Most companies have ethics and compliance policies that get reviewed and signed annually by all employees. “Employees are charged with conducting their business affairs in accordance with the highest ethical standards,” reads one such example. “Moral as well as legal obligations will be fulfilled in a manner which will reflect pride on the Company’s name.” Of course, that policy comes directly from Enron. Clearly it takes more than a compliance policy or Values Statement to sustain a truly ethical workplace. Corporate ethical failures have become painfully common, and they aren’t cheap. In the last decade, billions of dollars have been paid in fines by companies charged with ethical breaches. The most recent National Business Ethics Survey indicates progress as leaders make concerted efforts to pay holistic attention to their organization’s systems. But despite progress, 41% of workers reported seeing ethical misconduct in the previous 12 months, and 10% felt organizational pressure to compromise ethical standards. Wells Fargo’s recent debacle cost them $185 million in fines because 5300 employees opened up more than a million fraudulent accounts. When all is said and done, we’ll likely learn that the choices of those employees resulted from deeply systemic issues.
Despite good intentions, organizations set themselves up for ethical catastrophes by creating environments in which people feel forced to make choices they could never have imagined. Former Federal Prosecutor Serina Vash says, “When I first began prosecuting corruption, I expected to walk into rooms and find the vilest people. I was shocked to find ordinarily good people I could well have had coffee with that morning. And they were still good people who’d made terrible choices.” Here are five ways organizations needlessly provoke good people to make unethical choices. It is psychologically unsafe to speak up. Despite saying things like, “I have an open door policy,” some leadership actions may inhibit the courage needed to raise ethical concerns. Creating a culture in which people freely speak up is vital to ensuring people don’t collude with, or incite, misconduct. Elizabeth Morrison of New York University, in Encouraging a Speak Up Culture, says “You have to confront the two fundamental challenges preventing employees from speaking up. The first is the natural feeling of futility — feeling like speaking up isn’t worth the effort or that on one wants to hear it. The second is the natural fear that speaking up will lead to retribution or harsh reactions.” A manager’s reactions to an employee’s concerns sets the tone for whether or not people will raise future issues. If a leader reacts with even the slightest bit of annoyance, they are signaling they don’t really want to hear concerns. There is excessive pressure to reach unrealistic performance targets. Significant research from Harvard Business School suggests unfettered goal setting can encourage people to make compromising choices in order to reach targets, especially if those targets seem unrealistic. Leaders may be inviting people to cheat in two ways. They will cut corners on the way they reach a goal, or they will lie when reporting how much of the goal they actually achieved. Says Lisa Ordonez, Vice Dean and professor at the University of Arizona, “Goals have a strong effect of causing tunnel vision, narrowly focusing people at the expense of seeing much else around them, including the potential consequences of compromised choices made to reach goals.” Once people sense the risk of failure, they go into “loss prevention” mode, fearing the loss of job, status, or at-risk incentives. The Veterans Administration learned this lesson the hard way when trying to address the 115-day wait time in their Phoenix hospital. They set a new goal of reducing the wait to 14 days, which resulted in an alleged 24-day wait. But employees said they felt compelled to manipulate performance records to give the appearance of meeting these goals. As many as 40 veterans died waiting for care at the Phoenix center, some more than a year. Organizations must ensure people have the resources, timelines, skill and support they need to achieve targets they are given, especially ambitious stretch goals. Conflicting goals provoke a sense of unfairness. And once a sense of injustice is provoked, the stage is set for compromise. Maureen Ambrose, Mark Seabright, and Marshall Schminke’s research on organizational injustice clearly shows a direct correlation between employees’ sense of fairness and their conscious choice to sabotage the organization. Consider one organization I worked with whose pursuit of growth created conflicting goals. The head of Supply Chain was given a $3.5 million capital investment to overhaul a plant to triple its production. Some of that funding came from the 25% budget cut in marketing in the same division. At the same time, Sales divided its quota territories to raise topline performance. The intensity of resentment in the salesforce at having to drive revenues with smaller territories was compounded by having fewer marketing dollars to sell more product. The conflicting goals created excess product capacity that was bottlenecked getting to market. Two years later, the organization was indicted for channel stuffing. Too many leaders assume that talking about ethics is something you do when there’s been a scandal, or as part of an organization’s compliance program. Everyone gets their annual “ethics flu shot” in the mandatory review of the compliance policy, and all is well for another year. Nick Eply, professor at the University of Chicago, in Four Myths about Morality and Business, says, “It’s a myth to think ‘Everyone is different and everything is relative.’ You actually have to teach people the relative value of principles relative to choices.” Leaders have to infuse everyday activities with ethical considerations and design policies and norms that keep ethics top of mind. Jonathan Haidt, Professor of Business Ethics at NYU and founder of says, “It’s important to talk about the positive examples of ethical behavior, not just the bad ones. Focusing on the positive reasons you are in business, and reinforcing the good things people do strengthens ethical choices as ‘the norm’ of the organization.” A positive example isn’t being set. Leaders must accept they are held to higher standards than others. They must be extra vigilant about not just their intentions, but how it is others might interpret their behavior. While they can’t control every possible misinterpretation, leaders who know their people well make careful choices in how they react to stressful situations, confront poor performance, how politic they are in the face of controversy, and how receptive they are to bad news. Above all, even in what might be considered the smallest “white lie,” ethical leaders are careful not to signal that hypocrisy is ok. As an example, a leader may casually review an employee’s presentation and provide feedback like, “I think we need to take these two slides out — that data is inflammatory and we don’t want to derail the ultimate outcome which is to convince the budget committee to give us the resources we want.” While the leader might presume he has acted in the best interest of the group — going to bat for resources they need- the person building the presentation has just been told, “We can’t tell the entire truth because it could prevent us from getting what we want.” Leaders must put themselves in the shoes of those they lead to see what unintended messages they may be sending. Organizations who don’t want to find themselves on a front-page scandal must scrutinize their actions to far greater degrees than they may have realized. In an age of corporate mistrust, creating ethical workplaces takes more than compliance programs. It requires ongoing intensified effort to make the highest ethical standards the norm, and ruthless intolerance of anything less. Skip to content Skip to Live Chat
Ethics. Values. These things are extremely important to working professionals in any industry. In fact, 73% of professionals say they take an organization’s values into account and would not apply to a company unless its values aligned with their own. Furthermore, 82% of workers say they would prefer to be paid less and work for a company with ethical business practices rather than receive higher pay at a company with questionable ethics. Business leaders need to work to ensure their organization is one with high morals, principles, conduct, and ethics so that employees feel comfortable and confident there. Employees who believe in your corporate principles and conduct and share your values are a huge asset to the organization. Employees and management alike can work together to create businesses that have high standards. Unethical businesses also lose favor with consumers. 43% of consumers have stopped buying from brands they find unethical and 71% say they carefully consider corporate values when making a purchase. Trust is vital for consumers to feel comfortable and confident with their purchases. Business ethics is its own set of morals and values that are vital in a workplace or corporation. Business ethics involves the industry, their business practices, how they deal with customers, profits, legal issues, and corporate conduct. Management needs to focus on business ethics as an important pillar of their corporation in order to make sure customers are happy with the appearance of their workplace.. The workplace should focus on their ethics and values so they can attract the right employees and consumers alike. The more willing a workplace is to create a mission that demonstrates their ethical values, the more likely the organization is to thrive and succeed. rates their ethical values, the more likely the organization is to thrive and succeed. In fact, recent reports show businesses that have ethical workplace cultures outperform their competitors—but especially in stock price growth. Ethical scandals in business can deeply hurt the look of a corporation, which can make employees and consumers get a bad taste in their mouth about the morals of the company. How a company reacts to ethical scandals and dilemmas that happen on a small level will say a lot about their core practices and values. As a student of business, it’s valuable to learn from business scandals to understand what to avoid or watch out for in business ethics of a company, as an employee and as a consumer. Utilize your time as a student to learn from examples that can give you a deeper understanding as you prepare for a business career.
It’s hard to forget the scandal United Airlines faced after security officers forcefully dragged a passenger off an overbooked flight. While it’s perfectly legal for airlines to overbook flights and equally legal for them to request certain passengers get off the flight, many consumers say they were disappointed with how the company handled the situation. This ethical dilemma of how to handle a consumer who wasn't cooperating showed a. lot about corporate practice for United Airlines. Additionally, the apology and statement from the United Airlines CEO seemed lukewarm to many consumers. The apology seemed to back up employees, but didn’t really express remorse or regret about the situation. This is a business ethics situation where consumers wanted to hear that their corporate practice involved consumers and customers coming first. This entire ethical scandal lead many customers to cut up their United Airline loyalty cards, cancel flights, or book with another airline. Many consumers still talk about this incident and use it as an example for reasons to avoid United Airlines, stating their business ethics aren't what they should be.
Equifax faced a large ethical scandal when hackers stole data from more than 148 million consumers. After the fact, the research found that the systems Equifax was using were old, and their security systems were out-of-date and could have been updated to prevent the breach. This is an example of business ethics where small businesses and big companies alike have a duty to ensure the are following guidelines for a safe work environment and safe opportunities for consumers. Beyond the breach itself, Equifax didn’t report the stolen data for two months. This means that for two months, consumers who had their data stolen were walking around, with no idea there could be any issues. This lead the Equifax CEO to step down, and nobody knows where the data is, or who has it. The ethics in this situation focus on honesty and integrity, and the best ethical choice would have been for Equifax to immediately admit that something had gone wrong. Equifax has worked to right the wrong by paying out consumers whose data could be compromised. But unfortunately, there is only so much they can do at this point. Consumers expect business ethics from Equifax and other financial institutions that keep sensitive data to be up-to-date on security measures and do their due diligence to make sure data is kept safe.
Enron faced an ethical accounting scandal in 2001 after using “mark-to-market” accounting to fake their profits and misused special purpose entities, or SPEs. Enron worked to make their losses seem less than they actually were, and “cooked the books” to make their income look much higher than it was. Enron stock plummeted after the news got out, and the SEC began an investigation. That ethics investigation lead to jail time for many Enron executives, and their accounting firm Arthur Anderson lost all of their clients and eventually was dissolved. Enron filed for bankruptcy, and new laws were introduced based on this scandal to prevent similar situations. This is a case where business ethics means that honesty and full transparency is what companies and consumers should expect.
Google may be one of the largest companies in the world, but it’s not immune from ethical dilemmas and business ethics scandals. As of 2019, Google is facing a fine from the EU, with the EU saying that Google abused their dominant position and forced AdSense customers to sign contracts saying they wouldn’t accept advertising from rival search engines. This is an example of business ethics where consumers expect organizations to be fair in their treatment of consumers and of rivals. Especially when a company dominates the market, the ethics involved have to be more strict. Google has been fined a total of $9.3 billion by the EU for antitrust issues, ranging from mobile market dominance to manipulating search results. They are now facing a probe from the United States Justice Department. Google has released statements saying they’re working to make changes so all companies are represented fairly on their platform. Users have been unhappy when they’ve discovered the problems that Google is responsible for, but as the company works to institute changes, they are also winning back consumers. As Google works to improve their business ethics practices, they will appeal to their consumers again.
An ethical dilemma is a paradox that comes up when there are two or more options, but neither of them are the best ethical or moral option. False accounting, sexual harassment, data privacy, nepotism, discrimination—these are just some of the ethical dilemmas that happen in today’s workplace. Many business owners and managers will deal with ethical issues at some point in their career. For this reason, it’s crucial for every business—no matter the size—to create a code of ethics. Not only will it establish a foundation of trust between employees, customers, investors, etc., but it will help ensure your business is operating within the law.
Big scandals are just the tip of the iceberg when it comes to business ethics. There are small, daily decisions happening with executives, managers, and employees that all make up a company’s ethical behavior. There are issues that the public doesn’t hear about that could be impacting culture and performance negatively inside an organization. As a business student, it’s important to understand how to be ethical in a company now. Making decisions on your values and morals will help you be prepared to face ethical dilemmas in the future. There are many ways you can be ethical, including being honest with other employees and the public, whistle blowing on misconduct, paying employees what they deserve, not tolerating theft, being unwilling to participate in questionable accounting, respecting the environment, and refusing gifts from vendors in exchange for better treatment.
To be prepared to handle company ethical dilemmas, you should try the following. 1. Decide what your ethics are before you start a job. Understand what your values, your personal mission statement, and your goals are in order to help you know ahead of time how you'll behave in an ethical dilemma. 2. Communicate with your manager. Management should be made aware of any areas that you feel are ethically questionable. This is usually best done via email, so you have record and proof or your actions. Be sure to let your manager know the entire situation, and how you feel about it. If a manager is behaving unethically, you can send an email explaining your feelings and concerns. 3. Work with HR if necessary. Sometimes management doesn't respond or react when you bring up ethical dilemmas at the office. If this is the case, go directly to your human resource manager and work with them to know how to best handle the situation. 4. Know when to get out. If you believe a company is going to continue unethical behavior, it's up to you to get out of the company. Work to find another job at a company that you feel will uphold your ethical standards. There is nothing wrong with leaving a job because you believe they are being unethical, and it can end up being good for you in the long-run. If you’re hoping to be successful in business, understand that the best thing you can do for your employees and your consumers is to practice ethical behavior. Business ethics can be a slippery slope, so it's best to ensure you know what your personal ethics are, so when a conflict or challenge arises, you know exactly what you will do. Ethics are a vital element of becoming successful in business, and the more prepared you are, the better your career will be.
Our focus on your success starts with our focus on four high-demand fields: K–12 teaching and education, nursing and healthcare, information technology, and business. Every degree program at WGU is tied to a high-growth, highly rewarding career path. Which college fits you?
Want to see all the degrees WGU has to offer? View all degrees |