs. self-identified Formal vs. informal documentationFormal vs. informal documentation Exit: symbolically or pre-retaliationExit: symbolically or pre-retaliation Should I blow the whistle?Should I blow the whistle? Should I do it privately or publicly?Should I do it privately or publicly? 8a. Exercise Questions:

Wk Three Stories on Page 400Three Stories on Page 400 –Construction contracts –Engineers –University Admissions Self whistleblowing (Case 11-2 [428])Self whistleblowing (Case 11-2 [428]) Greenhouse Effect (Case 11-4 [430])Greenhouse Effect (Case 11-4 [430]) Phone Company (Case 11-5 [431])Phone Company (Case 11-5 [431]) 8b. Exercises: Lower Salford Sewer AuthorityLower Salford Sewer Authority

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