Whistleblowing: Ethical Dilemmas, Legal Protections, and Organizational Challenges

 By: Juan, Princess Sañata & Sonico, Maricel N.

Divine Word College of Laoag

Abstract:  

            Whistleblowing serves a vital function in promoting more transparent and accountable organizations by unveiling illegal and unethical practices. This paper explores the complex concept of whistleblowing, navigating not just the protection laws on a national and international level but also the personal and professional challenges that potential whistleblowers may face or the dilemmas that come with speaking up. It assesses the current whistleblower protection laws, such as the US Whistleblower Protection Act, the Dodd-Frank Act, and the European Union’s Whistleblower Protection Directive, while presenting also that these protections are not always effective since whistleblowers still face ethical dilemmas and challenges such as retaliation and emotional distress.

            In today’s modern era, social media and technology shaped the changes in the way whistleblowing can be exposed to the public, however, it imposed a risk to privacy and security. The paper also emphasizes the terrible reality that whistleblowers may face including being isolated from the rest of the group or subjected to reprisals, which shows that these practices can affect organizational ethics and public trust. To build a supportive environment and a culture where whistleblowers feel safe, the paper provides actionable recommendations in response to these challenges, including strengthening compliance programs and ethics training. Finally, it advocates for continuous legal reform, better implementation of existing protection laws, and cultural changes to guarantee that whistleblowing continues to be an effective weapon against corruption and promotes ethical behaviour in society.

Keywords: whistleblowing, legal protection, egoism, deontology, utilitarianism, organizational culture, retaliation, compliance, and ethics programs

Introduction

Our actions lead to consequences greater than ourselves that affect our health, safety, economic, and human rights. When it comes to corruption, its greatest prevention is revealing the truth. Unfortunately, not all the time employees are left to do the right thing due to a significant risk.

In 2015, Sustainable Development Goal 16, “Peace, Justice and Strong Institutions” introduced by the United Nations played a significant function in streamlining whistleblowing as an instrument in promoting transparency (Høedt-Rasmussen and Voorhoof 2018). In line with the mission of SDG 16, it recognizes whistleblowing in curbing corruption (Sørensen et al. 2020) through elevated reporting of illegal, dangerous, or unethical actions within both government and private sectors. Whistleblowing has contributed to bettering organizational culture by preventing or uncovering errors and accidents (Banisar, 2011), and strategy for boosting the effectiveness and sustainability of organizations (Önder et al. 2019). However, despite the initiatives and protection, when it all comes down to a real situation, the company is more in an advantageous position than the whistleblower. In addition, instead of feeling empowered, mishandled cases of whistleblowing further diminish the conviction of blowing the whistle.

Definition and Concepts of Whistleblowing

Whistleblowing encompasses a variety of aspects. According to Near, J.P. and Miceli, M.P. (1985), whistle-blowing refers to the act of an existing or former member of an organization discovering an illegal, unethical, or irregular behaviour in an organization and whistle-blowing to an individual or organization that may affect the behaviour. On the other hand, US consumer activist Ralph Nader (1971) described it as “An act of a man or woman who, believing that the public interest overrides the interest of the organization he serves, blows the whistle that the organization is involved in corrupt, illegal, fraudulent or harmful activity.” Similarly, Duska et al. (2011) defines whistleblowing as “the practice in which employees who know that their company or colleague is engaged in activities that: cause unnecessary harm; violate human rights; are illegal; run counter to the defined purpose of the instructions or the professions; are otherwise immoral informs superiors, professional organizations, the public, or some government agency of these activities”. Other academics like author Peter Jubb have focused on whistleblowing as mostly an element of free speech and the right of individuals to express dissent. According to him, it is a necessary public action that involves deliberate and voluntary disclosure. He also added that it is an act by someone with current or former privileged access to an organization’s data or information, addressing significant illegal activities or other misconduct—whether real, suspected, or anticipated—that the organization controls. This disclosure is made to an external entity capable of addressing the issue. In that sense, whistleblowing involves negative or sensitive information regarding potential misconduct in an organization (Lazar, 2022; Skivenes & Trygstad, 2010) which is why individuals who have a potential role in uncovering organizational fraud (Dyck et al., 2010) are hesitant due to the high risk it comes within the responsibility (Lee & Fargher, 2018; Mesmer-Magnus & Viswesvaran, 2005).

Upon presenting themselves, whistleblowers are confronted with unfair treatment and termination from companies. Regulators intervene by enforcing laws to minimize these risks and protect whistleblowers. In the Philippine setting, the Whistleblower Protection Act of 2019 acknowledges whistleblowers play a vital role in reporting improper conduct within public offices, thereby aiding in the fight against corruption and ensuring high standards of integrity. The proposed measure aims to enhance the protection, security, and benefits for whistleblowers who are admitted into a designated whistleblower protection program managed by the Whistleblower Benefits and Protection Council. Even though the legal framework of the policy continuously evolves and strengthens to protect whistleblowers, there are gaps and the effectiveness of these protections can vary greatly. Such protection must be meaningful and incorporated into organizational structures and policies (Fotaki, 2016). Some scholars believe that whistleblower protection law cannot be truly effective. For example, Martin (2003) argued that whistleblower legislation is often ineffective and can even create an illusion of protection that is dangerous for whistleblowers. He proposed that whistleblowers should focus on acquiring practical skills such as grasping organizational dynamics, gathering data, writing clear reports, forming alliances, and engaging with the media, rather than depending solely on official procedures, legal frameworks, or ombudspersons. He contended that these skills are central to the effectiveness of official procedures. Encouraging the development of these skills could be a more effective approach to empowering and safeguarding whistleblowers (Martin, 2003). This statement further emphasizes the heavy responsibility of the whistleblowers- this requirement adds to the individual’s burden, making the process of whistleblowing more daunting and intimidating that leading to discouragement in coming forward. 

The landscape for whistleblowers has evolved significantly over recent decades, influenced by various societal changes. Today, various web-based platforms are developed as way to deal with the challenges of whistleblowing. This technology is intended to improve the accessibility of the channels, confidentiality and anonymity protection, as well as report management. The existence of social media also contributed to whistleblowing practices, which some scholars refer to as virtual whistleblowing (Lam & Harcourt, 2019; Latan et al., 2021; Lazar, 2022). With internet technology and social media, any stakeholders (including employees) can share negative or sensitive information about companies online—and even anonymously—through employee review websites. Still, it is a double-edged sword, while it offers anonymity and reach, it can also potentially compromise security and privacy.

In the past, whistleblowing was associated with the concept of gaining information on revolutionary movements or political activities. Consequently, in some countries, the concept of reporting misconduct has become associated with negative connotations such as in the Czech Republic, Ireland, Romania, and Slovakia, “whistleblower” is associated with being an informant. In Bulgaria and Italy, it’s associated with being a traitor or spy while in Hungary, Latvia, Estonia, and Lithuania, it’s associated with being a snitch.

Therefore, the mistrust of whistleblowers is a learned behaviour passed down from families and communities which leads to the stigma of speaking up is life-threatening, and it’s safer to stay quiet.  Ultimately, the historic feeling that making a report even if it’s to report wrongdoing is “wrong” could contribute to fewer people blowing the whistle in these countries. Without widespread support for the idea that blowing the whistle is the correct course of action, many potential whistleblowers feel pressured to stay quiet. Therefore, corruption goes unchecked for longer, often putting people at risk.  

Theoretical Frameworks

Whistleblowing involves exposing unethical or illegal activities within an organization. According to Duska et al. (2011), when it comes to Egoism, individuals always act in their self-interest. This suggests that the decision to blow the whistle depends on what they can gain-- such as career advancement, recognition, incentives, etc. Conversely, if the action does not offer personal gain, there is no motivation to blow the whistle. For this reason, Egoism is generally rejected often because it promotes selfishness and disregard for others' welfare. On the other hand, Duska et al. (2011), also argued that recent mindset research has shown that self-interest and concern for the self are not entirely bad but it is worse when certain individuals start pushing their goals at the grief of another. However, egoists contend that if one does not look out for the self, who will? Therefore, the very nature of egoism undermines the moral and professional values typically associated with whistleblowing when it should be done in honour of the profession in the first place and not for self-advancement. Duska et al. (2011) state that even though professionals may not concur, there are times when they will be obliged to expose unethical secrets.

 Utilitarianism is an ethical approach that advocates the greatest good for the greatest number (Mill, 1863). He advocated that an action that brings about more good consequences is viable while an action that brings about bad consequences is harmful. (Duska et al., 2011). Therefore, if exposing wrongdoing prevents harm, protects public interest, or promotes justice, then the act of whistleblowing can be seen as morally right. This makes whistleblowing fits into the utilitarian framework of ethics because it is grounded on the consideration of the larger society and the greater good over the potential harm or discomfort experienced by a few individuals or organization

Deontology is based on the belief that if one acts to fulfil his desires then they are not acting out of a moral motive. There are two formulas Immanuel Kant articulated based on the principle of this theory. The first formula is that one should “act so that you can will the maxim of your action to become a universal law”. Therefore, whistleblowing is valid under the ethics of deontology if one wants it to be universally accepted as a moral act. The second formula is to “act to never be to treat another rational being merely as a means”. In the context of whistleblowing, by bringing to light the practices that harm individuals or the public, the whistleblower respects the dignity and rights of those affected by the unethical behaviour—unlike in egoism wherein the main concern is themselves or utilitarianism which centres on outcomes.

Legal Protections for Whistleblowers

            Whistleblower protection legislation aims to shield people from retaliation when they reveal illegal, unethical, or improper activity within corporations. These laws encourage the reporting of misconduct by providing legal protection to whistleblowers. Such protections' scope, effectiveness, and enforcement vary significantly across countries and regions. Here is an overview of some of the National and International laws in place to protect whistleblowers.

National Whistleblower Protection Laws

            The most advanced procedures for protecting whistleblowers are found in the United States. This includes the "Whistleblower Protection Act of 1989," which shields federal workers who provide information that demonstrates legal infractions, flagrant financial mismanagement, hazards to public health and safety, or other miscellaneous misconduct. Retaliation in the form of termination, demotion, or other unfavourable job measures is prohibited. Another is the "Dodd-Frank Act" which protects people from retribution and offers incentives to expose financial wrongdoing, including violations of securities laws. Anonymous reporting of infractions is permitted, and whistleblowers may be compensated with up to 30% of the fines obtained through legal action.

            The "Whistleblower Protection Directive" of the European Union ensures that whistleblowers have access to efficient mechanisms for reporting violations of regulations confidentially, both internally and externally. And these reports are appropriately looked into and handled by the concerned authorities and organizations. Whistleblowers are also protected against all forms of retaliation.

            The United Kingdom’s "Public Interest Disclosure Act of 1998" protects workers from detrimental treatment or victimization from their employer if, in the public interest, they blow the whistle on wrongdoing such as breach of legal obligation, danger to the health and safety of any individual, and damage to the environment. The Act protects most workers in the public, private, and voluntary sectors. 

International Whistleblower Protection Laws

            In Article 33 Protection of Reporting Persons of the “United Nations Convention Against Corruption,” each State Party shall consider incorporating into its domestic legal system appropriate measures to provide protection against any unjustified treatment for any person who reports in good faith and on reasonable grounds to the competent authorities any facts concerning offences established following this Convention.

            The “Council of Europe’s Recommendation CM/Rec(2014)7” has developed a legal instrument for protecting individuals who report or disclose information on acts and omissions in the workplace that represent a serious threat or harm to the public interest. The report analyses whistleblower protection frameworks in Council of Europe member states since the adoption of the Recommendation CM/Rec(2014)7 and identifies good practices and positive developments.

            The “G20 Anti-Corruption Working Group” established the High-Level Principles for the Effective Protection of Whistleblowers. These principles intend to establish, modify, or strengthen protection frameworks, legislation, and policies for whistleblowers and are intended to complement existing anti-corruption commitments and not weaken or replace them. The High-Level Principles offer flexibility to enable countries to apply them by their respective legal traditions effectively. The principles can also guide those responsible for setting up and operating protection frameworks for whistleblowers in the public and private sectors.

            These laws were designed to make whistleblowers feel safe and protect them from reprisals. However, its effectiveness may vary from different locations. The Whistleblower Protection Act and Dodd-Frank Act have been effective in the United States to expose wrongdoing, especially in the federal government. With the financial incentives offered by the Dodd-Frank Act, numerous whistleblowers have disclosed financial fraud. In Europe, the Whistleblower Protection Directive united the member states in protecting the whistleblowers. By creating a way for people to report issues internally, it has helped make things safer for whistleblowers. The Public Interest Disclosure Act in the UK has led to more whistleblowers stepping forward, particularly in both the public and private sectors.        

            Certainly, whistleblower protection laws have come a long way in promoting transparency and accountability but there is still much room for improvement. The extent of their effectiveness lies mostly on the strength with which these laws are enforced and their acceptance culturally as well as in how much legal protections different sectors get. Continued uniformity in the adoption of international practice and limitations around resources for protecting whistleblowers are ongoing challenges. Further legal reform, enhanced enforcement, and a shift away from the stigmatization of whistleblowing are necessary to make these laws more effective worldwide.

Challenges faced by the Whistleblowers

            As an employee of any organization or company, you are expected to become loyal to the company at all times, that is why whistleblowing has been a pressing issue inside and outside the organization when one commits this act specifically to your employer. And as a result of that action, whistleblowers often face different challenges.

            One common challenge is Retaliation, your employer might take revenge and fire you, harass you, or demote you from your current position in the company. However, since retaliation is illegal with all the whistleblower protection laws on hand, you can ask for legal advice from lawyers and fight for your rights. Another is that you may go through Emotional Distress. As a result of revealing your employer’s misdeeds, you may face criticism and discrimination from your employer and colleagues and this could result in panic attacks and depression on your part. Next, since the whistleblowing process is often too lengthy to be proven in court, this may become tough for you as you pay for expenses such as hiring a lawyer and attending court hearings and this might become harder on your part if your employer chooses to fire or terminate you. Whistleblowing also compromises trust since the company prefers if issues and concerns are addressed internally thus creating harmony and good relationships among employers, employees, and the staff. Another is the possibility of getting an unfavorable judgment on the wrongdoing you have filed against your employer. If you can keep up with the legal technicalities that the court may require you and if you could provide strong evidence to prove your claim. It might also become challenging for you to get employed in other organizations once they happen to know your background as a whistleblower in your previous company. Lastly, you may also experience gender-based discrimination especially if you’re a female whistleblower. This will cause you greater criticism for your actions. So, it would be best to contact first a whistleblower lawyer before coming out.

Organizational and Societal Impacts

Despite the encouragement and transparent communication regarding whistleblowing in organizations, once the deed of disclosing information on wrongdoings is executed, whistleblowers are isolated as being the “troublemakers” as their colleagues and superiors become progressively less friendly (Rothschild, 2008). In such a way, whistleblowing is perceived as a form of betrayal that leads to retaliation by the organization (Uys, 2008). Organizations maltreat whistleblowers through work-related retaliations such as blacklisting, constructive dismissal, transfers to another section, personal harassment, character assassination, and the implementation of disciplinary proceedings discrediting the employee (Glazer & Glazer 1989; Gummer 1985; Hunt 1995; Mesmer‐Magnus & Viswesvaran 2005; Rothschild & Miethe 1994). These companies are the same organizations that advertise themselves with good values and ethics but dispute their principles. What makes it worse is that retaliation frequently takes place faster than protection, which places the employer at a strategic advantage (De Maria (2006). Miceli et al (2008) developed a model to understand the reason why organizations would retaliate against a whistleblower and provided insights on the constructive ways of facilitating whistleblowing by creating an organizational culture that discourages retaliation. He emphasized that it has something to do with compliance that strongly discourages wrongdoings which reduces the need for whistleblowing. This creates a perception of a receptive attitude toward dealing with complaints, thereby minimizing the likelihood of reprisals. If important values are not being shared by employees, it implies the organizational culture is weak and ethics are easily compromised (Dorasamy & Pillay, 2011). On the other hand, it could also be argued that “emphasis on compliance creates so much bureaucracy or over‐controls employees that it undermines the development of ethical values, good decision making and trust in management” (Miceli et al, 2008) but this approach can streamline in setting dominate organizational culture leading to consistent practice of values. This is further supported by Tsahuridu and Vanderckhove (2008) who argued that by institutionalizing employees into the ethical culture of the organization, the ethical autonomy of employees in the organizational context is enhanced. Hence, the environment for potential whistleblowing is more conducive. When values are enacted in an organization, it can be suggested that employees are less likely to fear retaliation.

            Whistleblowing plays an important role in promoting public trust and transparency. Brown et al. (2014) stated that the relationship between whistleblowing, transparency, and public trust is complex and nuanced. Whistleblowing exposes any misdeeds in an organization and is regarded as a critical instrument for transparency. A result of the study by the authors from Australia, the UK, and International surveys show that the public supports whistleblowing as part of transparency reforms. However, the public’s support of whistleblowing doesn’t necessarily mean that they don’t trust organizations, rather they see it as a corrective action to any wrongdoings. This highlights how whistleblowing as a transparency mechanism contributes to trust rather than as a substitute for it.

            Moreover, public whistleblowing such as to media is often seen as a last resort when internal mechanisms fail. This serves as a warning against any wrongdoing by organizations and helps build trust by ensuring that organizations are held liable.

Promoting ethical behaviour in the organization

            Whistleblowing might seem ethical since you as an employee have the moral duty to report any wrongdoing of your company. However, many employees hesitate to come out once they discover illegal activities in their organization, partly because they might find themselves struggling with ethical dilemmas and challenges they may face as a whistleblowers. That is why in creating a culture of ethics and transparency in an organization, ethics should be the top priority of a company from the very first day, so employees know and feel at ease to come forward if they discover something.

            To prioritize ethics, an organization can set up a compliance hotline where employees can report misconduct anonymously. Signage where employees can see when, where, and how to report. Another is the onboarding process of new employees, making ethics part of their training. These could help the organization create a culture of ethical behaviour and foster an environment where employees feel safe coming out. If you make ethics an integral part of your corporate culture, then there would be nothing wrong for whistleblowers to report.

Conclusion

            Whistleblowing even though when done with good intentions, is still frowned upon due to the consequences it leads to both employee and employer but most damage is directed to the whistleblowers extending outside the workplace. Over the years of significant progress and advancements in legal protection, conflicts continue to arise despite the ethical theories such as egoism, utilitarianism, and deontology providing insight and justifications making it difficult to apply due to complex actual circumstances.

            Legal frameworks have made notable strides in safeguarding whistleblowers. However, not every whistleblowing case is handled effectively since it varies widely; gaps in enforcement are also a hindrance and cultural acceptance persists. The challenge of retaliation and the stigma associated with whistleblowing implies the need for stronger and universally applied protection measures.

            To truly foster an environment where whistleblowing can thrive as a tool for ethical oversight, organizations must go beyond mere compliance. Organizations must live up to their core values of embedding a culture of ethics in their workplace, providing clear and confidential reporting mechanisms, and supporting whistleblowers through effective legal and organizational frameworks. In addition, corporate practices should incorporate education and training on ethical behaviour, ensuring that employees are both empowered and protected when reporting wrongdoing, without the fear of retaliation.

                Ultimately, to achieve an organizational culture that promotes transparency and accountability, effort must come from all the stakeholders including policymakers, corporate leaders, and the public. By addressing the underlying issues that undermine whistleblower protections and embracing a proactive approach to ethics, organizations can protect the integrity of their operations and contribute to the broader fight against corruption.

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Power Dynamics and Its Impact on Ethical Boundaries in the Workplace

 Jan Mikaela L. Ancheta, CPA

Michelle Monique Cleo S. Arizabal, CPA

Divine Word College of Laoag, Graduate School of Business

Abstract

This study focuses on how power dynamics influence ethical decision-making and behaviours in organizations. It highlights that unequal power distribution can significantly influence ethical practices. Theoretical frameworks like French and Raven's bases of power, Foucault's power-knowledge theory, power-dependency theory, and Leader-Member Exchange (LMX) theory provide insights into how power operates in the workplace. Misuse of power can lead to ethical violations, lower employee morale, and hostile organizational culture. The study also explores ethical theories such as deontology, utilitarianism, and virtue ethics, in order to understand their role in shaping workplace ethics. Deontology focuses on adherence to moral duties, utilitarianism on the outcomes for the majority, and virtue ethics on developing moral character. It aims to uncover strategies that organizations can employ to ensure ethical standards are maintained and power is exercised appropriately. Additionally, it emphasizes the need for ethical leadership and accountability, suggesting that addressing power imbalances is necessary for fostering a positive organizational environment and maintaining ethical standards.

Keywords: Power dynamics, ethics, power imbalances, ethical leadership, organizational culture, authority, influence

Introduction

In modern organizations, power dynamics play a significant role in shaping workplace relationships, influencing decision-making, and establishing the ethical tone of the company. Power is often distributed unequally in hierarchical organizations, creating environments where individuals may leverage authority to sway the actions of others, sometimes for personal gain (French & Raven, 1959). Understanding these power relationships is crucial for examining how they impact ethical boundaries, which are the implicit and explicit rules that define moral behaviour in the workplace (Trevino & Nelson, 2016).

Power dynamics in the workplace have significant ethical implications that require careful consideration. When power is misused, it can have detrimental effects on employee morale, engagement, and the overall work environment (Campbell, 2023). Imbalances in power can lead to ethical boundary violations, ranging from subtle pressures to comply with unethical requests to more overt abuses of authority. For instance, supervisors may exert undue influence on subordinates, compromising ethical standards through coercion or manipulation (Lammers et al., 2015). As organizations focus more on corporate governance, accountability, and ethical leadership, examining the link between power and ethical boundaries has become essential for fostering environments where integrity is upheld (Kaptein, 2019).

Power imbalances can blur the lines between acceptable and unacceptable behaviour in the workplace. Employees in positions of authority may misuse their power to exploit subordinates, leading to ethical breaches such as favouritism, harassment, or even financial misconduct. In such environments, ethical boundaries may become distorted or disregarded, potentially resulting in a toxic culture that undermines the integrity of the organization (Lammers et al., 2015). The extent to which power dynamics influence ethical decision-making and workplace conduct is an area that requires further investigation.

Understanding the relationship between power and ethics is critical for organizational leaders, HR professionals, and policymakers. By identifying how power imbalances contribute to ethical violations, this study aims to provide insights into creating more ethical, transparent, and equitable workplaces. These insights are crucial for improving leadership practices, enhancing corporate governance, and establishing stronger ethical guidelines that prevent the misuse of power.

Understanding Power Dynamics

Power dynamics refer to how power is distributed, exercised, and negotiated between individuals, groups, or institutions within a specific context. This concept explores how power influences relationships, decision-making processes, and social structures, often revealing underlying inequalities, hierarchies, and control mechanisms. Power dynamics are shaped by factors such as social status, economic resources, cultural norms, and institutional authority, which influence interactions and outcomes in various settings. (Lukes, 2020)

Power dynamics can shift based on changes in social, economic, or political conditions. Understanding this concept is vital in addressing issues of inequality, fostering effective leadership, and promoting social justice.

Theories on Power Dynamics

Power in the workplace can be understood through several theoretical lenses. One of the most well-known frameworks is French and Raven's (1959) five bases of power, which classify power into legitimate, coercive, reward, expert, and referent forms. Each of these types of power manifests differently in the workplace, influencing how leaders and employees interact. Legitimate power stems from a formal position or role within an organization, while coercive power involves the ability to impose penalties. Reward power enables the provision of incentives, expert power comes from specialized knowledge, and referent power arises from personal admiration or respect.

Foucault’s theory of power emphasizes the pervasive nature of power and its role in shaping social relationships. According to Foucault (1980), power is not only held by individuals but is diffused throughout organizational structures. His concept of “power-knowledge” suggests that power is closely linked with knowledge production and dissemination, making it a tool for controlling behaviour and defining ethical norms.

Power-dependency theory also provides a useful framework for understanding organizational dynamics. This theory posits that power is a function of dependency; those who control resources that others depend on wield power over them (Emerson, 1962). In the workplace, this dependency can manifest in various forms, such as access to information, decision-making authority, or control over career progression. Consequently, those in positions of power may influence ethical decisions by leveraging these dependencies.

Moreover, Casciaro and Piskorski (2005) emphasized that dependency is not just about resources but also about access to networks and social capital. Power often lies with those who have strong relationships and access to critical information, making network dynamics an important consideration in understanding power relations (Pfeffer, 2013).

Leader-Member Exchange (LMX) theory, introduced by Graen and Uhl-Bien (1995), explores the relational dynamics between leaders and subordinates in organizational settings. Unlike traditional leadership models that treat leader-follower relationships uniformly, LMX emphasizes that leaders form differentiated relationships with their subordinates, resulting in either high-quality or low-quality exchanges (Liden, Sparrowe, & Wayne, 1997). Leaders in high-quality exchanges may exercise greater influence on their subordinates' behaviour, encouraging ethical conduct through role modelling and open communication (Mahsud, Yukl, & Prussia, 2010). However, the differentiated nature of LMX relationships can also create ethical dilemmas. For instance, employees in high-quality exchanges might receive preferential treatment, potentially fostering perceptions of favouritism and inequality, which can erode organizational justice (Scandura, 1999).

From a power dynamics perspective, LMX theory highlights the unequal distribution of power within organizations. Leaders naturally develop "in-groups" and "out-groups" based on the quality of relationships, leading to power imbalances among employees (Dulebohn et al., 2012). Martin et al. (2016) suggest that in-group members benefit from closer relationships with leaders, often gaining more leeway in decision-making, which can sometimes blur ethical boundaries, while out-group members might experience feelings of marginalization and exclusion from key resources.

Ethical Theories and Boundaries

Ethical boundaries in the workplace are shaped by the norms and values that guide behaviour. Deontological ethics, rooted in the philosophy of Immanuel Kant, focuses on the adherence to duty and moral rules rather than the consequences of actions (Kant, 1785/1997). Deontology emphasizes that individuals in the workplace, especially those in positions of power, have a moral obligation to respect universal ethical principles such as honesty, fairness, and respect for others' rights, regardless of the outcomes (Alexander & Moore, 2016). This theory is particularly relevant in contexts of power dynamics because it stresses that those with authority must act according to moral duties, ensuring that their decisions are guided by principles like justice and equality rather than self-interest or utilitarian considerations.

In power-laden environments, deontological ethics can serve as a safeguard against the abuse of authority, ensuring that power is exercised responsibly and ethically. Leaders are expected to respect ethical boundaries that protect the rights and dignity of subordinates, preventing exploitation and unfair treatment (Bednar & Spiekermann, 2023). The deontological focus on duty provides a clear ethical framework that promotes accountability, even when power is unequally distributed. This approach helps maintain ethical integrity within organizations, ensuring that actions are not justified solely by their outcomes but by their adherence to moral principles.

In contrast, utilitarianism, a consequentialist theory primarily associated with philosophers Jeremy Bentham and John Stuart Mill, evaluates the morality of actions based on their outcomes, aiming to maximize overall happiness for the greatest number of people (Mill, 2009). In the workplace, utilitarianism often informs decisions where leaders balance competing interests, striving for the best aggregate outcome. However, power dynamics complicate this process, as those in authority may have the capacity to shape outcomes that disproportionately benefit the majority while overlooking the ethical treatment of minorities or marginalized groups (Helin & Sandstrom, 2008). This can lead to ethical tensions when decisions, though beneficial for many, result in harm or unfair treatment to a few.

The relevance of utilitarianism in power-laden environments lies in its potential to justify actions that prioritize collective benefit over individual rights. This is particularly evident when leaders use their power to make decisions that appear utilitarian but inadvertently perpetuate power imbalances, such as sacrificing the well-being of lower-level employees for organizational gains (Bednar & Spiekermann, 2023). Therefore, while utilitarianism offers a framework for ethical decision-making, it also risks reinforcing unequal power structures if not critically assessed, making it crucial to balance utility with fairness and respect for individual rights.

Virtue ethics, which emphasizes the development of moral character and virtues such as honesty, courage, and empathy, plays a critical role in navigating power dynamics within the workplace. By focusing on individual character, virtue ethics encourages leaders and employees to act with integrity, fairness, and respect, regardless of their position of power. This ethical framework is highly relevant in addressing the subtle ways power can influence behaviours and decisions. For example, leaders who embody virtues like humility and justice are better positioned to foster inclusive and respectful workplace environments, mitigating the potential for abuses of power (Markkula Center for Applied Ethics, 2023).

These ethical frameworks guide how individuals perceive and respond to power dynamics. A utilitarian approach may justify the misuse of power if it is seen to benefit the majority, while a deontological stance would reject unethical behaviour regardless of the outcomes. Boundaries are thus contingent upon the ethical framework that individuals or organizations adopt. However, when power is concentrated in a few individuals, ethical standards are often compromised, and ethical breaches become more likely (Lammers et al., 2015).

Impact on Organizational Culture

Power dynamics have a reflective impact on organizational culture, influencing the establishment and maintenance of values, norms, and behaviours within an organization. The distribution and exercise of power not only shape the organizational culture but also affect employee behaviour, decision-making processes, and overall performance.

In the case of Ayala Corporation, the management’s commitment to ethical business practices and social responsibility has been involved in shaping a culture that values integrity, inclusivity, and transparency. Ayala's emphasis on ethical behaviour and social contribution has influenced its organizational culture positively, promoting a strong sense of corporate responsibility and community engagement. When those in power prioritize ethical behaviour, inclusivity, and transparency, these values are more likely to enter the broader organizational culture. (Schein, 2017).

Likewise, power dynamics have led to hierarchical and dictatorial cultures that can repress creativity and innovation. In traditional family-owned businesses, power is concentrated within a small group of top executives or family members. This concentration of power can create a culture of compliance where employees may feel pressured to conform to the expectations of those in authority, even if these expectations conflict with their personal values. This has been observed in companies like San Miguel Corporation, where a strong hierarchical structure can sometimes limit employee input and innovation (Monteiro & Joseph, 2023).

Decision-making processes within an organization are similarly affected by power dynamics. When power is concentrated among a few individuals, decisions are often made unilaterally, with limited input from other employees. Some government-owned and controlled corporations in the Philippines have been criticized for their centralized decision-making processes, which can lead to inefficiencies and a lack of employee engagement. This can result in a culture of compliance where orders are followed without question, potentially suppressing creativity and innovation. In contrast, organizations that practice inclusive decision-making, where power is shared, tend to create a culture of engagement and accountability. This approach not only enhances the quality of decisions but also contributes to better organizational outcomes (Treviño et al., 2014).

Power imbalances can also contribute to or mitigate conflict within an organization. One prominent example is NutriAsia, a major food manufacturing company in the Philippines. In 2018, NutriAsia faced intense labour disputes and employee protests over issues of unfair treatment and poor working conditions. Workers raised concerns about power imbalances, citing favouritism and lack of transparency in management practices. These issues led to strikes and a negative public image, illustrating how power imbalances can destroy trust and create a hostile working environment. When employees perceive that power is being used unfairly it can lead to conflict in an organizational culture marked by fear and resentment. Addressing power imbalances and promoting fairness can help build a culture of trust and mutual respect, thereby reducing the potential for conflict and improving overall employee morale (Foldy & Ospina, 2023).

Power dynamics define organizational culture by influencing norms and values, employee behaviour, decision-making processes, conflict levels, and long-term cultural changes. Understanding and managing these dynamics effectively is essential for creating a positive and productive organizational environment. Over time, how power is exercised within an organization can lead to significant cultural shifts. Leaders who use their power to implement changes in policies, practices, and norms can reshape the organizational culture in various ways. (Monteiro & Joseph, 2023).

Influence on Ethical Decision-Making

Ethical decision-making involves understanding how various factors influence the choices individuals or organizations make when confronted with moral dilemmas. Key influences include personal values, cultural norms, organizational culture, and situational pressures. Leaders and employees often face conflicting interests, such as balancing personal gain, social pressures, and organizational objectives, which can challenge ethical standards (Treviño et al., 2014).

An organizational culture that prioritizes ethical behaviour promotes consistent and principled decision-making. In contrast, cultures that emphasize profit over ethics may compromise those standards (Kaptein, 2011). Individual differences, such as levels of moral development, also play a significant role in shaping ethical choices (Jones, 1991).

Organizational culture, shaped by shared values, beliefs, and practices, dictates the ethical climate of a company (Schein, 2017). Power structures within organizations influence the flow of information, decision-making processes, and the enforcement of ethical standards. Cultures that encourage open dialogue and distribute power more evenly across levels are more likely to foster ethical behaviour (Kaptein, 2011).

Power dynamics are crucial in ethical decision-making. Individuals in authority can either enforce ethical norms or encourage unethical behaviour. Organizations can mitigate the risk of unethical decisions by implementing procedures that ensure accountability, transparency, and checks and balances. (Treviño et al., 2014).

The style of leadership significantly affects the ethical decisions made by employees. Transformational leaders inspire ethical behaviour by promoting shared values and motivating employees to act in the organization's best interest (Bass & Avolio, 1993). On the other hand, authoritarian leaders who concentrate power at the top often create environments where ethical boundaries are distorted, and subordinates may feel pressured to comply with unethical directives to protect their positions (Brown & Treviño, 2006).

Ethical Boundaries and Hierarchy

The hierarchy of power dynamics and ethical boundaries are intertwined, influencing how decisions are made and how power is exercised within organizations. Ethical boundaries refer to the limits of acceptable behaviour that are guided by moral principles, organizational policies, and legal standards. When these boundaries are clearly established and upheld, they contribute to the way that power is used responsibly and fairly (Kaptein, 2011).

Power dynamics can significantly impact the enforcement of ethical boundaries in hierarchical structures. Individuals at higher levels of the hierarchy often have more authority and control, which can either sustain or challenge ethical standards depending on how power is exercised. Leaders who prioritize ethical behaviour can set a positive tone for the organization, promoting a culture of integrity and accountability (Treviño et al., 2014). Conversely, when power is concentrated and unrestricted, there is a greater risk of ethical boundaries being crossed, as those in power may exploit their position for personal gain or to further organizational objectives at the expense of ethical considerations (Jones, 1991).

The hierarchy of power dynamics also affects the ability of subordinates to challenge unethical behaviour. In organizations with rigid hierarchies, lower-level employees may feel disempowered or fear retaliation if they speak out against unethical practices. This can create a culture of silence, where unethical behaviour goes unreported and unchecked, leading to potential abuses of power and deviations in ethical standards (Kaptein, 2011).

Peer Influence and Group Dynamics

Peer influence refers to how individuals affect each other’s behaviours, attitudes, and decision-making processes, particularly in group settings. Group dynamics involve the interactions among group members, which can significantly influence how power is distributed and exercised within the group.

Recent research highlights that peer influence can be a powerful driver of behavior within organizations. Peers can apply pressure on individuals to conform to group norms, which may include both ethical and unethical practices (Yu et al., 2021). When group norms support ethical behaviour, peer influence can strengthen adherence to ethical standards and create a collective commitment to integrity. On the other hand, when norms are unethical, peer influence can lead to the perpetuation of dangerous practices, even among individuals who might otherwise act ethically.

In Philippine workplaces, the "barkada" (peer group) culture significantly influences employee behaviours and work ethics. Employees may feel inclined to conform to group norms, such as working late hours or participating in after-work social gatherings. Although positive peer influence can create a supportive environment, negative dynamics may lead to toxic behaviours. Additionally, the other culture that is prevalent in many Filipino workplaces is the emphasis on group harmony and consensus, often allowing the opinions of more senior or influential members to carry more weight in decision-making processes (Reyes, 2022).

On that note, peer influence can have both positive and negative impacts on power dynamics. Individuals may conform to group norms due to peer pressure, even when those norms contradict their personal beliefs or ethical standards (Cialdini & Goldstein, 2004). The collective behaviours that may result from this conformity may not be morally righteous because it may serve to perpetuate power dynamics or distribute responsibility.

Strategies for Maintaining Ethical Standards

Maintaining ethical standards within power dynamics requires implementing strategies that promote integrity, transparency, and accountability across all levels of an organization. Recent research highlights several effective strategies.

Establishing clear ethical guidelines is essential for setting clear expectations regarding acceptable behaviour. Developing and enforcing a code of ethics that reflects the organization's core values and ethical principles is necessary. This code should be well-communicated throughout the organization, and regular training sessions should be conducted to employees to internalize these guidelines and understand their importance (Kaptein, 2011).

Encouraging ethical leadership is another fundamental strategy. Ethical leadership involves modelling ethical behaviour, making decisions that align with ethical standards, and holding others accountable. Leaders who demonstrate ethical conduct set a standard for the rest of the organization (Brown & Treviño, 2006). Leaders should also be approachable and open to feedback to create an environment where ethical concerns can be raised without fear of retaliation.

Setting up a system for accountability is essential for maintaining ethical standards, particularly within power dynamics. Establishing clear reporting structures, whistleblowing channels, and regular audits can help ensure that power is not abused and that unethical behaviour is addressed. Organizations should provide safe and anonymous ways for employees to report unethical behaviour, ensuring these reports are taken seriously and investigated promptly.

Promoting an open communication culture is also integral in identifying and addressing early signs of unethical practices. This can be achieved by fostering an inclusive environment where diverse perspectives are valued, and employees are encouraged to voice their concerns (Mayer et al., 2012). This culture helps prevent ethical issues from escalating and reinforces a collective commitment to ethical conduct.

Conducting regular ethical audits and assessments provides an additional layer of protection by continuously monitoring the organization's ethical climate. These audits can involve surveys, interviews, and focus groups to gather insights from employees about the effectiveness of current ethical practices and identify areas for improvement (Treviño et al., 2014).

Organizations can create a culture where ethical standards are maintained, and integrity is upheld at all levels by adopting these strategies.

Addressing Power Imbalances

A fair and equitable environment can only be achieved by addressing power imbalances within organizations and social groups. These imbalances can lead to unethical behavior, discrimination, and conflict, making it essential to implement strategies that promote balance and accountability.

Empowering lower-level employees or group members by providing them with more autonomy and decision-making authority is an effective way of addressing power imbalances. Decentralized decision-making processes, participative leadership, and access to resources and opportunities for professional growth are all strategies that can help redistribute power more evenly. Jollibee Foods Corporation is an example of a company that has embraced decentralized decision-making and participative leadership. Jollibee’s leadership style encourages input from employees at various levels, allowing for a more collaborative approach to decision-making. The company’s success is partly attributed to its emphasis on empowering employees through training and development programs, which provide staff with the skills and autonomy to contribute to the company’s growth. This inclusive approach helps in redistributing power and adopting a culture of mutual respect and collaboration. Organizations can reduce the risks associated with concentrated power and promote a more balanced distribution of authority by empowering subordinates (Li & Tang, 2022).

Promoting open communication is another key strategy. Encouraging transparent dialogue allows employees to express their concerns, share ideas, and provide feedback without fear of retaliation. Globe Telecom is known for its commitment to open communication and employee engagement. The company has developed several platforms to facilitate transparent dialogue, including regular meetings, online feedback channels, and employee engagement surveys. Globe Telecom’s leadership actively encourages employees to share their ideas and concerns, ensuring that feedback is considered in decision-making processes. These steps are to ensure that voices from all levels of the organization are heard and considered, contributing to a more equitable environment (Monteiro & Joseph, 2023).

Implementing checks and balances within the organizational structure is essential to prevent the abuse of power. Oversight committees, regular audits, and transparent decision-making processes involving multiple stakeholders are critical in holding those in power accountable. Ayala Corporation has established several checks and balances to ensure responsible management and decision-making. The company has an Audit Committee that oversees the financial reporting process, internal controls, and compliance with legal and regulatory requirements. This committee is part of the Board of Directors and plays a crucial role in reviewing the company's financial statements and audit reports. Additionally, Ayala Corporation has a Code of Conduct and a Whistleblower Policy that allow employees to report unethical behaviour or misconduct anonymously, further ensuring transparency and accountability. These are necessary to set boundaries in exercising power sensibly and that decisions are made in the best interest of the organization and its members (Treviño et al., 2014).

Promoting inclusive leadership practices is also necessary for mitigating power imbalances. Leaders who promote inclusivity seek out and incorporate diverse perspectives in decision-making processes. BPI has taken steps to ensure that inclusive leadership practices are embedded in its organizational culture. Their leadership style is committed to diversity and inclusion, and this commitment is reflected in its recruitment, training, and promotion practices. BPI’s inclusive leadership approach includes mentorship programs, diversity training, and policies that support the advancement of employees from underrepresented groups.  By ensuring that underrepresented groups have a voice, leaders can help level the playing field and reduce the marginalization of certain employees or group members. An environment where the concerns of those with less power are more likely to be addressed contributes to a more equitable organizational culture (Li & Tang, 2022).

Encouraging collective action among employees can also shift power dynamics. PLDT employees have engaged in collective action to address concerns about labor practices and working conditions. Employees, represented by labor unions, have collectively negotiated with management for better benefits, job security, and fair treatment. These collective bargaining efforts have led to improvements in labor conditions and reinforced the importance of employee voices in shaping company policies. The collective action of PLDT employees demonstrates how organized efforts can shift power dynamics and lead to positive changes. When employees work together, they can collectively negotiate for better working conditions, challenge unethical practices, and advocate for their rights. Collective action increases the bargaining power of employees relative to management and can be an effective way to address power imbalances within organizations (Foldy & Ospina, 2023).

Conclusion

The findings of this study illustrate that power dynamics profoundly influence ethical boundaries in the workplace. Power, when concentrated and unchecked, can lead to ethical violations, fostering environments where moral behavior may be compromised. Hierarchical structures often exacerbate these issues by restricting open communication and promoting compliance over integrity, especially in environments where authority figures exert undue influence on subordinates.

Conversely, organizations that distribute power more equitably and promote ethical leadership cultivate healthier workplace cultures. Clear ethical guidelines, decentralized decision-making, and open communication are critical in mitigating the risks of power imbalances. To mitigate the negative effects of power dynamics and maintain a positive organizational culture, it is essential to implement strategies that promote transparency, accountability, inclusivity, ethical leadership and integrity across all levels of the organization. Establishing clear ethical guidelines, encouraging open communication, and conducting regular ethical audits are key practices that can help ensure power is used appropriately.

Addressing power imbalances and reinforcing ethical boundaries requires a concerted effort from leadership, HR, and all organizational members. Implementing the strategies outlined in this research can help mitigate ethical risks associated with power dynamics, leading to more equitable and ethical workplaces.

Overall, understanding and effectively managing power dynamics is essential for cultivating an inclusive, fair, and ethical workplace. Organizations that prioritize these aspects will be better positioned to navigate challenges, build trust, and achieve sustainable success.

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