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Moral hazard problems with employees may arise when they engage in riskier behavior because they do not bear the full consequences of their actions. For instance, employees might take excessive risks with company resources or make decisions that prioritize short-term gains over long-term stability, knowing that any negative repercussions will be absorbed by the organization. Additionally, employees might underperform or shirk responsibilities if they feel their job security is guaranteed, leading to a lack of accountability. This can ultimately affect overall productivity and company culture.

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1w ago

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