Whether Employees Allowed Using Their Positions to Advance Their Own Interests - Example

Name: Tutor: Title: Comparative Business Ethics Course: Date: Whether employees allowed using their positions inside an organization to advance their own interests? Companies must ensure a high standard of business ethics because it is of critical value in their societies. Based on the duty of employees, it is important to note that employees are obliged to have good morals to their organizations, co-workers and customers. Generally, the moral obligations of each and every employee include caring, honesty, loyalty and respect (Josephson 2010). Therefore, the question of whether employees are allowed using their positions inside their organizations to advance their own interests depends on the trustworthiness of a particular employee to its organization. It would be relevant to mention that employees who secretly use their positions inside their organizations to advance their own interests violate their duty to avoid conflicts of interest. Basically, a conflict of interest occurs when an employee’s private interest negatively affects the interests of his or her company. For example, it is generally considered a conflict of interest if a company employee works simultaneously for its competitor, supplier or customer without prior approval from the management (Moffat 2000). This means that the best policy that employees can take is to avoid direct or indirect business associations of whichever kind with the competitors, customers and suppliers, except on the behalf of their companies. It is worthy mentioning that employees who follow the highest ethical principles of their company help it to achieve a good reputation. However, maintaining this reputation requires each employee to observe the highest standards of their business integrity as well as avoid activities that might appear to be embarrassing to their companies or themselves. From the perspective of conflicts of interest, it is a fiduciary duty for each employee to avoid placing himself or herself in a position through which his or her loyalties might conflict with the company’s interests. Therefore, each employee is required to be free of all investment or associations that might interfere with independent activity of his or her decision made in the best interests of the company (IBM 2012). In order to ensure that high ethical employee behavior is achieved in the organization, it is crucial for all levels of management as well as non-management employees to be well-informed about the ethical implications of decisions they make because it is more related to their personal and professional values. Thus, corporations must implement a Business Code of Ethics and subsequently review with their employees because ethical behaviors the overall success of a corporation. This implies that in situations of ethical dilemma for any decision-making, a Business Code would act as the employee’s vital tool. Therefore, it is important for employees to be well-conversant with the laws, corporation’s policies as well as their Company’s Business Code of Conduct (Hartman 2001). This means that it would be difficult for employees of any company to determine the type of conduct that might be considered acceptable in that particular company without putting in place the necessary ethics policies and standards. As a policy statement, all the employees of the City of Toronto are required to behave ethically by exercising personal integrity and ethics as well as being honesty and diligence in executing their duties for the organizations. Thus, each and every employee is expected to support and advance the stated interests of their organizations rather than placing themselves in circumstances where their personal interests either potentially or truly conflict with those of the city of Toronto. For example, employees who already have financial interests within the city contract or other business transactions and associates, relatives or friends, are not required to represent or offer advice to their organizations in similar transactions (City of Toronto). Is insider trading or the use of privileged information considered to be immoral? Insider trading or use of privileged information is immoral. It should be noted that employees who have direct access to their company’s confidential information are not required to use or simply share that particular information for their own stock trading reasons, except for the purpose of conducting of their company’s business. This means that all non-public information concerning the company must be regarded as confidential information. It has been discovered that the act of using non-public information by an employee for his or her own personal financial benefit or influence others to make investment decision based on that particular information is both unethical and illegal (Schrag 2001). Insider trading particularly in the stock market has been considered as one of the most controversial issue within the business ethics. Barry, Norman (2008) defines insider trading as the activity that takes place when employee whether directors or ordinary staff of a given company, involves in the transaction of shares based on the confidential information to which him or her alone has access (Barry 2008). Insider trading is considered a prime example to distinguish between the ethical and legal activities. However, the activities perceived as insider trading as well as the manner in which they are handled vary accordingly in the sophisticated markets. It would be important to understand that misappropriation greatly makes insider trading to be seen as unethical activity. This implies that not all the activities of insider trading are unethical because the manner in which inside information is obtained helps to determine whether the activities involve in are immoral or not. It is apparent that how the trader relates to the source of information and its subject are crucial when determining the ethical status of an activity associated with insider trading. For example, in situations where the information was obtained incidentally or accidentally, then it means that insider trading would not be taken as unethical (Sternberg 2000). Importantly, immoral insider trading should be regarded as a dangerous activity to the market itself because not only the traders who involve in insiders’ transactions that lose, but also the overall reputation as well as viability of the entire securities exchange diminish. Therefore, it would be relevant to point out that insider trading can only be considered unethical when the inside information was misappropriated or obtained through the violation of the fiduciary responsibility. Similarly, immoral insider trading is unfair activity because the information of a corporation which is expected to enhance the interests of its owners, instead it is directed to private uses of corporate agents or commonly referred to as outright thieves. This clearly indicates that if owners of a corporation give the insiders the permission to use their corporate information to advance their private objectives, in such a case, the activity of insider trading is not regarded as unethical (Sternberg 2000). Shaub (2011) examines that quite a number of business press in recent weeks have impressively revealed the extent to which the insider trading has taken lead in the headlines. Shaub notes that even though insider trading boosts the efficiency of market by facilitating the incorporation of information into share price, it bothers majority of other people and the need to adhere to trading laws due to the issue of fairness. Generally, all business activities involve the gathering of data upon which decisions will be made. However, the problem occurs if only such information is obtained from sources that were not open to the entire management team but only made available to some individuals. For example, if based on their positions in the organization or simply due to their special affiliation to the source of this information. The implication of this activity is that the insider information makes all the participants involved in the market to be placed at a disadvantaged position. As a result, it becomes difficult for such individuals to overcome their conditions on their own efforts. A number of countries have resorted to legislate against insider trading so as to protect such unfair practices, while others face difficulties in differentiating between the insider information and what is really considered as legitimate forms of the information, and hence ignoring the issue. In this case, the fundamental idea is to develop a policy which requires any person engaged in transactions within the stock market to discern using such information as well as cease from its misuse (Tamari 1996). Conclusion Based on the above discussions, it can be concluded that the issue of whether employees are allowed using their positions inside their organizations to advance their own interests depends on the trustworthiness of that particular employee to its organization. The use of inside information by employees for their personal gains, or influencing others to make similar gains should be flatly prohibited. Immoral insider trading should be regarded as a dangerous activity to the market itself because not only the traders who involve in insiders’ transactions that lose, but also the overall reputation as well as viability of the entire securities exchange diminish. Learning how to identify as well as resolve ethical issues is a critical step towards making effective evaluations of ethical decision within the business world. It is notable that fairness and honesty are central to business ethics, and thus associated with the general values of most decision makers. It should be noted that ethical decisions in business or an organization are basically influenced by individual moral standards, coworkers as well as the opportunity for one to engage in a given misconduct. Bibliography Barry, P. N, 2008, The Ethics of Insider Trading, University of Buckingham, Buckingham. City of Toronto, 2000, “The Conflict of Interest Policy for the City of Toronto Employees”, retrieved December 19, 2013 from, Hartman, L., 2001, Perspectives in Business Ethics, Irwin/McGraw-Hill, Chicago. IBM, 2012, “The Management Principles and Practices of IBM: Conflicts of Interest”, retrieved December 18, 2013 from, Josephson, M., 2010, “The responsibilities expected in the Employer-Employee relationship: Business Ethics and Leadership”, retrieved December 19, 2013 from, Moffat, C., 2000, “Business in the changing world”, Chapter 2: Business Ethics and Social Responsibility, pp.30-50, retrieved December 19, 2013 from, Schrag, B., 2001, ‘The Moral Significance of Employee Loyalty’, Business Ethics Quarterly, Vol.11, No.1, pp. 41-66. Shaub, M., 2011, “Bottom Line Ethics: What is wrong with insider trading”? Mays business online, retrieved December 18, 2013 from, Sternberg, E., 2000, Insider Trading: Business Ethics in Action, Oxford University Press, Oxford. Tamari, M., 1996, Insider Trading: Jewish Perspective, Orthodox Union, New York. Read More