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  1. John Hooker says:

    This is a very common dilemma: should one report a colleague or superior who is breaking company rules?

    Here is how I analyze such cases. First, if a failure to report has a clear probability of causing more harm than reporting, then the infraction should be reported. If you are a flight attendant, and you see the pilots drinking before a flight, you should report them. This could result in retaliation against you, and your report may be ignored or have no effect. But the small risk of a crash, multiplied by the overwhelming negative utility that would result, outweighs the downside of reporting.

    Second, if it is part of your job at work to monitor such infractions, then you should report them. Failure to perform your duties is a violation of your employment contract, and violation of contracts merely for personal convenience is not generalizable.

    Third, if it is not part of your job, the infraction is fairly minor, and there is a mechanism in place for catching people who break the rules, then failure to report is generalizable. If people never reported their colleagues for expense account padding and the like, for the purpose of keeping their job and staying out of trouble, and they would still be able to keep their job and stay out of trouble. There are controls in place for catching expense account padding, or whatever, and it is very unlikely that the company would go under and frustrate your purpose of keeping your job if people never reported such things, (other than auditors and accountants whose job it is to report them). Nor is there typically a utilitarian argument for reporting, because the risk to yourself is likely to be as great as any benefit that would come from alerting the company. Expense account padding imposes only a small cost to the firm, and a habitual offender is likely to be caught at some point without your assistance.

    Fourth, if we are talking about a major infraction with possibly serious consequences to the firm or the public, and there is no mechanism in place for catching it, then the analysis changes. For example, you may learn that the controller is cooking the books. This becomes a whistle-blowing case, for which predicting the utilitarian outcome is notoriously hard. In serious cases, it is not unusual for whistle-blowers to lose their family, friends, and their mental and physical health, as well as their jobs. This has to be balanced against possible benefits of whistle-blowing. A famous example is Roger Boisjoly, who courageously blew the whistle on defective O-rings in the Challenger spacecraft but failed to prevent a disaster.

    The expense padding in your case is a minor infraction for which controls are in place. You have already reported the padding once, and the above analysis indicates that there is certainly no obligation to report it again.

    However, there is another problem. As I read the case, Lee asked you to file the false expense claim yourself, and you signed it. This is a very different matter than failing to report an infraction, because it is deceptive. You reported the matter to your manager, which is good, but apparently the false claim went through, indicating that someone was led to believe that the claim was legitimate. The only way to avoid unethical deception is to file a correct claim (or no claim). Exactly how you handle this depends on the personalities involved. You might (a) simply tell Lee that you can’t file a claim for the weekend, (b) ask Lee to file the claim himself, or (c) say nothing and file an honest claim, postponing a confrontation with Lee, by which point he may have thought better of it.


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