The Ugly Truth About Unethical Business Practices [Updated] (2023)

FAQs

What is the #1 reason people in business make unethical decisions? ›

1. Pressure to Succeed. Employees may choose to act unethically based on unrealistic expectations to succeed. For example, a salesperson may make false claims to secure a deal to meet their quota.

Unethical behaviour has serious consequences for both individuals and organizations. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss.

Unethical behavior comes from different elements such as poor personal ethics, a failure to incorporate ethical issues into strategic and operational decision-making, a dysfunctional culture, and the failure of leaders to act ethically.

Psychological traps are the root causes of unethical behavior. Because they are psychological in nature, some of these traps distort perceptions of right and wrong so that one actually believes his or her unethical behavior is right.

Being unethical does not always mean remaining illegal as well. For example, if a person lies about work or a project from some other person in the workplace, it is considered unethical. Still, it is not illegal to hide some information from an individual.

3 Reasons for Unethical Behaviour. The researchers describe the different factors as “bad apples” (individual factors), “bad cases” (issue-specific factors) and “bad barrels” (environmental factors).

What are the 10 most significant risks and costs resulting from unethical behaviour? ›

The 10 most significant risks and costs from unethical behavior: (1) Increased risk of doing business and the possibility of bankruptcy and severely damaged company brand and image. (2) Decreased productivity. (3) Increased misconduct and conflict internally.

The Harvard Business Review article, “How Common Is Unethical Behavior in U.S. Organizations?” references a national survey conducted by the Yale Center for Emotional Intelligence with the collaboration with the Faas Foundation, which found that: 29% of U.S. employees have witnessed or experienced unethical behavior.

Some of the main effects of unethical behavior in business include loss of company credibility, the negative association between employees, failure to maintain a long-term relationship with consumers, and reduced employee productivity.

Perception of unfair treatment – Good employees who feel that their efforts are not being adequately recognized or rewarded by the organization may resort to unethical behavior to retaliate for the slight, or to attain what they believe is rightly theirs.

The ERC reported that employees most often observe the following five unethical behaviors in the workplace: 1) employees misusing company time, 2) supervisors abusing subordinates, 3) employees stealing from their employers, 4) employees lying to their employers, and 5) employees violating company internet policies.

People behave unethically because they tend to perceive questionable behaviors exhibited by people who are similar to them — like their co-workers — to be more acceptable than those exhibited by people who they perceive as dissimilar, researchers say.

An unethical deed may be against morality but not against the law. An illegal deed is always unethical while an unethical action may or may not be illegal.

The vast majority of bad ethical decisions in companies tie to money in some way. In some cases, it is the desire to avoid taxes and line the pockets of internal shareholders, which can lead to a company's undoing.

Violence, harassment, bullying, theft, and fraud are examples that come to mind. But other behaviors may be less obvious—they're not ideal, but they may be more of a question of whether an employee should be terminated, disciplined, or simply warned to stop. Source: fizkes / iStock / Getty.

What is the top unethical behavior in the workplace? ›

Misuse of Company Time

Misusing company time, whether for covering up for a person who arrived late at the workplace or modifying the attendance log, is usually the most significant unethical behavior example. It also comprises knowing a co-worker managing their business during work hours.

Toxic employees are typically overconfident, have self-centered attitudes, and are rule breakers. They tend not to cooperate with others or respect their co-workers because they're always looking out for number one, which can make them difficult people in the workplace environment where teamwork is needed most often.

Walmart is proud of its long-standing commitment to protecting human health and the environment. As an ethical and responsible corporate citizen, Walmart is dedicated to minimizing our environmental impact and preserving the health and safety of our associates and customers.

Amazon ethics have stolen the headlines in recent years, with complaints about the company's treatment of employees, its anti-competition practices, negative impacts on the environment and tax evasion, to name a few. Those concerns make it worth doing your online shopping somewhere else, when possible.

Starbucks is an ethical company which focuses on three main areas: global human rights, equal employment opportunities, and healthcare coverage for employees.

Ethical, but Illegal

A common example of this is “whistleblowing,” or an individual's disclosure of dishonest, corrupt or illegal activity. While it may be ethical to denounce such activity, doing so may violate organizational policies and thus be considered illegal.

In severe cases of unethical misconduct, it can lead to severe legal issues that result in loss of time, large fines, and other penalties with possible jail time.

Answer and Explanation: An example of something that is legal but unethical is paying employees minimum wage without any increase over time, which leads to them struggling to manage their living expenses. An example of something illegal but ethical is driving over the speed limit.

Some common red flags that indicate trouble for companies include increasing debt-to-equity (D/E) ratios, consistently decreasing revenues, and fluctuating cash flows. Red flags can be found in the data and in the notes of a financial report.

1. Fear of failure. A fear of failure weighs heavy among new business owners, with 39% citing it as a chief concern.

What is something legal but not ethical in business? ›

Breaking promises is generally legal, but is widely thought of as unethical; Cheating on your husband or wife or boyfriend or girlfriend is legal, but unethical, though the rule against it is perhaps more honoured in the breach; …and so on.

Some of the most common ethical challenges in international business involve poor working conditions, managing workplace diversity, handling favoritism, understanding local belief systems, dealing with local authorities, environmental concerns and corruption.

Ethics violations such as discrimination, safety violations, poor working conditions and releasing proprietary information are other examples. Situations such as bribery, forgery and theft, while certainly ethically improper, cross over into criminal activity and are often dealt with outside the company.

Nike has been criticized for using Asian sweatshops as a source of labor. The reports of physical and verbal abuse in Nike's sweatshops astonished the general public. In addition, it was discovered that up to 50% of the factories imposed restrictions on their employees' restroom and water usage.

Apple conducts business ethically, honestly, and in full compliance with the law. We believe that how we conduct ourselves is as critical to Apple's success as making the best products in the world.

Nestle is known as an unethical company because of the use of child labour and manufacturing plastic bottles that are damaging the environment.

The four major factors that can cause ethical problems in the workplace are lack of integrity, organizational relationship problems, conflicts of interest, and misleading advertising.

You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss.

Cheating, deception, organizational misconduct, and many other forms of unethical behavior are among the greatest challenges in today's society. As regularly highlighted by the media, extreme cases and costly scams are common.

Best Buy Co., Inc. (NYSE:BBY) has been honored for the eighth time by Ethisphere in 2022 for being one of the most ethical companies in the US and in the world. It has a significantly low ESG-risk score of 14.2, indicating its commitment to social, environmental and corporate-governance causes.

What company has unethical issues? ›

The most unethical clothing companies are mainly popular multinational and e-commerce brands like Victoria's Secret, GAP, Fashion Nova, Uniqlo, Forever 21, Nike, Adidas, Disney, H&M that have been exposed to multiple unethical practices – including labor exploitation and/ or forced labor.

Business ethics enhances the law by outlining acceptable behaviors beyond government control. Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers.

Feeling invulnerable. People who feel a sense of power, which often comes along with wealth and fame, tend to be less likely to believe they are vulnerable to the detrimental consequences of unethical behavior. Experiencing a psychological sense of power leads to a false feeling of control.

Generally, the most common reason people justify unethical behavior is by telling themselves and others that the unethical action was to fulfill a higher purpose.