McGraw-Hill Answers: Ethics and Social Responsibility

By Certo, S.C.

Edited by Paul Ducham


Corporate social responsibility is the managerial obligation to take action that protects and improves both the welfare of society as a whole and the interests of the organization. Supervisors are responsible for meeting goals not only within their organization but also those for the benefit of society.
     Many areas exist in which a supervisor can strive to meet an organizational goal and benefit society at the same time. One such area would be a supervisor working to meet the organizational goal of producing high-quality products. Producing high-quality products not only helps to increase the marketability of company products but simultaneously benefits society by providing reliable products. Another example would be a construction supervisor who is attempting to meet the organizational goal of building new houses for the poor under a contract with the city. The supervisor not only is helping to meet company obligations under the contract but is simultaneously transforming the organization’s community into a more socially satisfying place.

The Davis Model of Corporate Social Responsibility
Keith Davis, a theorist in the area of corporate social responsibility, has developed a model by which businesses can become more socially responsible. The model consists of the following five propositions:

1. Social responsibility arises from social power. Businesses have a significant impact on societal issues such as environmental pollution and minority employment. Because businesses have this social power, it is important for them to act in socially responsible ways.

2. Business shall operate as a two-way open system, with open receipt of inputs from society and open disclosure of its operations to the public. Because businesses have power, they must listen to the public to understand what can be done to improve society as a whole. This is a two-way street, though, and society must also be able to listen to businesses about their ideas about how to improve society.

3. The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it. Business decisions should not simply be focused on the degree of economic profit to be earned. There are other factors, including societal consequences, which need to be considered when making decisions about the direction of a business.

4. The social costs related to each activity, product, or service shall be passed on to the consumer. Businesses need to earn money in order to keep providing services to society. They should not be expected to continually lose money in order to improve society. Therefore, consumers must be ready to buy services from businesses to help them maintain operational functions.

5. Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation. According to the Davis model, businesses need to help solve societal issues that may be outside their normal realm of action. In theory, as societal issues are solved, businesses will see increased profits, which will strengthen the argument for businesses taking action to solve societal problems.
   Overall, a supervisor must act in a way that supports the accomplishment of the corporate social responsibility mission of his or her organization. The following sections build on the topic of corporate social responsibility by discussing ethics, giving supervisors insights about what ethics is, and, as a result, helping them determine how supervisors should function.


One way of promoting social responsibility in organizations is teaching supervisors about the importance of ethics. In general, ethics refers to the principles people use to distinguish what is morally right. For example, most people would agree that cheating is wrong, or at least they would agree that it is unethical to cheat an elderly widow out of her life savings. Many decisions about ethics are more difficult. 
    Some people say that “business ethics” is an oxymoron—that is, a contradiction in terms. Can businesspeople behave ethically, and if so, should they? One view is that profitability should be the overriding concern of business. This view makes it easy to behave ethically unless an ethical choice is also costly to the organization. Another view is that organizations and their employees have an obligation to behave ethically, even if doing so cuts into short-term economic advantages. The implication is that we are all better off if organizations and individuals consider the common good.
      As a supervisor, you will be looking for ethical behavior in your employees and also making sure you contribute to an environment that encourages ethical actions. Research suggests that such efforts do make a difference. A recent survey by the Ethics Resource Center found that more than half of employees in business and government have observed unethical conduct, but more than 4 in 10 of them keep that information to themselves. At the same time, the most important factor in whether companies have a strong ethical culture is whether supervisors demonstrate ethical behavior and reinforce employees’ ethical actions. Figure 4.1 summarizes some trends in the Ethics Resource Center’s annual survey between 2000 and 2007.

Benefits of Ethical Behavior
In addition to being morally right, ethical behavior offers potential advantages to the organization. To be known as an ethical individual or organization is a satisfying way of maintaining a reputation for high standards. In a study of hundreds of salespeople, those who perceived that their organization maintained high ethical standards were more likely to trust their supervisor and be satisfied with their job, and salespeople who trusted their supervisor were more likely to plan to stay with the company. Achieving this type of ethical climate is mostly a matter of day-to-day practices. For example, employees expect their supervisor to be fair. One way to demonstrate fairness involves performance reviews. Supervisors can give fair Performance Appraisals by setting clear, measurable standards, making sure employees know and understand these standards, and scoring performance objectively according to the standards.
     Ethical behavior is part of a range of behaviors that ensure an organization’s long-term health and success. For a business, that success shows up in the performance of the company’s stock. Some investors go out of their way to select companies with a good track record of ethical behavior. Jim Huguet built a high-performing portfolio of stocks by looking at various performance measures including the companies’ “corporate governance”—systems for ensuring that the leaders put the company’s success ahead of enriching themselves. A number of investment firms, including Calvert Funds, Domini Social Investments, and Pax World Funds, list ethical behavior as one of their criteria for choosing stocks. Analysts at such firms are likely to steer away from companies that have been fined by government regulators, have been audited by supposedly independent firms that are also earning fees for consulting, or pay executives more than $10 million per year.
      Ethical behavior can also improve the organization’s relations with the community, which tends to attract customers and top-notch employees. Children’s clothing company Hanna Andersson is well known for its concern for the community. That concern is expressed through charitable giving of a portion of its profits and the Hannadowns program for donating its clothing, which is durable as well as beautiful. The company also pays employees for working up to 16 hours a year as volunteers in their communities. Co-founder Gun Denhart says, “Businesses, like people, don’t live in a vacuum. You can’t have a healthy company in an unhealthy community.” As well as earning approval, ethical behavior tends to reduce public pressure for government regulation—a situation that most managers would view as beneficial.
     In contrast, the costs of unethical behavior can be high. Organizations whose employees are unethical may lose respect, customers, and qualified employees who are uncomfortable working in an environment that compromises their moral standards. Unethical and illegal behavior caused the downfall of many companies in recent years, including Enron and Tyco. Others, among them Boeing and Martha Stewart Living Omnimedia, have struggled to recover from scandals.
     Unethical behavior has personal consequences as well. Federal employees who accept gifts that fall outside federal government regulations can be suspended, demoted, or even fired. Employees who cheat or steal from their employer may wind up in jail. Even if legal, activities that are against company policy can result in firing. And at the most basic level, a person who behaves unethically has to live with that knowledge day in and day out. Thomas S. Murphy, who once served as chief executive officer of Capital Cities/ABC, says that some of the best advice he ever received was his father’s counsel: “Doing the wrong thing is not worth the loss of one night’s sleep.”
Challenges to Ethical Behavior
Despite these implications, the restructurings, cutbacks, and layoffs of recent years have made ethical behavior harder to encourage. With greater responsibilities, supervisors and other managers in restructured or downsized organizations cannot monitor employees’ day-to-day behavior. At the same time, the uncertainty of the work environment has made many employees afraid of being ethical when doing so conflicts with other goals. Fudging numbers on performance records or producing shoddy merchandise to keep costs down is tempting, if the alternative is to be laid off for failing to meet cost or performance goals. Hard-pressed employees need flexibility, authority, and ethical leadership to create an environment in which to make principled decisions. For an example of circumstances in which ethical decision making was difficult, see “Supervision and Ethics.”
       Other challenges arise from the supervisor’s environment. According to Ethics Resource Center President Stuart Gilman, companies that single-mindedly focus on sales or profits can create an environment in which employees feel as if they have to bend the rules. According to Gilman, employees need training and guidance, as well as a readily available source of advice about ethical behavior. Along with high-pressure goals, some organizations create a climate in which employees fear they need to be unethical to save the company’s future or be treated as a team player. Figure 4.2 summarizes the most common reasons people feel pressured to compromise their ethical standards, according to a recent survey.
        On a more mundane level, a supervisor may simply find that tolerating lapses of ethics leads employees to behave in increasingly unacceptable ways. For example, if the supervisor looks the other way when employees take home small items like pencils or screws, employees may eventually start “borrowing” bigger items.

Differing Measures of Ethical Behavior
How can supervisors meet these challenges to ethical behavior? A good starting point is to seek guidance from the organization’s code of ethics, if it has adopted one. This is an organization’s written statement of its values and rules for ethical behavior. For instance, Figure 4.3 shows the credo (statement of beliefs) for Johnson & Johnson Corporation, which serves as a code of ethics for that company.
   Meeting high ethical standards is especially challenging for those who work with people from more than one culture, because ethical standards can vary from culture to culture. In a study comparing values of professionals in the United States, Canada, and Mexico, respondents from all the countries agreed that honesty is one of the most important qualities for representing ethical standards in three values, and only Mexican professionals put compromise in the top three. Even when ideals match, people in different parts of the world may accept different standards of behavior from businesspeople. Transparency International tracks perceived levels of corruption, such as bribery of public officials, and finds a wide variation in the amount of corrupt practices people observe from country to country. As shown in Figure 4.4, people in Denmark, Finland, and New Zealand observe very little corruption. In contrast, corruption is common in Bangladesh and Haiti. In a recent survey, Nigeria improved, while Iraq, Myanmar, and Somalia fell to the bottom of the rankings. The United States performed about the same, sliding a bit from a 7.5 rating in 2003 to 7.3 in 2007.
     If an organization does business in a country where corruption is expected, employees can have more difficulty meeting high standards. Coca-Cola sells beverages in almost every country in the world, with two-thirds of its sales coming from outside the United States. To serve the 9 million stores selling Coke, the company has contracts with hundreds of bottlers, which add water to the company’s trademark concentrate and distribute the soft drinks in cans and bottles. To gain entrance into some countries, the company found that it was expected to use politically connected individuals as its bottlers. In Iran, that person was a relative of the country’s president; in Uzbekistan, it was a son-in-law of the president, who brought in his brother to help run the company. For oil companies, entering a foreign market to drill for oil generally involves negotiating huge contracts with the government, however unsavory that government might be. ExxonMobil’s payments to Angola’s President, Jose Eduardo dos Santos, in the 1990s helped to fund that country’s civil war. The company’s chairman, Lee Raymond, defends such arrangements on the grounds that an oil company cannot choose where to operate: “You kinda have to go where the oil is.”
     One reason for perceived differences in corruption levels is that gift giving in the workplace can have different meanings from one culture to another. In the United States, the giving of gifts often is interpreted as bribery, an attempt to buy influence. However, in many parts of the world, giving a gift is the proper way to indicate one’s gratitude toward and respect for the receiver. What can a supervisor do if refusing a gift might insult the giver? Most important, the supervisor must follow company policy, and in many cases, that means turning down the gift. At the same time, however, the supervisor should explain carefully and politely the reason for not accepting the gift. If a supervisor has immigrant employees who might not understand U.S. views about gift giving, this might be an area about which to educate all employees before such a problem arises. Find out if there are any company policies or codes of ethics covering the situation. Following these policies is essential for all employees, including supervisors, and provides a way to show that turning down a gift is not meant as an insult to the giver. Some companies have helped individuals make ethical choices in an international context by signing the voluntary United Nations Global Compact. The compact includes principles of global citizenship, such as working against extortion and bribery. So far, 1,700 organizations have signed the compact; of these, are U.S. organizations, including Nike and Goldman Sachs.
       Understanding Cultural Differences also can help businesspeople interpret behavior so they can arrive at agreements that are acceptable on both sides. For example, Western ideals tend to focus on individual behavior, whereas in China, standards are based more on context, including relationships. In other words, one person’s duty to another depends on the nature of their relationship, say, father to son or supervisor to employee. People doing business in China find that they have to begin by getting to know one another and establishing a relationship of trust. In China, that relationship of trust is likely to count for more than any particular laws that are on the books, but may or may not be enforced. So, an American businessperson in China might respect Chinese values by taking time to develop trusting relationships and expect Chinese colleagues to honor Western values by agreeing to follow certain rules of conduct.

Code of Ethics: An Example
The Coca-Cola Company, a long-standing leader in the beverage industry, has recognized the importance of upholding ethical standards. In the company’s Code of Ethics, it is written that managers should:

• Ensure that the people you supervise understand their responsibilities under the Code and other Company policies.
• Take opportunities to discuss the Code and reinforce the importance of ethics and compliance with employees.
• Create an environment where employees feel comfortable raising concerns.
• Consider conduct in relation to the Code and other Company policies when evaluating employees.
• Never encourage or direct employees to achieve business results at the expense of ethical conduct or compliance with the Code or the law.
• Always act to stop violations of the Code or the law by those you supervise.

By writing a Code of Ethics, the Coca-Cola Company has demonstrated the importance of upholding ethical standards in the workplace.



In Slidell, Louisiana, along the Gulf Coast, the Perez family was among those receiving orders to evacuate on a Saturday morning in 2005 as Hurricane Katrina approached the coastline. For the Perezes, evacuating posed an additional challenge: Their car was in the shop for repairs. The family had obtained a rental car for that weekend, so they loaded it with their belongings and headed to Alabama for what they anticipated would be a short stay at the home of some friends.
      The next day, the hurricane passed directly over Slidell, and floodwaters rose to 20 feet in some parts of town. In the days following the hurricane, returning to the devastated area was impossible. Still, that Tuesday, the car was due back at the flooded rental office.
       Unsure what to do, the Perezes called the company’s main customer service office. The representative had no ideas either and asked them to call back “in a couple of days.” When asked how this would affect the terms of the contract, the representative could offer no information. Two days later, the family called again, and a representative said they should return it to the local Alabama facility and that they would not be charged for the two extra days.
      However, when the Perezes returned the car, they received a bill for a full six-day rental—and at more than four times the rate per day charged in their original contract. Instead of about $150, the family was asked to pay more than $1,500 for the car. When the Perezes objected, the agent at the counter insisted that the rules are the rules, and the family had not adhered to their original contract. The company could not waver from the contract, the agent maintained, because it was “just a business.”
      No one at the office was willing to call the central customer service office and verify the original promise, so the Perezes called on their cell phone and negotiated a total of $332. A week later, they managed to reach the person who had made the original promise, and after an hour’s discussion, they obtained a refund of the difference.
      Should employees bend contract terms to assist victims of a disaster? Do businesses as well as individuals have an ethical duty to help people in need? Apparently, one customer service representative was paralyzed by these questions. The second thought a discount was the right thing to do and perhaps that was the best way to fulfill the agency’s advertising promise to “try harder.” The third agent focused only on the contract. (Of course, if the Perezes had followed the contract strictly and returned the car to Slidell, that car would have been underwater with all the other vehicles in the facility’s parking lot.) All three agents’ actions were influenced by their sense of what the company would allow them to do.

Figure 4.1

Figure 4.2

FIGURE 4.3 The Johnson & Johnson Credo (Statement of Beliefs)

We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services.
In meeting their needs everything we do must be of high quality.
We must constantly strive to reduce our costs in order to maintain reasonable prices.
Customers’ orders must be serviced promptly and accurately.
Our suppliers and distributors must have an opportunity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world.
Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs.
Compensation must be fair and adequate, and working conditions clean, orderly and safe.
Employees must feel free to make suggestions and complaints.
There must be equal opportunity for employment, development and advancement for those qualified.
We must provide competent management, and their actions must be just and ethical.

We are responsible to the communities in which we live and work and to the world community as well.
We must be good citizens—support good works and charities and bear our fair share of taxes.
We must encourage civic improvements and better health and education.
We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.

Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas.
Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times.
When we operate according to these principles, the stockholder should realize a fair return.

Figure 4.4


If supervisors wish to see a high standard of ethical behavior in the workplace, they must behave ethically themselves. Supervisors in particular must exhibit important dimensions of ethical behavior including loyalty, fairness, and honesty (see Figure 4.5).
      As a leader, a supervisor is expected to be loyal to the organization, to his or her manager, and to his or her subordinates. When these loyalties conflict, ethical dilemmas result. These loyalties also may come into conflict with the supervisor’s self-interests. If supervisors are seen by others in the organization to put their own interests first, they will have difficulty earning the loyalty, trust, and respect of others.
    Fairness is another important trait of a supervisor. Employees expect to be treated evenhandedly. They resent it if the supervisor plays favorites or passes the blame for mistakes on to them. In some cases, their resentment can breed unethical responses that make the situation even worse. Consider the case of the consultant who worked with a lumber company that suffered falling profits despite strong sales. The consultant observed that employees were treated harshly, and he asked an employee why absenteeism was low and quality was high, considering that these measures often suffer when employees are unhappy. The employee had a ready answer: Whenever employees were upset, they would “feed the hog,” a large wood chipper. The chipper was there to grind up scrap for chips to make particleboard; angry employees would “feed” it finished lumber, and management would never know the difference. Employees didn’t want to miss work, because they had “hog quotas”—if they didn’t feed the hog, they put $20 into a fund that was used for parties every few months. In this situation, employees felt they were treated unfairly, so they tried to even the score by cheating their employer. Ironically, no one is really benefiting; rather, fair treatment of employees and profitability would go hand in hand.
       Supervisors may find it harder to be fair—or toHonesty includes several types of behavior by the supervisor. First, when employees
make a suggestion or convince others that they are fair—when they supervise their own relatives. Therefore, supervisors may find it wise to avoid nepotism, the hiring of one’s own relatives. Arelated problem can arise when supervisors accept a gift from a supplier or someone else who may wish to influence their judgment. Even if a supervisor is sure about remaining objective in the acceptance of cash, lavish entertainment, or other gifts, other people may question whether the supervisor can be fair. When supervisors place themselves in such a position, management tends to doubt their ability to exercise good judgment.
    Honesty includes several types of behavior by the supervisor. First, when employees make a suggestion or accomplish impressive results, the supervisor should be sure that the employees get the credit. Pretending that other people’s accomplishments are your own is a type of dishonesty. So is using the company’s resources for personal matters. For example, a supervisor who spends work time chatting with friends on the phone or who takes supplies home for personal use in effect is stealing what belongs to the organization. Furthermore, the supervisor is demonstrating that such behavior will be overlooked, thus encouraging employees to be equally dishonest. Finally, supervisors should be honest about what the organization can offer employees.

Making Ethical Decisions
Assuming that it is desirable to choose ethical behavior and to help employees do so, the challenge is to decide what action is ethical in a particular situation and then determine how to carry it out. There are no hard-and-fast rules for making ethical decisions. In some cases, two possibilities might seem equally ethical or unethical. Perhaps someone will get hurt no matter what the supervisor decides. In addition, as discussed previously, people from different cultures may have different measures of ethical or unethical behavior. “Tips from the Firing Line” offers recommendations for making decisions when faced with this kind of dilemma.
     Sometimes the supervisor can promote ethical decision making by involving others in the process. When the group discusses the issue, group members can offer their perspectives on the situation and the underlying values. Discussing the ethical implications of the decision can help the supervisor see consequences and options that he or she might not have thought of alone. 
       Deciding what behavior is ethical does not always end an ethical dilemma. Employees are sometimes afraid that doing what is morally right will cause their performance to suffer and may even cost them their jobs. However, supervisors can help alleviate these concerns. Employees respond when supervisors and higher-level managers model ethical behavior and include ethical standards in performance discussions and rewards (even as simple as praising ethical actions).

Supervising Unethical Employees
It is tempting to ignore the unethical behavior of others, hoping they will change on their own. However, the problem usually gets worse as the unethical employee sees that he or she can get away with the behavior. Consequently, when the supervisor suspects that an employee is behaving unethically, the supervisor needs to take prompt action. Figure 4.6 summarizes the steps to take.
        The first step is to gather and record evidence. The supervisor needs to be sure that unethical behavior is actually occurring. For example, if the supervisor suspects that one or more employees are padding their expense accounts, the supervisor regularly should review expense reports. As soon as the supervisor sees something that looks odd, he or she should ask the employee about it. After confronting the employee with the evidence, the supervisor should follow the organization’s disciplinary procedure. 
         After dealing with the specific problem, the supervisor should try to understand what conditions contributed to this problem. That effort can help the supervisor avoid similar ethical lapses in the future. In analyzing why an employee has behaved unethically, consider whether you have created a climate for ethical behavior in the department. Have you set a good example through your own ethical behavior? Are the rewards for productivity so great that they tempt employees to cut ethical corners? Do the employees hear messages that say the organization cares only about achievements, such as, “I don’t care how you get it done, just do it”? Ethics consultant Frank Bucaro says a salesperson who believes his or her job depends on meeting a sales target can risk the company’s reputation. One overeager salesperson can give customers the impression that the whole organization puts ethics and customer satisfaction on the back burner.


In some situations, the ethical course of action is obvious. But how can supervisors decide what to do when the alternatives are a mixture of benefits and harm, greed and good? On its Web site, Loyola Marymount University’s Center for Ethics and Business offers a three-step strategy for resolving ethical dilemmas. This strategy combines two ways that people usually think about ethics: by weighing an action’s consequences and by evaluating the action itself.
     Consequences are usually easier to compare, so first think about the consequences of each alternative. List who will be helped by each alternative, then list who will be harmed. For each person or group on the list, consider the kind of benefit and harm that will result. Will the benefit or harm be great or minor? Consider both the short-term and long-term consequences. Look for the alternative that offers the best mix of great benefits and minor harm.
     Next, shift from the consequences and consider the action itself. Does each alternative action involve behaviors that meet high moral standards, such as fairness, honesty, and respect for people’s dignity? Do any of the actions violate moral principles? Try to find an alternative that meets the highest standards of behavior.
     Finally, compare the choices that result from each way of thinking about ethics. If the first two steps lead to the same alternative, your decision is complete. If not, you will have to make a difficult decision, considering which way of thinking about ethics best reflects your own values.

figure 4.5

Figure 4.6


Someone who exposes a violation of ethics or law is known as a whistle-blower. Typically, a whistle-blower brings the problem first to a manager in the organization. If management seems unresponsive, he or she then contacts a government agency, the media, or a private organization. The whistle-blower’s hope is that the negative publicity will spur the organization to do the right thing. Of course, the negative publicity also can damage the organization. This is one reason why supervisors should respond carefully and appropriately when employees come to them with complaints. (To learn more about responding appropriately, see “Supervisory Skills.”)
       A whistle-blower’s report may be embarrassing as well as costly to the organization. Nevertheless, whistle-blowers are protected by federal laws, the laws of several states, and some recent court decisions. For example, federal laws protect employees who make complaints pertaining to violations of Antidiscrimination Laws, environmental laws, and occupational health and safety standards. Most recently, the Sarbanes-Oxley Act forbids employers from retaliating against an employee who reports possible accounting, auditing, or reporting misdeeds that deceive investors. Thus, in general, employers may not retaliate against someone for reporting a violation. Suppose an employee files a complaint of sexual harassment; the organization may not react by firing the employee who complained.
    In addition, under a Civil War–era law that was little used until the late 1980s, whistle-blowers who report on companies that are cheating the government stand to receive up to 30 percent of whatever money the company ultimately pays as a penalty for the fraud. The number of cases filed by whistle-blowers under the False Claims Act jumped from 66 in 1987 to 533 in 1997, and the cases filed each year continues to be high (394 in 2005). Recoveries under the False Claims Act since 1987 have totaled more than $17 billion, with an average of almost 17 percent awarded to the whistle-blowers. In a dramatic recent case, paralegal R. C. Taylor filed a whistle-blower lawsuit claiming that the law firm he formerly worked for had engaged in fraud, attempting to deceive the Federal Communications Commission. In a settlement, the firm agreed to pay $130 million to the Justice Department; Taylor (and his attorneys) will receive more than $30 million of that amount.
      Despite these protections, whistle-blowers often suffer for going public with their complaints. Typically, the whistle-blower is resented and rejected by coworkers and may be demoted or terminated. Even when the courts agree that the whistle-blower was treated unlawfully, it can take years for that person to be compensated by the organization or even appreciated by the public. Even when a whistle-blower keeps his or her job, there are consequences. Daniel Thobe blew the whistle at DPL Inc., a utility company. Thobe informed DPL’s audit committee that he had concerns about the company’s financial reporting and corporate governance. The committee hired an independent law firm to investigate, and the lawyers agreed with some of Thobe’s concerns. Three top executives resigned, and DPL promised to strengthen its financial controls. Even though Thobe was protected by the Sarbanes-Oxley Act and kept his job, he faced the embarrassment of scathing criticism by DPL’s executives during the investigation. And like other whistle-blowers who keep their jobs, Thobe is in the awkward position of working for a company he is known to have subjected to an investigation. Because of these consequences—and out of fairness to one’s employer—a would-be whistle-blower should try to resolve problems within the organization before blowing the whistle.
           Today, many organizations are protecting ethics-minded employees and themselves with hotlines that make it easier to report and resolve ethical disputes within the organization. Cabela’s, a retailer specializing in products for outdoor recreation, works with an outside firm that operates its hotline. The hotline operator has someone respond to each call within 48 hours, so the caller knows that his or her concerns were heard. The operator also provides Cabela’s managers with quarterly reports, which they use to identify problem areas. For example, if several complaints come from a particular store, that fact may signal a need for managers at that store to receive training in an area of weakness.
       A supervisor’s general attitude toward whistle-blowing should be to discourage reports of wrongdoing when they are motivated simply by pettiness or a desire to get back at someone. Yet, when someone does complain, the supervisor should investigate the complaint quickly and report what will be done. This lets employees know that their complaints are taken seriously and that the supervisor wants to handle them fairly and appropriately. The supervisor should bear in mind that the typical whistle-blower is not simply a troublemaker but a person with high ideals and competence. Keeping communication flowing and responding to problems will allow the organization to find solutions without the costs and embarrassment of public disclosure. Finally, engaging in ethical behavior can eliminate the need for whistle-blowing—and the other negative fallout of misconduct—in the first place. .



No one enjoys listening to people whine and complain, but sometimes a complaining employee is a blessing in disguise. An employee with a complaint may have important information about a problem that needs to be corrected. Even if the complaint is misguided, an employee who believes that a concern was ignored may turn into a whistle-blower, potentially causing great expense and embarrassment.
        This situation is especially relevant to supervisors. Research by the Ethics Resource Center has found that employees who report misconduct are most likely to go to their immediate supervisor. Fewer turn to higher-level managers or their human resources department.
      What should a supervisor do if an employee is complaining? Eric M. Heath, whose responsibilities at East Boston Savings Bank include training supervisors, says supervisors should listen carefully and provide “no-fault feedback.” That means the supervisor doesn’t jump to conclusions but instead asks openended questions about what the employee observed. The supervisor should treat the complainer with respect and thank him or her for the information. If the situation is ethical and in accord with business goals, the supervisor should, if possible, explain the reasons. If the situation calls for a response beyond what the supervisor can do, the supervisor should refer the employee to someone who can help.