Term Paper: Employees Accepting Gifts

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[. . .] As a result, goods and services may be bought at higher costs, directly impacting the profitability of the organization. Again, this is not to conclude that employees will blatantly decide purchasing from sellers offering gifts. What can actually happen is that employees may not go the extra mile in securing the 'best buys'. In such an event, the incremental cost per transaction may not be significant, but the sum of several such transactions, especially in multi-location and large organizations can make a difference.

Employers tend to believe that a section of employees accepting gifts may spread the practice to other departments for a chain of favors. For example, in an engineering firm, the purchase executive may try to influence the quality control manager to do certain questionable acts. Here again, the impact of such actions may be felt over a period of time; in several cases, it may not be felt at all. Yet another major perceived risk is the interference of competition. It is a wide spread practice for competing players to gather information on the organization's activities from its employees. Competitors may try to accomplish this task either directly or indirectly through suppliers and service providers. Therefore, employers can become uncomfortable when employees receive gifts. Having earned the goodwill and trust of employees, competitors would try to extract as much as information for planning their marketing strategies. (Balmer, 1998, p.50).

Customer perception:

Even more important is the perspective of the customer, the very reason for the existence of the business. This is one area where employers would be very careful, as customer goodwill is vital to success in business. If customers start realizing that the organization's employees are freely accepting gifts, they tend to develop a negative image about the company. Of course, it can be argued that customers are more interested in the price discounts and free offers that they get and should not be bothered about employee behavior in respect of accepting gifts.

Stakeholder perception:

Employee acts of accepting gifts may also have a bearing on the stakeholders' evaluation, if such acts cause damage to the reputation and image of the organization. It is only logical that stakeholders would like to stay away from organizations that are known to be very lenient in administration and control of ethical issues. This is because unethical practices among the employees are bound to adversely affect the performance of the organization in the long run. Therefore, employers would strive to ensure that stakeholders do not have any issues with respect to ethical code of conduct of employees, which includes accepting gifts.

Employee perception:

From the perspective of employee, accepting gifts is a perfectly normal activity. There can be several arguments - to start with, employees generally do not demand gifts from suppliers and it is the other way around. These are times, when suppliers and contractors are treated as partners by progressive organizations. They contribute to enhancing the efficiency and profitability of the organization. As much as the sellers depend on buyers, the buyers also depend on sellers, although competitive market forces may give more options to the buyers. So, it is likely that the employee declining to accept a gift may offend the seller, indirectly affecting the relationship with the seller. The employer may argue that she is very clear about what is gift and what a bribe is. When the seller offers gifts to a group of employees as a goodwill gesture during festival days and other relevant occasions, it does not amount to bribe. It is only when the seller offers some gifting to select employees in return for a specific favor, that it becomes bribe. In practice, an employee who declines gifts in public view can always accept bribes in private. (Wood, 1995, p.58)

Employees may also be partially justified in the view that the organization itself is not immune from giving gifts in the course of business operations. For instance in several ports across the world, giving away small gifts to the port and customs officials for expediting unloading or loading of shipments so that there is no delay or detention. Several companies, including the international ones, hold conferences and parties for customers periodically and offer gifts. Pharmaceutical companies encourage the practice of giving away gifts to doctors in a bid to market drugs. Companies even go to the extent of giving away freebies, discounts and material gifts to customers for increasing sales. This is a common practice followed by mass production companies manufacturing and selling consumer durables, personal products, electronic devices etc. If the organization's act of offering gifts is accepted, then why cannot employees accept gifts? After all, employees are also consumers and they have surely gone through with the pampering of marketing companies. From a personal viewpoint, gifts are symbolic of simple joys of life and work. When an employee is offered a gift, she feels important and realizes that it is the organization that is responsible for her position. This could be a motivating factor for performance enhancement and can be advantageous in organizations, where employees feel they are not being paid well. (Haong, 1997, p.70)

Public perception:

The perspective of a third person external to the organization can range from indifference to total concern. Generally, employees accepting gifts are seen as those who will return the favor in some form. However, the perception can greatly vary, depending on whether the organization is in the private or public sector. Since the common people interact more with the public sector organizations, the employees of these organizations come under greater scrutiny. It is common for people to take biased positions that public sector employees exhibit greater tendency to accept gifts. This of course, could be defined as bribery, but the social and cultural perceptions can vary from country to country. For example, in developing countries, it is common for public servants to demand 'gifts' in return for carrying out even routine duties, to which the public may be indifferent. It would probably take a much more serious crime such as embezzlement of funds that will qualify for being classified as bribery.

The importance of public perception lies in the fact that the action of employees affects the image of the company. Since any member of the public can become a shareholder of the organization in future, employers are concerned over this aspect. At any given time, employers would like to project a clean image of the company, to avoid any adverse impact on the business. This is important from a long-term business perspective, as people are quick to grasp the personality of corporate and negative images are rarely forgotten. The concept of corporate image identifies five problems - its multiple meanings, its negative associations, its difficulty or impossibility to control, its multiplicity and the different image effects on stakeholder groups (Balmer, 1998, p.52). Thus, negative associations and the lack of control over corporate image can have serious repercussions for the business. This is one of the reasons why employers tend to restrict employees taking gifts, as it could send negative signals to the market, if left uncontrolled.

Ethical practices in organizations:

Over the years, several leading companies across the globe have developed their own policies, rules and regulations on workplace ethics. A typical policy clearly states the view of the company on the ethical issue in question and outlines the expected code of behavior from employees. Companies such as Exxon-Mobil, BP-Amoco, Shell, and IBM have well defined codes of ethical behavior with specific reference to acceptance of gifts. Most companies bar employees from accepting gifts and services that can impact business decisions. However, probably realizing the practical difficulties involved, many companies permit employees to receive gifts, which are offered in good intention and not to seek undue favors or concessions. American company Raytheon does not prohibit employees from accepting gifts. In its published policy on 'ethics and gift giving', the company allows employees, during holiday season, to receive gifts offered by suppliers and contracts as simple gestures of goodwill, to promote business relationship. Raytheon's policy however recognizes that accepting gifts can detract the judgment of even competent employees and hence expressly prohibits employees from accepting gifts exceeding nominal value. The company has a separate office of Business Ethics and Compliance, which offers training and support to employees as to how best to handle the situation when employees are in a dilemma whether to accept a gift or not. (Forrest, 1995, p.34)

Ballard Power Systems Inc. has evolved comprehensive guidelines on corporate governance, which covers code of ethics in the workplace. The conflict of interest policy does not permit employees to accept money or gifts from suppliers or customers, especially where such an act could influence or there are reasonable grounds to believe that such acts may influence Ballard's business relationships with such suppliers or customers. However, the company allows accepting gifts of nominal value of less that $50; it also permits employees to accept customary… [END OF PREVIEW]

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Employees Accepting Gifts.  (2003, November 21).  Retrieved May 20, 2019, from https://www.essaytown.com/subjects/paper/employees-accepting-gifts-objective/2677149

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"Employees Accepting Gifts."  Essaytown.com.  November 21, 2003.  Accessed May 20, 2019.
https://www.essaytown.com/subjects/paper/employees-accepting-gifts-objective/2677149.