A company’s unethical behavior is most likely to come to our attention when it’s headline news. In general, this means that the business has been involved in something big like consumer fraud or sexual harassment. But what about the other smaller unethical infractions that employees deal with on a regular basis? According to a Yale Center for Emotional Intelligence survey, 23% or one in four people regularly feel pressured to enact unethical behavior at work. This would seem to suggest that corrupt business practices in the US are relatively common.
What are Unethical Business Practices?
Ethical behavior is defined as actions that are honest, fair, and equitable. It respects the rights of individuals and groups of people as well as their dignity and diversity. Conversely, we can characterize unethical behavior as dishonest, unfair, and biased. Unethical actions will infringe upon the rights of individuals or groups.
In business, unethical practices can take many forms. However, they mainly fall into four categories:
- Corrupt practices with regards to employees such as poor working conditions and sexual harassment.
- Unethical practices involving customers, for example, hiding terms in user agreements and false product claims.
- Competing unfairly by defaming the competition, bribing officials or industry leaders, or engaging in trade secret infringement.
- Legal but unethical practices such as paying full-time employees minimum wage or manipulative marketing.
How Unethical Business Practices Affect Employees?
When there’s a lack of ethics in the workplace, this can negatively affect employees. For instance, when workers are concerned about getting ahead or making money, they may ignore procedures and protocols. As a result, mistakes may happen that lead to tasks having to be redone. Furthermore, those who act ethically and follow the rules but don’t get ahead may lack motivation, resulting in a decrease in performance. They may also resent those who don’t play by the rules. Therefore, a lack of ethics in the workplace can lead to a lack of trust among staff members, which can be detrimental to a business.
If a manager or executive acts unethically, this can result in a loss of respect from their employees. It can also cause others to feel that they can get away with disobeying the rules and result in a cascade of unethical behavior. Imagine, for instance, that a higher-up gets away with sexual harassment. Others may interpret this as a sign that they can also act inappropriately and get away with it. Thus a culture of sexual harassment is born. This would undoubtedly create an unhealthy work environment.
Unethical business practices are not always as extreme as sexual harassment. However, they are just as detrimental to employee wellbeing. For example, if workers are subject to long hours, refused overtime, or forced to work under the constant threat of dismissal, morale, and employee mental health will be depleted.
When unethical behavior leads to inhumane working conditions, employees suffer mentally. Quitting and finding another job is not always an option, and so many people have to remain. Currently, according to the Yale Center for Emotional intelligence, 27% of respondents to their survey said they experienced an unhealthy work environment. Therefore, unethical behavior in the workplace is not just an issue of public image. Rather, it is an issue of employee morale, safety, and a sense of wellbeing.
How Common are Unethical Business Practices in the US?
The Ethics and Compliance Initiative (ECI) regularly surveys American businesses, and according to their data, 29% of employees reported pressure to compromise standards in 2020. However, they also said that 1 in 5 US employees stated their workplace had a strong ethical culture in 2020.
So what does this tell us about how commonplace it is for US companies to engage in unethical business practices?
The statistics seem to imply that it’s not that common. However, it is happening, but not with the frequency that some of the big scandals in recent years might suggest. This may be because nowadays, the internet makes it easy to run a background check on the owners of a business. As a result, it’s easy to learn about companies with poor ethical standards. For instance, sites like Glassdoor lets employees leave reviews about where they work so others can learn the truth about the culture there. Furthermore, movements like #MeToo empower people to speak out about sexual harassment, so it’s less common for these things to be swept under the rug.
How to Prevent Unethical Behaviors in US Companies?
Businesses need incentives to take action to eliminate unethical practices. This means that employees and consumers need to speak up, whether that be publicly or privately. In addition, a company’s reputation means everything these days, so if a business needs to succeed they need to keep their image squeaky clean. Therefore, the motivation to develop a culture of ethics should be strong. Here are a few ways US companies can do this:
- Cultivate emotional intelligence skills in leaders and managers.
Businesses can either select for these skills in recruitment or develop them through leadership development programs. According to research by the Harvard Business Review, workers who have supervisors that act in emotionally intelligent ways experience less pressure to act unethically.
- Communicate ethical standards and values to employees.
If the managers and leaders of a company have an attitude where they care only about outcomes and not processes, this may result in a “ends justify the means” mindset. As a result, employees may be afraid to speak up because their managers may see them as problematic. Therefore companies should set out clear ethical standards and values and communicate these effectively to employees. They should also empower workers to speak up when they see or feel that something is unethical.
- Develop an awareness of employee emotions.
Businesses need to actively solicit employee feedback as staff frustrations and stresses can point to organizational problems. Anonymous monthly surveys are an excellent way to assess the emotional climate of the workplace and allow workers to feel comfortable sharing their observations and concerns.
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