6 Ethical Issues in Business and What to Do About Them

Ethical Issues in Business

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Ethical issues in business can be a difficult challenge to navigate for any business owner. Though there are laws and statutes that exist to hold workers and employers accountable, these alone do not entirely deter employees from behaving unethically.

What Are Ethical Issues in Business?

Ethical issues in business encompass a wide array of areas within an organization’s ethical standards. Fundamental ethical issues in business include promoting conduct based on integrity and trust, but more complex issues include accommodating diversity, empathetic decision-making, and compliance and governance that is consistent with the organization’s core values. According to the Global Business Ethics Survey of 2019, 25% of employees still feel that their senior managers do not have a good understanding of key ethical and compliance business risks across the organization.

In order to manage the ethical issues in business that arise in your organization, you first need to develop a thorough understanding of what those issues can look like. Understanding how to detect and, most importantly, deter these issues before they become a problem can ensure your focus stays on business growth and success instead of remediation.

Ethical Issues in Business and How to Address Them

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1. Harassment and Discrimination in the Workplace

Harassment and discrimination are arguably the largest ethical issues that impact business owners today. Should harassment or discrimination take place in the workplace, the result could be catastrophic for your organization both financially and reputationally.

Every business needs to be aware of the anti-discrimination laws and regulations that exist to protect employees from unjust treatment. The U.S. Equal Employment Opportunity Commission (EEOC) defines many different types of discrimination and harassment statutes that can have an effect on your organization, including but not limited to:

Age:

applies to those 40 and older, and to any ageist policies or treatment that takes place.
Disability:

accommodations and equal treatment provided within reason for employees with physical or mental disabilities.
Equal Pay:

compensation for equal work regardless of sex, race, religion, etc.
Pregnancy:

accommodations and equal treatment provided within reason for pregnant employees.
Race:

employee treatment consistent regardless of race or ethnicity.
Religion:

accommodations and equal treatment provided within reason regardless of employee religion.
Sex and Gender:

employee treatment consistent regardless of sex or gender identity.

2. Health and Safety in the Workplace

As outlined in the regulations stipulated by the Occupational Safety and Health Administration (OSHA), employees have a right to safe working conditions. According to their 2018 study, 5,250 workers in the United States died from occupational accidents or work-related diseases. On average, that is more than 100 a week, or more than 14 deaths every day. The top 10 most frequently cited violations of 2018 were:

Fall Protection

, e.g. unprotected sides and edges and leading edges
Hazard Communication

, e.g. classifying harmful chemicals
Scaffolding

,

e.g. required resistance and maximum weight numbers
Respiratory Protection

, e.g. emergency procedures and respiratory/filter equipment standards
Lockout/Tagout

, e.g. controlling hazardous energy such as oil and gas
Powered Industrial Trucks

, e.g. safety requirements for fire trucks
Ladders

, e.g. standards for how much weight a ladder can sustain
Electrical, Wiring Methods

, e.g. procedures for how to circuit to reduce electromagnetic interference
Machine Guarding

, e.g. clarifying that guillotine cutters, shears, power presses, and other machines require point of operation guarding
Electrical, General Requirements

, e.g. not placing conductors or equipment in damp or wet locations

However, health and safety concerns should not be limited to physical harm. In a 2019 report conducted by the International Labour Organization (ILO), an emphasis was placed on the rise of “psychosocial risks” and work-related stress and mental health concerns. Factors such as job insecurity, high demands, effort-reward imbalance, and low autonomy, were all found to contribute to health-related behavioural risks, including sedentary lifestyles, heavy alcohol consumption, increased cigarette smoking, and eating disorders.

3. Whistleblowing or Social Media Rants

The widespread nature of social media has made employees conduct online a factor in their employment status. The question of the ethics of firing or punishing employees for their online posts is complicated. However, the line is usually drawn when an employee’s online behavior is considered to be disloyal to their employer. This means that a Facebook post complaining about work is not punishable on its own but can be punishable if it does something to reduce business.

In the same vein, business owners must be able to respect and not penalize employees who are deemed whistleblowers to either regulatory authorities or on social media. This means that employees should be encouraged, and cannot be penalized, for raising awareness of workplace violations online. For example, a Yelp employee published an article on the blogging website Medium, outlining what she claimed as the awful working conditions she was experiencing at the online review company. She was then fired for violating Yelp’s terms of conduct. The ambiguity of her case, and whether her post was justifiable, or malicious and disloyal conduct, shows the importance of implementing clear social media policies within an organization. In order to avoid this risk of ambiguity, a company should stipulate which online behaviors constitute an infringement.

4. Ethics in Accounting Practices

Any organization must maintain accurate bookkeeping practices. “Cooking the books”, and otherwise conducting unethical accounting practices, is a serious concern for organizations, especially in publicly traded companies.

An infamous example of this was the 2001 scandal with American oil giant Enron, which was exposed for inaccurately reporting its financial statements for years, with its accounting firm Arthur Andersen signing off on statements despite them being incorrect. The deception affected stockholder prices, and public shareholders lost over $25 billion because of this ethics violation. Both companies eventually went out of business, and although the accounting firm only had a small portion of its employees working with Enron, the firm’s closure resulted in 85,000 jobs lost.

In response to this case, as well as other major corporate scandals, the U.S. Federal Government established the Sarbanes-Oxley Act in 2002, which mandates new financial reporting requirements meant to protect consumers and shareholders. Even small privately held companies must keep accurate financial records to pay appropriate taxes and employee profit-sharing, or to attract business partners and investments.

5. Nondisclosure and Corporate Espionage

Many employers are at risk of current and former employees stealing information, including client data used by organizations in direct competition with the company. When intellectual property is stolen, or private client information is illegally distributed, this constitutes corporate espionage. Companies may put in place mandatory nondisclosure agreements, stipulating strict financial penalties in case of violation, in order to discourage these types of ethics violations.

6. Technology and Privacy Practices

Under the same umbrella as nondisclosure agreements, the developments in technological security capability pose privacy concerns for clients and employees alike. Employers now have the ability to monitor employee activity on their computers and other company-provided devices, and while electronic surveillance is meant to ensure efficiency and productivity, it often comes dangerously close to privacy violation.

According to a 2019 survey conducted by the American Management Association, 66% of organizations were found to monitor internet connections, with 45% tracking content, keystrokes, and time spent on the keyboard, and 43% storing and reviewing computer files as well as monitoring employee emails. The key to using technological surveillance in an ethical manner is transparency. According to the same survey, 84% of those companies tell their employees that they are reviewing computer activity. In order to ensure employee surveillance does not turn into an ethical issue for your business, both employees and employers should remain conscious of the actual benefits of being monitored, and whether it is a useful way of developing a record of their job performance.

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Ethical Issues in Business

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Final Thoughts on Addressing Ethical Issues in Business

Avoiding ethical issues in business always starts with top management. Providing clearly written policies and processes that ensure those policies are both acknowledged and adhered to, can ensure transparency and ethical business practices are applied.

In order to effectively detect and, most importantly, deter ethical issues in business from surfacing in your organization, there are several everyday efforts you can take. Be sure to communicate and enforce a robust code of ethics when making decisions and ask the same of your employees. Remain aware of the discrimination laws that exist in your region. Stay informed on the rules that impact your industry, and ensure your organization is acting in compliance with those regulations. Collaborate with accountants, maintaining transparency and honesty in your financial reports. Be present in your company, making sure your organization and employees alike are always doing the right and ethical thing.