Human resource happens to be the most vital asset of many organizations in the business arena. Employees are an integral part of an organization because there are the cardinal drivers of policy initiatives, implementers and coordinators of any significant project initiated by an organization. Even in organizations that have programs that are run automatically by machines or computers, there are usually a number of employees required to oversee the project. Human resource is needed to input data or raw materials or collect the final product for distribution. Indeed, it is trite to argue that an organization can exist without any form of human resource. Therefore, employees are required to carry out their duties and functions in a professional, ethical, transparent and accountable manner. There are supposed to subscribe to the tenets of the organizations’ code of conduct and ethics. Indeed, this is cardinal in order to protect the integrity of commercial transactions and to ensure trust between the company and its stakeholders. Without trust between the organization and its shareholders, employees, directors, customers and other stakeholders it is impossible for it to have any form of consistency or success. However, employees in many organizations continue to ignore their codes of conduct and ethics causing academics and scholars to examine the arena of business ethics. Questions have been asked as to the threshold of certain business transactions, engagements and interactions in the course of employment. Indeed, the scope of this paper will canvas some of these conundrums. The first section of the paper will precisely and concisely present an argument on whether employees should be allowed to use their positions inside an organization to advance their own interests. This paper holds that employees should not be allowed to pursue individual interests using their official capacity. The second section of the paper will canvas the morality of employees using privileged information to further their interests or the ethical conundrum of insider trading.
Employees should not be allowed to use their positions in an organization to advance their interests. This is an unethical process and makes the business unattractive because it compromises the integrity of the organization. In order to make an objective determination on this contentious issue, it is vital to have a cost benefit analysis of such a process. The paper will provide, in brief yet precise, the merits and demerits of allowing employees to use their official capacity to advance personal interests. To begin with benefits, it is cardinal to state that organizational ethics are mainly concerned with what the group views as wrong and right. The knowledge that an employee will place the organization’s interests over and aboard his own promotes the view that the employees will comply with all laws, rules and regulations. It also enables all stakeholders and interested parties contend with knowledge that in case of a conflict of interest, the employee will perform their duties not only in an objective manner, but also effectively. However, the employee can also be allowed the discretion to disqualify themselves in a case of conflict of interest whereby the case would cloud their judgment, and severely affect their productivity. Disallowing employees from advancing personal interests using official positions allows all employees to enjoy and privilege from all corporate opportunities. The contrast would be to allow a select few to benefit themselves at the expense of the majority. Furthermore, it creates and sustains a corporate culture of fair dealing and competition between the employees. This facilitates operations that are in tandem with the doctrine of honesty. It averts a situation whereby employees are engaged in an ongoing tirade of manipulation, concealment, scheming and abuse of process to satisfy their individual appetites. This promotes the culture of impunity and other intentional unfair-dealing practices which would severely affect the not only the productivity of the employees in the organization, but also the success and consistent of the organization to produce goods or offer its services.
On the other hand, allowing employees to use their positions to advance personal interest would impede the growth and service of the organization. Such a cultures incubates lethargy and by promoting corruption and impunity. Employees would be quick to take shortcuts that offer personal gain compromising of the organization’s interests for their short–terms benefits. It would most definitely not attract customers from the firm’s products or goods. This would significantly affect the sales and profits margins of any enterprise. It may also severely affect the goodwill of any non-profit making organization by soiling its reputation. It would also make effective, effective and productive employees want to leave the organization. This would increase the turnover rate increasing the cost of hiring and other operational costs. Close to this, it will serve as a disincentive to new recruits who would shun the organization because of its business ethics. Talented individuals would look for employment elsewhere thus letting the organization lose the opportunity to tap their potential. Investors are a critical component of a business organization. A successful business organization positions itself in an angle that it is not only attractive to employees, but more significantly to its current and potential investors. Investors pump into businesses the requisite resources that are cardinal for it to kick start its projects. Without them, a business is just another lame duck idea whose time has expired. Indeed, business ethics partly an extremely significant role in pleasing investors and thus making them desirous of trusting their many with an organization’s leadership. Huge profits margin are not enough to convince any prudent investor where to put their money. However, predictable, certain and predetermined ethical conduct is the key. Indeed, such an arrangement makes its extremely easy for a company executives and operatives to carry out the duties and responsibility in a transparent, accountable and effective manner.
Therefore, it is the wise counsel to promote and inculcate a culture that disallows employees from using their own positions to advance personal interests. As observed above, this practice adds no value to the organization as it only serves the personal interests of a particular set of employees. Therefore, the interests of majority of employees and the organization at large will suffer at the expense of the few.
Most organizations, whether they are businesses or not, have policies and rules that prohibit insider trading. Employees are not permitted to use confidential information that they have accessed on course of their employment for purposes of stock trading, or other business related activities for personal gain. Insider trading is usually a vice of the cream of an organization’s management. It involves directors, managers and senior employees of companies that trade in shares. Such critical information is usually not open to the public and junior staff because it is confidential and any linkages could cost the organizations a lot of money and resources. Despite being illegal, insider trading has persisted in world stock markets for decade. This has led to a contentious debate whether the practice is moral or not and whether it should be legalized. Many scholars and market analysts have analysed the phenomenon and propagated numerous arguments for and against this unique phenomenon. The paper will provide a brief case against inside trading arguing that it is not only an immoral business practice that contradicts all principles of business ethics, but that it should not be made legal to safeguard business interests.
Insider trading provides four critical conundrums in stock markets. These include asymmetry of information, being counter to fiduciary, infringement of property rights to such information and more significantly, promoting unequal access to information. When two parties are engaging in a business transaction when they do not have an unequal share of information involving the transaction, this occasions an unfair transaction which is referred to as asymmetry of information. Therefore, it is unfair and thus immoral to undertake a transaction when both parties are not on the same page as one suffers from deficiency of information. In any morally sound activity any party engaging in it should be furnish with the essential details of the prevailing conditions to avoid a scenario where one party is caught off guard. This might lead to loss of millions of dollars which could cripple the financial stability of individuals and companies.
In addition, the information has not been succinctly availed to the shareholder for them to determine the suitability of selling or buying further securities. It is vital that all business related information should be made public to promote transparency and fairness. This would ensure those who work hard get rewarded for their efforts. Allowing insider trading goes contrary property rights in information. This is because while the shareholders have legal rights to such critical information, corporate executive who engage in insider trading have an advantage of obtaining the information prior to the shareholders. Using such information to trade unfairly amounts to abuse of property rights of shareholders. Indeed, property owners who have labored immensely to create a product, or channeled significant resources into the production of raw materials, or reorganization of a company have an inherent right over any information relating to their labor. Therefore, corporate employees cannot and should not be allowed to use their privileged capacities and positions to engage in activities that would benefit them personally instead of the shareholders. More fundamentally, corporate executives are entrusted to carry a fiduciary duty. It is a long-standing position and tradition that fiduciaries should serve and protect the interests of the beneficiaries. Corporate executives are not an exception. Their need to serve their shareholders and all decisions made should bepremised on the best interest of the shareholder. Indeed, a fiduciary relationship is one that requires high levels of trust to survive. This is because of the high levels of material gains and losses involved. Therefore, executives should not abuse this relationship by misusing privileged information for their own causes.
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