Lecture 2 - Part 1: Whistleblowing Flashcards
What is whistleblowing?
Whistle-blowing is the VOLUNTARY release of NON-PUBLIC information, as a MORAL PROTEST, by a MEMBER OR FORMER MEMBER of an organisation to an appropriate audience OUTSIDE NORMAL CHANNELS of communication regarding ILLEGAL AND/OR IMMORAL CONDUCT in the organisation that is opposed to the public interest
Summarise the six key aspects of the whistleblowing definition
1) Voluntary
2) Non-public information
3) Moral protest
4) Member or former member
5) Outside normal channels
6) Illegal and/or immoral conduct
What does it mean for whistleblowing to be outside of the normal channels of communication?
For an employee to be a whistleblower, they must go outside the normal established procedures for reporting wrongdoing - external or internal
What is the justification of whistleblowers in relation to the agent argument (i.e. whistleblowers are agents of their employers)?
1) The agent must only obey all REASONABLE demands
2) Obligations of the agent are confined to the NEEDS OF THE RELATIONSHIP (not obliged to do anything outside of scope of employment)
Why are whistleblowers not disloyal employees?
As they are commited to the trust interests of goals or an organisation
What are the conditions for justified whistleblowing?
1) Is the situation of sufficient moral importance to justify the whistleblowing?
2) Do you have and understand all of the relevant facts
3) Have all internal channels of whistle-blowing been exhausted
4) What is the best way to blow the whistle
5) What is my responsibility, based on my organisational role?
6) What are the chances of sucesss
What are the arguments for and against whistleblowing?
For: - Benefits society - Moral right to blow whistle - Employees ought to have the right to act following their own conscience Against: - Open right to abuse - Covering up incompetence - Hurts cooperative spirit - Infringes entrepreneurs' rights to run company as they want
What are the components of an effective whistle-blowing policy
1) Communicated statement of responsibility - employees have the responsibility to communicate all concerns about unethical/ illegal conduct
2) Clearly defined procedures for reporting
3) Trained personell to receive and investigate reports
4) A commitment to take action - may include informing reporting employee of the outcome
5) A guarentee against retaliation for blowing the whistle
What were the three psychological affects that made the CEO create special purpose entities to hide the losses?
1) Attitudes: The CEO Skilling had a positive attitudes towards taking risk and his own ability to get away with the accounting scandal
2) Prospect theory: Losses loom larger than gains, people are risk taking for choices that involve sure losses
3) Sunk cost: Tendancy to continue in course of action once course of action decided - if he wanted to change course, this would involve exposing the loss hiding entities
Was Sharon Watkins a whistleblower?
Not technically, as she did follow the established procedures for reporting wrongdoing (which is reporting the issue to senior management)
- Even though whistleblowing can be internal, it seems as though the protocol was followed
What did the bounties for whistleblowers case in relation to the SEC say?
- SEC was planning a program that provided monetary compensation for employees who reporting wrongdoing
- ISSUE: would meant that issues are not reported to management, and hence not fixed, as employees would go straight to SIC and receive compensation
- Also, businesses beleives the SIC would not be able to keep up with the demand
What were the three mistakes Skiing made?
1) failed tonne aware of his own risk taking attitudes
2) didn’t base judgements on expected utility, and failed to account for subjective risk and the certainty effect
3) dailies to show leadership by cutting sunk costs
