Business Ethics: Ethical Decision Making & Cases 11th Edition Instructor manual

The instructor may wish to discuss where the line is between loyalty to the company and loyalty to the staff you manage.  Given the nature of the franchise Best East Motels operates under, Nikhil is breaking the agreement set out in the franchise employee handbook. It should be reported, but to whom?  However, if Lael goes public with the harassment allegations, the family could lose its franchise. 
Lael knew that putting pressure on the female employees to report on the behavior of the boss’s son was problematic. Lael also felt it would not be appropriate taking her concerns to Nikhil personally about these allegations.  If Lael reports the information to the owner, it would become an official allegation.  This could affect the motel’s reputation and image in the community, and she would be responsible for it.  This example illustrates that uncovering an unethical act is the first step, but following through with the right action may be more difficult.  These situations can be extraordinarily difficult for employees, particularly ones who have limited experience upon which to draw.  It is in situations like these that a clear code of conduct and a strong ethics and compliance program will minimize the opportunity for misconduct.