As guest speakers come into my graduate classes, I always ask, "What do you most look for in hiring new graduates?"

The traits most often mentioned are a sense of ethics and devotion to the employer.

Of course, an employer never really knows how ethical or devoted an employee is until he or she has been in the job for a while.

As for ethics, here is a test: What do you do when you see a colleague doing something dishonest or behaving in some other way that could hurt the company?

Many employees would take the attitude that such behavior was none of their concern. "If I say something," they might reason, "I may make enemies in the bank and develop a reputation as a snitch - which could hurt me with my colleagues and with management as well. The best thing to do is ignore the situation."

This is not a unanimous view. For example, Bear Stearns chairman Ace Greenberg has said his firm rewards snitches with 5% of what is recovered thanks to their snitching, up to a limit of $1 million.

Why, he asks, should employees "be afraid to protect the assets that feed their families?"

Another snitching question has to do with sexual harassment. Should those who feel they have been victims complain?

For the individual, it is a tough question. For first of all, such harassment is hard to prove. Even if it is proved, the victim often finds it hard to remain at the firm. And if a decision is made to leave, a reputation as a troublemaker may follow, making it hard to get a job elsewhere. The result: Many harassment victims never report the problem.

Snitching can raise some complex management problems.

I remember a case in which the CEO of a bank was very honest with his secretary, who in turn told him everything going on in the bank.

One day she reported on an affair that two employees had been having on the bank premises.

The CEO had two choices: Bring the situation into the open or ignore it.

Why ignore it? Were he to expose the culprits, he realized, everyone on the staff would figure out how he learned about them. As a result, his secretary would cease to be a useful source of information about what was going on in the bank.

The dilemma was like Winston Churchill's on learning that the Germans were going to bomb Coventry: To order an evacuation would have revealed that the German code had been broken.

One ethical problem I often run into is how to write recommendations that signal the subjects' weaknesses without seriously harming their employment opportunities - or making me liable to a lawsuit.

Examples: "I can recommend this man without any qualifications at all." "I can say I am delighted I formerly was his colleague."

What ethical dilemmas have you encountered in your career? Please write to tell us about them.

The best answer will win some reader a day as president of Schmidlap National Bank, with suitable-for-framing certificate as proof. The winner will then face the moral question: "Do I have the guts to hang this on my wall?"

Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.