Ethics in Organizations: On Witnessing a Fraud - Essay Example

Ethics in Organizations: On Witnessing a Fraud1. There are two ethical problems in this case. Identify both issues. Which one is a relatively simple problem and which one is a complex problem?Joe’s Supervisor is asking him to commit fraud and the other issue is subtle bribery as a reward for cooperation. The fraud is a simple ethical problem to detect for it was blatant. Joe knew that the surge had only fried a few underground wires and computer circuits, which would have to be replaced at about a cost of $15,000 and being asked to dig up nearly all the under-ground and cable, then dispose of it before the insurance adjuster arrived to have a repair job that would come to $600,000 is a glaring fraud and easier to refuse.

But the other ethical issue is more difficult to discern and in fact, very tempting as it has a reward if he cooperate and will be scolded if he refuse. That should he cooperate, the new computer which he has been asking for will be installed and if worse comes to worst, it is the company who will be liable, not him. The bribe was offered as a reward for fraud which in the first place, the plan to install a new computer was part of Joe’s job. Though not stated in the problem, that requested new computer might be to improve the system of the club as such should not be used as a reward because it was not requested for Joe’s personal benefit.2. Put yourself in the position of Joe in the case study.

What would Joe do with regard to his complex ethical problem in each of the following stages? In each case, explain your answer briefly.Stage 1. In this case, if Joe will just cooperate and be obedient, he might be spared from implicit punishment from his supervisor like giving him a low appraisal of his job performance. Stage 2. As mentioned above, Joe will be awarded the installation of the new computer he previously requested if he acceded to the “request” of his supervisor and as a “reward for his good behavior.

”Stage 3. With how the “request” to dig up nearly all of the underground cable to have a repair job that would come to $600,000, it seems that it is has been the norm to make the most of the insurance coverage as it was delivered casually, even without pausing to ponder that it is fraud.Stage 4. Joe was forthright that he does not want to do it saying “wow, I don’t think that is something I want to do”. And though persuaded by his superiors to cooperate and coerced when he refused, he replied “I’m sorry, it’s fraud, and I refuse to be a part of it.Stage 5. In this case Joe may have a social contract to his employer to work for them to serve the end goal of the company.

But this was placed in a crossroad when he was asked to commit fraud where Joe is not acceding as he is unwilling to commit fraud.Stage 6. Honesty is a universal principle that is honored by all societies and is not bound by time or cultural context. And fraud is fraud no matter how it is being rationalized. In this case, Joe refused to be a part of it. 3. What would you do to resolve this ethical problem? Why? What stage of moral development does this most resemble? Report it. For ethical purpose, its fraud and the company he works for knowingly and intentionally does it.

If that kind of practice becomes pervasive, it will destroy the insurance industry which will have a ripple effect on the economy where everybody will be affected.The stage of moral development this resemble is stage 4. Social system and conscience maintenance: Conformance with the laws of one’s society or nation out of a sense of duty. Because despite of the persuasion and coercion of Joe’s superiors, he still refused to commit fraud owing to a higher sense of obligation that it is wrong, no matter how it is sugar-coated.