Do you know the current ethics issues for businesses today? If not, read about these issues and their solutions to learn the consequences of bad actions.
Although no laws exist regarding unethical behavior, it can severely damage a company’s reputation. Companies can lose clients, vendors, and even investors over unethical practices. Before trying to understand how ethical issues can be problematic for businesses, it is essential to understand ethics.
What is Business Ethics?
Business principles are a form of professional rules that most companies strive to meet. Some of these behaviors include integrity, professional conduct, accountability, and fairness, among others. In some cases, unethical behavior by someone who works for a company can become criminal if they are committing fraud or embezzling from the company.
However, business conduct is usually not a criminal offense, but it can still create significant problems for a company. Some of the ethical concerns for businesses can be broken down into four categories:
- Fundamental issues: These issues include integrity and trust when dealing with customers and employees.
- Diversity: Respect for all employees and treating them fairly as far as equal training and opportunities are some diversity issues for businesses.
- Decision-Making: Ethical decision making helps to maintain good employee morale and includes investigating complaints fairly, taking appropriate actions or alternative actions, and making fair decisions. Also, customer’s rights should remain under consideration as well.
- Compliance and Governance: This includes obeying the guidelines and laws that involve your type of business. Also, businesses must obey civil rights laws, safety regulations, environmental standards, and tax regulations.
Consequences of Unethical Business Behavior
Along with losing clients, vendors, and investors, unethical practices or behaviors can cost a company, valuable employees. People who value honesty, fair treatment of others, and obeying the law may resign over the actions of a company or its leaders that are unfair, illegal, or unethical. Depending on the situation, some unethical behaviors could lead to lawsuits from employees who feel that they did not receive fair treatment or were let go without just cause. Clients may file complaints regarding unfair practices if they think that discrimination took place because of their ethnicity, gender, or sexuality.
Also, bad ethical practices in the workplace can lead to production levels dropping due to poor morale. Managers and executives who exhibit unethical decisions or behaviors can lose respect, and eventually their jobs. Plus, gaining a reputation for unethical practices results in loss of confidence by the public.
Current Issues Regarding Ethical Business Behaviors
The changes in the political atmosphere of the country and the uses of new technology can affect behaviors in the workplace and out in public that may seem unprofessional and unethical. Some modern ethical issues include:
- Discrimination and Harassment
- Social Media
Concerns regarding accounting can affect any business and can border on being criminal. Some behaviors, such as not reporting taxes or “cooking the books,” which is an idiom for falsifying a company’s financial statements, are illegal.
In a well-known case, the Enron corporation gave false statements about their financial matters and their accounting firm, Arthur Andersen, signed off on the statements despite their inaccuracies.
The result was $25 billion in losses for shareholders and employees who had pension funds with the company, the accounting firm and Enron went out of business, and over 85,000 people lost their jobs. The government also prosecuted several executives and 16 of them from Enron went to prison.
Solutions for Unethical Accounting Issues
Punishment for unethical accounting practices can come from within a company or law enforcement personnel may need to step in if it is a widespread problem that involves criminal behavior.
An accountant with a firm who is embezzling money may be let go from the company and, if recovering the money isn’t possible, then the company may call in the police, Federal Bureau of Investigation or the Security and Exchange Commission (SEC) to press charges against the culprit.
The best solutions involve making sure the company’s practices are ethical and fair to employees, clients, and competitors. Before companies adopt solutions, they should test them to ensure fairness and how easy, or difficult, they will be to implement. Then, they can adopt them and train their staff on how to behave ethically and the consequences of not doing so
Discrimination and Harassment
These issues seem to be ongoing in the workplace, but finding solutions to them can save companies millions in potential lawsuits and prevent involvement from state or federal authorities for not being compliant with regulations regarding these issues.
Some of the issues that can happen in the workplace and treating clients and others can include discriminating against someone because of their race, gender, sexual preferences, religion, class, ethnicity, or physical disabilities.
In the workplace this can include someone not receiving job placements for which they qualify, not being paid a fair wage or as equally as their colleagues for doing the same job, being disrespectful to someone because of their differences in race, religion, sexuality, disability, etc.
Most states and the federal government have regulations regarding discrimination of any kind toward employees. Breaking regulations can result in fines, which can grow in severity with each complaint, lawsuits from employees, bad morale, and the loss of valuable personnel.
Harassment comes in many forms, but the most common harassment issue across all industries is sexual harassment. In many cases, it is usually a supervisor or manager harassing an employee, but it could be another employee harassing a coworker.
Although women are the primary victims of sexual harassment, men receive harassment as well from other men or women supervisors or employees. Sexual harassment can be either overt or subtle.
Overt harassment involves touching someone intimately without their permission, asking for sexual favors in order to receive pay raises or promotions, or sexual assaults including rape. More subtle sexual harassment is lewd comments, "girly" calendars or pictures in plain sight, or making suggestive gestures to another person.
Sexual harassment can result in personnel losing their jobs, lawsuits from victims, and charges against the perpetrators if the harassment includes criminal behavior like sexual assaults including rape.
Solutions for Discrimination and Harassment Issues
The solutions for these two issues are similar and involve large companies or corporations having compliance personnel onsite to ensure that state and federal regulations are being met, and to guide companies in their policies.
If a company isn't large enough to have personnel onsite, then they can hire a compliance consultant to ensure the company is obeying regulations and that they have the right policies in place, including policies on the consequences for discrimination and harassment.
Human resources personnel, as well as compliance officers, should also be able to field complaints from employees, clients, and others regarding these issues. They should know how to handle complaints fairly and how to investigate them properly. Also, they need to know when to bring in law enforcement if the behavior is criminal.
The rapid changes in technology have become problematic for many businesses because they have had to adjust their policies on handling customers private information. Unfortunately, there have been many cases involving the release of consumers private information by companies of all types.
Verizon, Uber, Google, and KISSmetrics have all been fined by the Federal Trade Commission for violating consumers privacy rights. Business customers can include businesses or individual consumers who frequently use their services.
Privacy breaches usually involve consumers receiving sales pitches from companies that gain their information, or they can include hacking to steal their money if the privacy breach also included financial data. In this case, companies can be held liable and face lawsuits from angry customers.
Privacy Issue Solution
The best to handle privacy breaches is for companies to be aware of the information that they can and cannot release to other companies or people. The healthcare industry has HIPPA, which is a federal regulation in which no medical information about a patient should be given to anyone other than those that the patient gives permission for or their case should not be fodder for gossip.
Technology changes happen so frequently that companies may have difficulty keeping up with privacy issues but hiring a compliance consultant for advice can help with knowing what and what not to share.
Social Media Issues
Using social media is a good way for companies to promote their business, but it can create ethical issues in business regarding its use at work and in private. However, the most prominent ethical dilemma involving social media is firing employees for posts that reflect personnel character flaws, like racism, inappropriate behaviors, and memberships in controversial social organizations.
Most businesses argue that the conduct of their employees can reflect poorly on them, especially if they are in prominent positions. However, everyone must receive the same treatment. So, if a department manager is let go for a racist Facebook post, then a lower level employee can be as well.
While many people see it as a free speech issue and disagree about firing people, businesses know it can affect their reputations and bottom lines and will do anything to protect them. The best way to address ethical issues with social media is to create clear policies and provide training on what is acceptable and not acceptable for employees to post in public.
Social Media Issue Solutions
The training can help eliminate confusion about social media policies, and then, if an ethical breach occurs, the employee will already know about the policies and understand why the company is letting them go.
Businesses can easily avoid most ethics issues with well-written policies on each issue their companies face and by putting rules in place about the consequences of unethical behavior. Employees should also receive policy training, so they cannot deny not knowing the company’s ethical stances on the issues they face every day.