OUM BUSINESS SCHOOL

BMEM5103
ETHICS FOR MANAGERS
MAY 2015
i) Introduction – The Company Profile

The Dow Chemical Co. was founded in 1947 and is headquartered in Midland,

Michigan. The company manufactures and supplies products used primarily as raw

materials in the manufacture of customer products and services. The company serves the

industries, including the appliances, automotive, agricultural, building and construction,

chemical processing, electronics, furniture, housewares, oil and gas, packaging, paints,

coatings and adhesives, personal care, pharmaceutical, processed foods, pulp and paper,

textile and carpet, utilities, and water treatment. The company operates though five

segments such as Agricultural Sciences, Consumer Solutions, Infrastructure Solutions,

Performance Materials & Chemicals, and Performance Plastics.

The Agricultural Sciences segment provides crop protection and seed/plant

biotechnology products and technologies, urban pest management solutions, and healthy

oils. The business invents, develops, manufactures, and market products for use in

agricultural, industrial, and commercial pest management and food services. The Consumer

Solutions segment consists of three global businesses such as Consumer Care, Dow

Automotive Systems, and Dow Electronic Materials. These global businesses develop and

market customized materials using advanced technology and unique chemistries for

specialty applications including semiconductors and organic light-emitting diodes,

adhesives and foams used by the transportation industry, and cellulosic for innovative

pharmaceutical formulations and food solutions.

The Infrastructure Solutions segment comprises of an industry-leading portfolio of

businesses utilizing advanced technology to deliver products such as architectural and

industrial coating applications, building insulation, adhesives, microbial protection for the

oil and gas industry, and water technologies. The Performance Materials & Chemicals

segment comprises of five technology-driven, customer-centric global businesses that are

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advantaged through integration and driven by innovative technology and solutions such as

Chlor-Alkali and Vinyl, Chlorinated Organics, Epoxy, Industrial Solutions, and

Polyurethanes. Products produced by this segment are back-integrated into feedstocks,

supporting a low-cost manufacturing base and consistent, reliable supply. The Performance

Plastics segment is a leading plastic franchise and is a market-oriented portfolio composed

of five global businesses known as Dow Elastomers, Dow Electrical and

Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons.

ii) Ethical Issues

Employee’ internet misuse and abuse has gotten to be such a problem that has

become one of the leading causes of job termination with high-profile cases such as The

New York Times, Xerox, Dow Chemical, and Merck & Company who have disciplined

and dismissed employees for internet abuse. The Dow Chemical Co.’s problem started in

the early 2000 with employees transmitting pornographic email. In September 2000, Dow

Chemical Co. fired 24 employees for alleged violating the company’s email policy by

circulating violent or sexually explicit material at its plant in Freeport, Texas. Other 235

employees faced suspensions or reprimands. A similar review in early 2000 at Dow’s

corporate headquarters in Midland, Michigan led to 50 firings.

It started with one person was harassed; therefore, the company downloaded

everybody’s email. As in this case, when employees make a specific complaint, it triggered

an investigation which included a review of the servers which host the 6,000 email

accounts. This action comes as company scrutinizing what they perceived as abuse of the

electronic communication privileges they offer their employees. Most of the material was

off-color jokes, nude pictures and photos of car wrecks. Employees who had pornographic

or violent materials in their accounts were investigated. Those who actively brought in,

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saved, and disseminated the materials, those who had material that was extremely graphic

or violent in nature, and those with histories of violating Dow policies were singled out for

termination. On the other hand, employees who innocently received pornographic materials

weren’t investigated.

While the internet is a practical tool, it can easily be misused in the workplace.

During investigation of pornographic complaint, the company also discovered that

employees were spending work hours shopping online even after the company distributed

book outlining policies which included the prohibition of computer use for personal and

objectionable subject matters. Other illegal internet’s activities includes play interactive

games, chat with friends, accessed Penthouse thousands of times each month. From the

investigation conducted, some of the employees told that they were unaware of Dow’s

policies, while others didn’t take them seriously.

While there is not much dispute that companies have both the power and the legal

right to monitor emails sent on the company network, ethical conflicts arise when managers

are faced with the task of monitoring communications. There is an argument saying that

Dow is violating privacy right. On the other hand, some argue that Dow wasn’t violating

privacy rights because an employer has the right to view email in employees’ corporate

accounts. However, Dow had to look at the email to determine if the claims of sexual

harassment were true.

Dow Chemical Co. had to investigate the pornographic emails to avoid appearing to

support a hostile work environment. This action is rightful consistent with D’Arcy and

Devaraj (2012) that argue misusing company technology is morally wrong. Dow Chemical

lost over four billion dollars a year due to lost employee productivity and organizational

efficiency when wired workers utilize internet access at work to view news sites, send and

received personal emails. Dismissals based upon internet abuse result in significant

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production delays and repeated turnover costs that cut into the corporate bottom-line. While

the focus has revenue losses generated by poor worker productivity and job turnover

increases, dollar estimates haven’t even been placed on the cost to the growing climate of

corporate distrust and low employee morale generated by such monitoring practices and

related job firings.

When Dow Chemical fired employees for abuse, new issues emerge. Employee

termination for internet abuse may solve one problem, i.e. the abuse. However, it can lead

to new problems such as expanded job turnover and recruitment costs. Frequent job

turnover can result in productivity slowdowns due to increased job vacancies and

production delays while recruiting for open positions. Zero-tolerance policy for employees

due to internet abuse costs company extraneous expenses in the recruitment for

replacements. And once hired, these new recruits must be trained, and during that training

period are not as efficient in the capacity that is expected to increase organizational

efficiency.

Besides that, the integrity of sensitive data on a computer system such as company

plans, customer demographic data, product designs, or proprietary information may be

risked due to information security breaches caused by internet misuse. When the employees

are surfing in the unnecessary web, this can easily result in the spread of computer viruses

that lead to complete network shutdowns or corrupt valuable databases that stop daily

operations and lead to costly repairs, especially if efficient disaster emergency plans are not

in place. Ultimately, such abuses may leave company vulnerable to hackers and

compromise the security of vital system information.

In addition, the internet misuse may cause network slowdowns and system failure.

Employees who utilize the internet for other than job tasks place a significant drain on

network energy only to decrease responsiveness of the system for job related functions.

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Access to the internet costs business’s money, either in fees to Internet Service Providers,

or in hardware costs necessary to accommodate increased network traffic and data storage.

An employee's inappropriate use may negatively affect others employees' speed of access

or storage space for work product. Or worse, system slowdowns can delay data retrieval

and possibly result in network malfunction or failure due to overload.

Moreover, for every minute, hour, or day that an employee utilizes work access to the

internet for recreation use that is a minute, hour, or day the employee is not working, which

results in billions of dollars of lost productivity for the company. The estimation from a

cross section of industry analysts show that employee internet abuse is a serious financial

concern for any company that provides online access to workers (Mubarak & Sitnikova,

2009).

The one thing a Dow Chemical strives to build is its reputation. It’s reputation for

being a strong and reliable company. It’s reputation for being able to succeed. It’s

reputation for quality and customer service. As wired workers surf during hours, they are

slower to respond to customer needs, unable to meet deadlines, and fail to complete tasks.

Employees who abuse the internet under-perform. This translates into poor quality and

customer service, which eventually hurts corporate credibility. Organizational efficiency is

compromised because the company is unable to meet consumer needs and/or delivery

quality products. Over time, these factors will create a negative brand image as the

reputation of the company becomes tarnished and the firm is labelled unreliable and

unresponsive.

Furthermore, corporate goodwill rests on three interdependent levels within a

company that equally impact organizational productivity, efficiency, and cohesion. First,

employee internet misuse and abuse compromise customer goodwill. As customers learn

about firings due to internet abuse at the firm, consumers are less trustful of the integrity of

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the company. Customers may turn to competitors who they view as more dependable and

reliable, which results in lost revenue for the company. Secondly, employee goodwill is

compromised when employers decide to monitor all internet use and take a zero-tolerance

stance on any incidents of internet misuse. Often, employees fear employers and this

creates poor morale among wired workers that can lead to poor job motivation and output.

Ultimately, an unsatisfied employee becomes resentful of these workplace restrictions and

will look for alternative employment. While this individual may not have been the best

employee for the company, repeated turnover due to poor morale is an unhealthy trend for

any company. Finally, investor goodwill is hurt due to underlying production delays and

sale losses created by employee internet abuse. Specifically, the stock value of the company

may decline or it may be more difficult for the firm to obtain new financing. Business

longevity is significantly hindered and potential revenue is lost to competitors and that

spells danger for the company.

iii) Root Cause of Problem

Sexual harassment and discrimination liability suits caused by misuse of personal

email by employees are a major employee internet abuse concern. In Dow’s case, a

supervisor sent inappropriate e-mail to female employee, and the e-mail was used as

evidence from which a reasonable jury could find that failure to promote a woman was

based on gender. Jokes emailed to co-workers may seem like just an innocent way to

brighten up another’s day; however, these jokes can also lead to costly harassment suits as

email that is perceived to be sexually or racially discriminating can be grounds for a

harassment lawsuit. And it is not just the person who sent the email, but the entire company

may be liable if the email was sent over a firm’s intranet or network mailing system. A

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supervisor sent the discriminatory email, but the entire company was held liable because it

was sent during work hours and on the work email system.

The investigation team found serious issues regarding the internet abuse on Dow

Chemical and a lack of procedures to ensure that employees are following the company’s

policies. Dow doesn’t normally monitor employee email and has no intention of starting

regular screening despite the latest incident. One factor behind the rise of computer ethics is

the lingering suspicion that employees may be unprepared to deal effectively with the

ethical issues that arise in their workplace. Over the years, this suspicion has been

reinforced by mostly anecdotal research that seems to show that employees simply do not

recognize when ethical issues are present. More surprisingly, a significant minority of

employees held to their belief that no ethics issue was present even in cases of email abuse.

Many internet abuse catastrophes are the result of unintended actions and, as such, offer

little guidance in organizing purposive behaviour.

From the investigation conducted, some of the employees were not aware of the

company’s Acceptable Use Policy, which governed employees’ use of company’s

technology resources. The Policies are available to employees on the company intranet and

were outlined separately in a booklet, called “Respect and Responsibility” that was

distributed to all Dow workers. The Dow’s Computer Use Policy prohibited personal use

during the working hours. However, the Policy did not present an objective standard

concerning normal usage, as opposed to excessive usage, of the company’s technology. On

the other hand, some other employees didn’t take them seriously.

Besides that, this issue is directly related to workforce education because abuse of

technology in the workplace has the ability to cause a human performance problem while at

the same time obstructs labour market advantage for the individual.

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iv) Moral Principles

With respect to internal activity, employers have a greater right to restrict employee

use of technology because companies own their equipment, and it is generally understood

that the intended use of company equipment is business purposes. These circumstances

generally can establish that employees do not have a right to privacy when using an

assigned computer or any other technology tools, including email. When determining

whether the employees had a protected expectation of privacy as to pornographic material

discovered on an assigned work computer, the company held the employees did not have

privacy interest by relying on: (1) the employers' computer use policy prohibiting personal

use of the systems; and (2) the fact that the equipment was owned by the company. The

company acknowledged, however, that the employee did establish a subjective expectation

of privacy as evidenced by password protections and a locked office door. This subjective

expectation of privacy was not sufficient to afford a protected privacy interest.

Overall, the employer has a legal right to control the use of the equipment they gave

to employees for business purposes. The 1986 Electronic Communication Privacy Act

grants employers the right to review stored communications such as email on the

company’s computer system. Dow Chemical Co. is not in the habit of snooping at

employee emails on a regular basis. But, on the back of the complaint, it decided to monitor

all email use during a one week period. The US chemical company said the action was

taken “to protect our other employees”.

According to Kennedy and Kanan (2004), in the US, Courts generally recognize that

a company may access email stored on its own system for business purposes, especially

after a warning has been given. In addition, the US law gives employees few protections

against employer surveillance of their workplace communications. Even without express

employee consent, US employers generally may listen to workplace telephone

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conversations, read messages sent to and from corporate email accounts, and record and

disclose the contents of employee communications. Employees that bring legal challenges

to these practices rarely succeed in the US courts.

There is a lesson to be learned by other companies. As employee internet abuse has

become an identifiable concern, corporations have developed various strategies to help

combat the problem. First, the incident has prompted the company to increase efforts to

communicate its email policies to employees. It’s important to established and

communicate an email privacy policy. Dow Chemical should develop a comprehensive

internet use and abuse policy to protect the company from corporate liability. Developing a

comprehensive electronic communications policy is perhaps the best tool for avoiding

potential risks associated with the internet, blogs, text messages, email, and other electronic

media. Employers should include a number of provisions to ensure the policy is

comprehensive and binding.

The Internet Use Policy is a visible tool that not only provides guidance on

appropriate online behavior but also outlines how violations will be handled. This policy is

a written agreement that establishes the permissible workplace uses of the internet. In

addition to describing permissible uses, an effective Internet Use Policy should specifically

set out prohibited uses, rules of online behavior, and access privileges. Among others, the

policies should be clearly stated that the company is prohibits potentially harassing emails,

internet or other computer use. Besides that, the use of company equipment for

downloading or disseminating off-color or sexually oriented material, or racist material,

may properly be forbidden. Most important, the company should include a notification that

workers have no privacy expectation in any technology provided by the company, including

computer files, emails, internet use, voicemail messages or business telephone

conversations on company equipments, and that these may be recorded, monitored or

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examined at the company’s discretion. Penalties for violations of the policy, including

security violations and vandalism of the system, should also be covered. Anyone using a

company's internet connection should be required to sign the policy, and know that it will

be kept on file as a legal, binding document. Employees should be required to acknowledge

that their consent to recording, monitoring of information, and communications on the

company’s systems is a condition of their employment.

A comprehensive policy will help minimize employee internet abuse, shield the

employer from possible sexual harassment suits, prevent drains on network resources for

frivolous use, and reduce corporate risk and liability, especially in the event of legal action

taken by an employee terminated for abuse. A comprehensive policy should outline

acceptable and unacceptable internet use, communication practices, restrictions on software

downloads, copyright issues, security, online harassment, and how violations will be

handled. In addition, the policy should include provisions prohibiting discriminatory, lewd,

defamatory or other offensive communications about the company, superiors, co-workers

or competitors. Employees should be reminded that, when using company technology, they

must comply with all other company policies, such as policies against sexual harassment

and discrimination. The company also should regularly alert employees that their online

activities may be monitored and that inappropriate use may result in disciplinary action.

In addition, in order to combat these morale issues, the company must learn how to

effectively implement appropriate policies and monitoring strategies that cultivate an open

and positive work environment for wired workers. It would be very hard for the company to

prevent employees from making some personal use of this technology. Even if this could be

done, it would require diverting substantial resources to do it, and the cost in goodwill and

workplace harmony would be huge. Rather than attempt this, the company may tolerate a

certain level of personal use. Having these policies in place, and enforcing them promptly

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against transgressors, can help the company keep insulating distance between it and its

offending employees in later negotiations with authorities.

Second, the company also should employed comprehensive monitoring strategies to

enforce policies. Once appropriately communicated, the next level of employees’ internet

management is to develop a system to monitor employee internet accounts in order to

enforce policies. The company should begun to rely upon filtering software and firewalls to

block access to inappropriate areas of the internet and employ the use of monitoring

software to detect incidents of employees’ internet abuse. To avoid giving a litigant the

opportunity to show the policy is a pretext, the company should comply with the policy and

monitor computer use on a regularly scheduled basis and company-wide.

One way of monitoring is by the use of electronic monitoring software to deter

potential abuse and to enforce existing policies. Monitoring methods include direct

surveillance, which records periodic “snapshots” of workers’ screens, keystroke logging,

which as its name implies allows reconstruction of every computer action, and keyword

flagging, which alerts management to use of specific words in email or internet searches.

This keyword flagging is useful not only for locating sexually or racially oriented material

but also for tracking the company’s proprietary information. Software for all these purposes

is commercially available, and consultants are able to provide monitoring at almost any

level of detail required. When the company is using monitoring software to deter potential

abuse, awareness that employees’ email, computer, and internet use are monitored by the

company should be given to the employees. The company must make constant reminders

by techniques such as splash screens. Employees should be made to realize that they are in

effect copying their supervisors on all emails, and that their supervisors are in a position to

know if they access pornography on the job.

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 Given the mass of employees to regulate and supervise, it is not surprising that large

firms reported the greatest benefit from electronic monitoring, which provides a systematic

review of internet usage among numerous employees. Electronic monitoring allows large

firms to accurately track users efficiently, helping them detect patterns of abuse at an earlier

stage of development. Furthermore, Internet Use Policies were found moderately effective

among large firms and policies offer an added benefit with respect to corporate liability to

protect sizable organizations from potential lawsuits due to firings or dismissals results

from internet abuse (Young & Case, 2003).

Besides that, filters are an effective deterrent as they disable an employee’s ability to

access sites that the company finds unproductive or objectionable. The main target can be

blocked access to adult entertainment web sites. In addition, any problematic web site or

area of the internet can be filtered. While filters are effective, they are not full proof, as

computer-savvy employees can disable the filter or pass through the firewall with ease.

Employers must also monitor employee internet accounts with software that generates

internet usage reports that tracks an employee’s online activities such as web sites visited

and duration of use. Excessive time spent at entertainment sites, sport sites, or online

shopping can be detected or visits to adult entertainment sites can be tracked. Here again, a

computer-savvy employee may be able to apply software that erases their internet tracks

and wash away traces of inappropriate or objectionable online use.

Having policies and monitoring software build an excellent foundation, but while the

company has put forth these measures, it must routinely communicate these policies to

employees and utilize seminars to educate employees about internet use and its potential for

abuse. Therefore, the material contained in the booklet will teach employees additional

techniques and strategies to increase employees’ compliance with the company’s

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acceptable Internet Use Policy and enhance their cohesion with workplace technologies in

order to maximize profits and minimize abuse.

Finally, the key thing is training and education for their employees. Young and Case

(2003) found that both large and small firms rated management training an equally effective

deterrent suggesting that training may be a viable strategy when dealing with relatively few

or relatively many employees. Dow Chemical Co. should educate and re-educate

employees of company policies to increase compliance. Once the company has developed

an appropriate policy, the next step is to clearly communicate these policies to employees.

What is the best method to communicate an acceptable internet use policy that will achieve

employee compliance? The answer varies. Dow Chemical may include the Internet Use

Policy within an employee manual given to new hires, or the company may utilize policy

management software to distribute and update policy information via emails. Each method

has its own set of unique problems to overcome. Perhaps new hires don’t actually read the

employee handbook, or they don’t fully absorb what they sign, or the policy management

software is expensive and difficult to implement.

In the past, the company relied upon written communication alone to convey the

importance of appropriate internet use within the workplace. However, the employees’

internet abuse is on the rise despite the implementation of an acceptable Internet Use Policy

due to unawareness of the employees. Another difficulty that company face is how to

communicate policy updates that stay current with new technologies in the workplace. The

company must then modify the internet acceptable use policies to incorporate these new

applications. However, corporations often upgrade workplace technologies without

updating policies, leaving themselves at great corporate risk if an employee abuses the new

technologies and no policy specifically mandates its abuse.

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 The training regarding employee internet use and its potential for abuse is one of the

best methods to communicate policies and aid in the prevention of internet abuse. These

corporate training programs are akin to sensitivity training for sexual harassment or

diversity training that increases employee awareness of the issues, reduces the occurrence

of future incidents, and decreases corporate liability. Ultimately, these type of corporate

seminars are a proactive response on the part of management to implement education that

increase employee awareness about such topics as clearly defining what is acceptable and

unacceptable internet use, identifying the warning signs and risk factors for abuse, and how

to address underlying problems in an employee’s life that contribute to internet abuse. Such

seminars utilize didactics, small group discussions, and concrete exercises to convey

material in an organized and meaningful fashion. Some of the benefits from awareness

training program includes enhances employees’ understanding about what is acceptable and

unacceptable use of employee internet accounts, increases compliance to acceptable

Internet Use Policy, provides training to long time employees as well as new hires,

increases employees’ accountability and ethical integrity when online, improves

employees’ morale and job productivity, enhances employee interdependency with

workplace technologies that increase overall organizational efficiency, and reduces

corporate risk and liability when violations occur.

v) Conclusion

Abuse of workplace technology has been an important topic of discussion over the

past several years. In fact, Dow Chemical Co. identified that their employees have admitted

using email for transmitting pornographic email. This employees’ internet abuse costs

billions of dollars in lost productivity, lost goodwill, and lost potential sales. The employees

should be acknowledged that computers and programs are entirely the property of the

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employer, and employees should have little or no expectations of privacy when using the

employer’s property. Many of the problems caused are due to employees’ ignorance of the

company’s policies. Employees should be warned of the risks of accidentally sending

confidential or private emails to inappropriate recipients. They should also be trained on

internet and email according to specific standards of the employer.

Besides that, employers generally claim ownership of employee’s email. They argue

that because it is created, transmitted and stored on company systems, generally on

company time, they should be able to inspect it. They make similar claims about other

online employee communications when they use company-owned computers and the

company’s network. This has generally been accepted by the courts, as long as employees

are informed that they are being monitored and they receive due process before any

punitive action is taken However, another issue is the consent of the employees being

monitored. Employer claim that employees know, or should know, that email and other

communications are easily accessed and can be monitored by the employer.

Therefore, the company must employ effective internet use management strategies

that range from policy development, employee monitoring, to training seminars.

Collectively, these efforts will enhance employees’ interdependency with workplace

technologies and enable then successfully integrate the internet within the company. Dow

Chemical Co. increasingly finding it necessary to watch for and regulate emails and other

online workplace communications that could be taken as harassing, in order to protect their

employees and protect themselves from liability. Even when there is no question of

wrongdoing, email monitoring can help employers assess employee performance, by

showing how employees are spending their time, what they are accomplishing, and so on.

Or it can help managers track the progress of a project by seeing what work is being done,

what problems have been encountered and what responses have been tried.

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vi) References

D’Arcy, J. and Devaraj, S. (2012). Employee misuse of information technology resources:

Testing a contemporary deterrence model. Decision Sciences, 43, 1091–1124.

Kennedy, C. H. and Kanan T. (2004). Surveillance of workplace communications: US

employer rights. Privacy and Information Law Report, 7.

Mubarak, S. and Sitnikova, E. (2009). Case study on an investigation of information

security management among law firms. Proceedings of the 7th Australian Information

Security Management Conference, Perth, Western Australia, 1st to 3rd December 2019

Young, K. S. and Case, C. J. (2003). Employee internet abuse: Risk management strategies

and their effectiveness. Proceedings of the American Society of Business and

Behavioral Sciences, Las Vegas, February 21, 2003, 1688-1694.

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