Transcript Whistle-Blowing - Chu Hai College

Lecture 2: Whistle-Blowing
BBA 361
Business Ethics & Corporate Governance
Please refer to “Ethics and the Conduct
of Business” by John R. Boatright
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What is Whistle-blowers?
-People who expose some wrong doing in a
corporate, often at great personal risk.
Risk/Price???
Retaliation:
-Poor evaluations, demotion, outright dismissal,
career disruption, financial hardship resulted from
job dislocation and legal expenses, severe
emotional strain, being crowded out…
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A proper definition of
Whistle-Blowing I
-A disclosure of information in which the
action takes place within an organization,
while the employees have obligations to
maintain confidentiality;
-Necessarily involves the release of nonpublic information;
-Information should be evidence of
significant misconduct on the part of an
organization/members.
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A proper definition of
Whistle-Blowing II
-Information must be released outside
normal channels of communication, i.e.
internal/external whistle blowing:
*report to immediate superiors
*submit suspicions of misconduct to
CEO with assurance of confidentiality
*ombudsman- designated official
handling employee complaints
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A proper definition of
Whistle-Blowing III
-To whom the whistle is blown: information
must be revealed in ways that can reasonably
be expected to bring about a desired change.
-The release of information must be
something which is done voluntarily.
-It must be undertaken as moral protest:
motive must be to correct some wrong and
not to seek revenge or personal advancement.
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Ethical Justification of
Whistle-Blowing I
Three concerns:
1. Whether it will create suspicion,
disharmony and conflict
2. Does a person who blow the
whistle have a greater obligation to
the public or to the organization?
3. Violation of loyalty?
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Ethical Justification of Whistle-Blowing II
The Loyal Agent Argument I:
Are Whistle-Blowers Disloyal Agents?
Apparently:
 Employee is an agent of an employer.
 Agent: act in the interests of employer. Employee /
agent has an obligation to work as directed, to
protect confidential information, and to be loyal.
 E.g. Lawyers agree for a fee to represent clients;
employees are hired with understanding that they
will work for the benefit of an employer.
 A lawyer who sells out a client—clearly a violation
of legal profession’s code of ethics.
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Ethical Justification of Whistle-Blowing II
The Loyal Agent Argument II:
Are Whistle-Blowers Disloyal Agents?
Justification:
 Obligation is not without limits. It can be justified.
 An agent has an obligation to obey all reasonable
directives of the principal (employer), but not
obligated to do anything illegal/immoral, even
instructed by employer.
 An agent are not obligated to keep confidential any
information about the commission of a crime.
“If the confidential information is to the effect that the
principal is committing or is about to commit a crime, the
agent is under no duty not to reveal it.”
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Ethical Justification of Whistle-Blowing II
The Loyal Agent Argument II:
Are Whistle-Blowers Disloyal Agents?
Justification:
 Obligations of an agent are confined to the needs of
the relationship.
Conclusion:
Obligations that employees have as agents of a company
are of great moral importance, but they have limits. The
agency relationship does not require employees to
involve in illegal/immoral activities.
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Developing a Whistle-Blowing Policy
Benefits of an effective policy:

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
Learn about problems early and take corrective
action before problems become public
Affirm a company’s commitment to good ethics and
creating an ethical corporate climate
Help employees perceive what is wrong doing in
organization
Dangers of such policy:


Create an environment of mistrust and intimidation
Over-caution towards work, due to the possibility of
accusations
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Developing a Whistle-Blowing Policy
Components of an effective Whistle-Blowing
Policy
1)

2.

An effectively communicated statement of
responsibility
Employees have responsibility to report all concerns
about serious unethical or illegal conduct through
appropriate internal channel.
Clearly defined procedure for reporting
Employees should be notified a procedure that allows
them to report in a confidential manner, and specify
the persons to whom reports are to be made, i.e.
hotline, anonymous, report to direct supervisor etc.
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Developing a Whistle-Blowing Policy
Components of an effective Whistle-Blowing Policy
3) Well-trained personnel to receive and investigate report
 Skills of personnel are very important, need to maintain
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4)
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5)

confidentiality, and conduct fair and thorough investigation
Need to be well-trained and have sufficient authority
Commitment to take appropriate action
Employees must be ensured by both word and deed that
suspected wrongdoing will not be ignored and misused.
Reporting employees will be informed about the outcome
of an investigation and the action taken.
A guarantee against retaliation
Assure that employees will not suffer retaliation for making
reports in good faith.
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CAN ONE PERSON MAKE A
DIFFERENCE?
Edward Everett Hale wrote:
I am only one.
But still I am one.
I cannot do everything,
But still I can do something;
And because I cannot do everything
I will not refuse to do the something that I can
do.
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