Ethical Dilemmas in Business
There are many areas where ethical dilemmas arise. Here are five categories of common
ethical dilemmas in business:
1. Human resource issues
2. Employee safety issues
3. Conflicts of interest
4. Customer confidence
5. Use of corporate resources
We shall discuss ethical dilemmas related to conflict of interest here.
Conflicts of interest
Conflicts of interest arise when an employee’s judgment is compromised due to external
influences. These situations present a particular ethical dilemma when the best interest of
the employee and the best interest of the company are at odds.
Conflicts of interests often arise. A company may specify that an employee must not have
any financial
interests in a company that has dealings with or competing with it. A conflict of interest
situation may not
arise out of financial interest. We have to be careful that while we attempt to eliminate a
conflict of
interests, we do not cause another conflict of interest issue. A recent example is when Mr.
Paul
Wolfowitz, the previous President of World Bank, transferred his girlfriend out of the Bank
to reduce conflict of interest, but because the new terms were too much better than her
old terms of employment, resulting him being accused of infringement of code of ethics.
IBM is quite explicit in defining when a financial interest in another organization may lead
to conflicts of
interest arise. It states:
"A financial interest is improper if your job, the amount of your investment, or the particular
company in
which you invested could -- when viewed objectively by another person -- influence your
actions as an IBM
employee. In the case of a supplier or alliance company, if you have anything to do, either
directly or
indirectly, in deciding whether IBM does business with that company, you should not have
any financial
interest at all in the company."
However, most organizations, especially the smaller ones, do not have such clear
statements on conflict of interest. It is important that the employees themselves be wary
of the dangers if they do not want to get into trouble with their employers or with the law.
There is an example of a case that involves two former Boeing employees. Michael Sears
was the CFO and Darleen Druyun was corporate vice president. Druyun retired earlier from
the Air Force as the No. 2 acquisition executive. It all began with the request by Druyun to
Sears for jobs in Boeing for two of Druyun’s family members. She was sentenced to nine-
month prison sentence because she awarded a contract to Boeing out of gratitude for the
company for employing her and two family members. Sears was sentenced to four months
in prison for improperly recruiting Druyun.
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