Employees Accepting Expensive Gifts Term Paper

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Employees Accepting Gifts

The objective of this paper is to analyze the impact of the practice of employees accepting gifts in organizations. Accepting gifts has been a major controversial issue because of the different perceptions among different sections connected with the organization. It is recognized that the line between gift and bribe in the organizational context is almost invisible. This paper attempts to highlight and understand the perceptions of employers, customers, stakeholders and third person/general public. The employers' general tendency to disallow employees from accepting gifts is explained with reasons and examples. The perception of employees is also analyzed in detail from psychological and sociological viewpoint. Attempt is made to analyze the findings and inferences in the context of practical examples, by looking up the ethical policies and codes of leading global corporations. The importance of ethics in the private as well as the public sector is explained with specific examples.

From the analysis, it emerges that employers are willing to provide some freedom in accepting gifts of nominal value, subject to the provisions, rules and codes of the organization's ethical policy. Both the private and public sector organizations have shown a common tendency to limit the value of gifts and also provide guidelines on how to decide whether to accept a gift or not. Private organizations, in particular are very specific that gifts can be accepted under the code of ethics, only if such an act does not influence the business in any manner. However, certain companies recognize that giving and accepting gifts are part of business development efforts but they expressly prohibit employees from soliciting gifts of all types, irrespective of the value. The paper concludes that employees must be allowed to accept gifts in the course of their business, provided there is no breach of the law and the ethical codes of conduct of the organizations in which they are employed.


One of the universal issues in organizational ethics is acceptance of gifts by employees. It is human nature to give and accept gifts during festival and holiday seasons and on special occasions such as birthdays, wedding functions etc. However, the central issue in corporate governance is the acceptance of gifts by employees in organizations, especially from suppliers and contractors or more generally to include all persons who are doing business or likely to do business with the organization. The reason why it is such an important issue is not hard to seek. While accepting gifts is an accepted social action, the perception differs when it is examined in the organizational context. When a supplier offers a gift to the employee, the inevitable third party perception is that the gift is offered in return for a favor of some kind. Thus, there is an element of conflict of interest, which makes employers and stakeholders uncomfortable, as the image of the organization is put to test. It is for this reason that many employers take a serious view on their employees accepting gifts. The distinct possibility of this practice crossing the limits and falling into the ambit of bribery is reason enough for many employers to discourage this practice. This issue is relevant to both private and the public sector, especially the latter where the discerning customers are none other than the tax-paying general public.

The practice of accepting gifts is an ethical issue because it involves a moral dimension. Ethics is concerned with the study of moral duty, of dealing with what is good and bad and with moral duty and obligation. Employees, when faced with the situation of having to accept gifts, are faced with the principal moral question of whether it is right or wrong. The central element of ethics involved in accepting gifts is integrity, which is defined as a 'consistent adherence to moral, intellectual, professional or artistic principles despite temptations to abandon them' (Forrest, 1995, p.32). In accepting a gift, the employee is aware of the possibility of loss or dilution of integrity, yet finds it compelling to abandon that possibility. It is the risk of integrity that is perhaps forcing employers to take a tough stance on this issue.

However, it is difficult, if not impossible to impose an absolute ban on employees from taking gifts. There is a view, even among top level managers that simple gifts given in 'good faith and spirit' by long standing suppliers and contractors does not amount to breach of ethics. To cite an example, it is quite normal for students or parents of students to give gifts to teachers as a mark of their gratitude. Such an act does not mean that the student is trying to obtain favorable grades or other concessions from the teacher. But the downside of this action is that other people and even other students may construe this action as an effort to secure some favor from the teacher and because the teacher has accepted the gift, she is morally compelled to oblige the student. Thus, a simple act assumes ugly proportions driven by the perception of people who are external to the particular situation, but directly or indirectly related to the environment. If, based on this rationale, the practice of accepting gifts is totally prohibited, it is natural for the concerned people to believe that there is unnecessary interference in their private matters. Faced with a catch 22 situation that seems to have no definite or simple solution, organizations is constantly trying to identify ways and means to address the issue of employees accepting gifts from external sources linked to the business.

Employer perception:

One of the overwhelming reasons for governments and organizations attempting to regulate acceptance of gifts, is the possibility of such actions amounting to bribery. The line of difference between gift and bribe can often be very thin, although the implications of two are very different. A bribe is often paid with the understanding of receiving a special favor. In most countries, bribery falls under the governance of criminal law and naturally, employers are anxious to eliminate the possibility of bribery scandals. The several infamous scandals involving bribery directly or indirectly in many countries across the world has made employers take cognizance of the risks of allowing their employees accept something from those doing business with the organization. Recent scandals involving some of the best known global companies such as Enron, Arthur and Andersen are examples of how things can go wrong even in companies with best practices. In international trade, offering and accepting gifts are a very common phenomenon, which can easily be interpreted as bribery, depending on the perception from which it is analyzed. (Ball and McCulloch, 1996, p.41; Haong, 1997, p.68)

International markets present a complex environment, with many variables including physical, cultural, political, economic and competitive elements as a result of which marketers tend to adapt specific marketing strategies for each market. For instance, in Asian countries, it is a socially accepted practice for the seller and buyer to exchange gifts to foster trust and strengthen business relationship. (Wood, 1995, p.56) However, the same may not be the case in developed European countries. In addition, bribery causes increase in cost of contracts and goods. One research estimates that in Asia, bribery can result in five percent more costs for goods and services and even more in certain cases. (Kraar, 1995, p.12) Organizations are thus forced to live with a double edged sword - they need to implement practices to effectively market products ad at the same time, ensure that their employees are not party to acts of bribery.

Employers are wary of employees accepting gifts because of the apprehension that this may lead of lowering of organizational performance and efficiency. It is reasonable to doubt that this act may result in lower quality and deficiency in service. For example, suppliers may try to pass off defective goods to the organization and to cover up the effort, may resort to gifting the concerned employees. Contractors may try to clear the bills for jobs that are either incomplete or does not comply with the contract conditions. It is natural for employers to doubt that by accepting gifts, employees may consciously or otherwise fail to act in the best interests of the organization. This is not to say that the employees would fail in their duties merely because of taking gifts; however, it is a question of evaluating what the same employees would have done in case they had not accepted the gifts. In a highly competitive environment, it is important that quality is not compromised under any circumstances and it is in this context that employers tend to become suspicious. (Balmer, 1998, p.48).

The next major issue is the probability of higher costs. In their quest for better revenues, suppliers and contractors may resort to gifting employees. Sellers can be astonishingly innovative in carefully understanding the needs and desires of employees and surprise them with appropriate gifts at the appropriate time. With the employees experienced a state of psychological pleasure, albeit temporarily, they…[continue]

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