IQS BUSINESS ETHICS

Employer-Employee
ethical issues
Employer Responsibilities
• Compliance with laws and regulations
• Providing a safe and healthy work environment
• Avoiding discrimination and promoting diversity
• Providing fair compensation and benefits
• Protecting employee privacy and confidentiality
• Providing opportunities for training and career development
•
Employee Rights
• Right to privacy and confidentiality
• Right to fair compensation and benefits
• Right to a safe and healthy work environment
• Right to non-discrimination and equal opportunity
• Right to work-life balance
• Right to voice concerns and grievances
Ethical Challenges in Employer-
Employee Relationships
• Conflicts of interest
• Whistleblowing and retaliation
• Workplace harassment and discrimination
• Unethical practices in recruitment and hiring
•
Best Practices for Employers
• Creating and enforcing ethical codes of conduct
• Encouraging open communication and transparency
• Providing channels for reporting unethical behavior
• Offering training and support for ethical decision-making
• Monitoring and enforcing compliance with laws and regulations
•
Conflicts of interest
• Conflicts of interest can arise in various scenarios where an individual
or entity has competing interests that could potentially compromise
their ability to act impartially and in the best interest of the
organization
Typical situations of conflict of
interest
• Personal Relationships: An employee may hire a friend or family
member for a job, even if they are not the most qualified candidate,
creating a conflict of interest.
• Financial Interests: An executive or board member may have a
financial interest in a supplier or contractor that the company uses,
creating a potential conflict of interest when it comes to awarding
contracts or making purchasing decisions.
• Outside Business Interests: An employee or executive may have an
outside business that competes with the organization, creating a
potential conflict of interest in decision-making and allocation of
resources.
•
Typical situations of conflict of
interest
• Personal Gain: An employee may use their position to gain personal
benefits, such as accepting gifts or favors from a supplier, which
could compromise their judgment and create a conflict of interest.
• Legal Obligations: An employee may have a legal obligation to another
organization or person that conflicts with their responsibilities to
their employer, such as a board member of a non-profit also serving
on a for-profit board.
•
Examples of conflicts of interest
• Volkswagen Emissions Scandal: In 2015, Volkswagen was found to have
installed software in its diesel vehicles that cheated emissions tests. The
company's CEO at the time, Martin Winterkorn, was also a member of
the supervisory board of Audi, a subsidiary of Volkswagen. This created a
conflict of interest for Winterkorn, who failed to take appropriate action
to address the emissions cheating, leading to fines and legal action
against Volkswagen.
• Wells Fargo Account Fraud Scandal: In 2016, Wells Fargo was fined $185
million for creating millions of fake customer accounts without their
knowledge or consent. The scandal was traced back to a sales culture
that put pressure on employees to meet aggressive sales goals. Some
employees opened fake accounts to meet their sales targets, creating a
conflict of interest between their obligation to their customers and their
job performance goals.
•
Examples of conflicts of interest
• Goldman Sachs Abacus Deal: In 2010, the U.S. Securities and Exchange
Commission (SEC) accused Goldman Sachs of creating and selling a
collateralized debt obligation (CDO) called Abacus that was designed to fail. The
SEC alleged that Goldman Sachs had a conflict of interest because it allowed a
hedge fund manager, John Paulson, to select the underlying securities for the
CDO, knowing that he intended to bet against it. The SEC claimed that Goldman
Sachs failed to disclose this conflict of interest to investors.
• Enron Accounting Scandal: In 2001, Enron, a former energy company, was found
to have engaged in widespread accounting fraud that led to its bankruptcy. The
company's senior executives, including CEO Jeff Skilling, created off-balance
sheet entities to hide debt and inflate profits. They also pressured Enron's
auditors, Arthur Andersen, to ignore accounting irregularities. Andersen had a
conflict of interest because it also provided consulting services to Enron,
creating a potential conflict between its obligation to audit Enron's financial
statements objectively and its interest in maintaining a lucrative consulting
relationship.
•
Whistleblowing
• Whistleblowing refers to the act of an employee or an insider
reporting or disclosing illegal, unethical, or fraudulent behavior or
activities within an organization to an external authority or to the
public. Whistleblowers may come forward with information about
violations of laws or regulations, ethical violations, or other forms of
wrongdoing. Whistleblowers often risk retaliation from their
employers, such as termination, demotion, harassment, or legal
action.
•
Whistleblowing
• Retaliation, in the context of whistleblowing, refers to any negative
action taken by an employer against an employee who has reported
or disclosed illegal, unethical, or fraudulent behavior or activities
within the organization. Retaliation may take many forms, including
termination, demotion, harassment, or legal action. Retaliation is
prohibited under many whistleblower protection laws, which are
designed to protect whistleblowers from retaliation and encourage
ethical behavior.
•
Examples of Whistleblowing
• Enron Accounting Scandal: In the Enron accounting scandal, a
whistleblower named Sherron Watkins, who was an employee of
the company, warned senior executives that Enron's accounting
practices were unethical and could lead to financial ruin. However,
Enron's executives ignored her warnings and continued their
fraudulent activities, leading to the company's collapse. Watkins
faced retaliation in the form of threats and intimidation from
Enron's executives, but she was later hailed as a hero for speaking
out.
•
Examples of Whistleblowing
• Enron Accounting Scandal: In the Enron accounting scandal, a
whistleblower named Sherron Watkins, who was an employee of
the company, warned senior executives that Enron's accounting
practices were unethical and could lead to financial ruin. However,
Enron's executives ignored her warnings and continued their
fraudulent activities, leading to the company's collapse. Watkins
faced retaliation in the form of threats and intimidation from
Enron's executives, but she was later hailed as a hero for speaking
out.
•
Examples of Whistleblowing
• Monsanto's Roundup Lawsuits: In 2015, an employee of Monsanto, a
multinational agrochemical company, leaked documents showing
that the company knew about the potential health risks of its
weedkiller product, Roundup, but failed to disclose them. The
employee faced retaliation from Monsanto, including termination
and a lawsuit, but the information she provided was used in lawsuits
against the company, resulting in billions of dollars in damages.
•
Examples of Whistleblowing
• Edward Snowden and NSA Surveillance: In 2013, Edward Snowden, a
former employee of the National Security Agency (NSA), leaked
classified information about the agency's surveillance activities to
the media. Snowden's actions were considered whistleblowing, as
he believed that the NSA was engaging in illegal and
unconstitutional activities. However, the U.S. government charged
Snowden with espionage and theft of government property.
Snowden fled to Russia, where he was granted asylum, and has
faced criticism and praise for his actions.
•