Charnele Hodge

MGNT 3300

Ethical Dilemma: “Lying in Business”

Do you think it’s ever okay to lie? If you were negotiating for the release of hostages, most
people would probably agree that if lying would lead to the hostages’ safety, it’s okay. What
about in business, where the stakes are rarely life or death? Business executives such as Martha
Stewart have gone to jail for lying (submitting a false statement to federal investigators). Is
misrepresentation or omitting factors okay as long as there is no outright lie?

Consider the negotiation process. A good negotiator never shows all his cards, right? And so
omitting certain information is just part of the process. Well, it may surprise you to learn that the
law will hold you liable for omitting information if partial disclosure is misleading of if one side
has superior information not accessible to the other.

In one case (Jordan v. Duff and Phelps), a company (Duff and Phelps) withheld information
from an employee (Jordan) about the impending sale of the company. The problem: Jordan was
leaving the organization and therefore sold his shares in the company. Ten days later, when the
sale of the company became public, those shares become worth much more. Jordan sued his
former employer on the grounds that it should have disclosed this information to him. Duff and
Phelps countered that it had never lied to Jordan. The Court of Appeals argued that in such
situations, one party cannot take “opportunistic advantage” of the other. In the eyes of the law,
sometimes omitting relevant facts can be as bad as lying.

Questions

1. In a business context, is it ever okay to lie? If yes, what are those situations? Why is it
okay to lie in these situations?
a. Lying in general is not the right thing to do but most people can attest that there
are different extremes to lying. From a little white (i.e. telling your boss her new
hair style is nice) to harmful, deceitful lies that can not only effect you but those
around you (i.e. an inside accountant lying on your financial statements/budgets).
From a business context, it is never okay to lie. It is unethical and depending on
the severity of the situation, it can be illegal.
2. A recent survey revealed that 24 percent of managers said they have fired someone for
lying. Do you think it’s fair to fire an employee who lies, no matter what the nature of the
lie? Explain.
a. I strongly believe it is okay and understandable to fire an employee who lies. If an
employee sees that he/she can get away with one lie, he/she will continue to do
so. Any company that hires someone wants to make sure they are gaining a
trustworthy employee that thrives on dignity and integrity. It would be subpar for
a company to keep an employee that has knowingly lied no matter the nature of
the situation.

3. In business, is withholding information for your own advantage the same as lying? Why
or why not?
a. Withholding information for your own advantage is the same as lying. Take the
example from the Martha Stewart case. Martha Stewart received an inside tip to
sell her shares before they went down a few days later. No other stakeholders
knew of such business deal going on so in turn those individuals lost money.
Martha and her former broker also gave false statements and obstructed justice for
their own benefit, which was misleading. This effected several individuals
involved with company because Martha withheld important information.

4. In a business context, if someone has something to gain by lying, what percentage of

people, do you think, would lie?
a. If a person had something to gain by lying, I know more than half would lie. The
business world is a dog eat dog atmosphere. If given the circumstances, I believe
a lot of people would take the opportunity to get ahead because society is
becoming more money hungry a lot of individuals are motivated by that factor
alone, even though it may not be ethical.