Eight Common Ethical Dilemmas Business Owners Face (And How To Overcome Them)

Ethical dilemmas are commonplace in society, but when a business experiences one, the impact (and potential fallout) can have a wide reach.

In many cases, ethical dilemmas are challenging to work through because the risk and reward aren’t as clear-cut as other types of decisions. This complexity becomes even more convoluted with businesses, as other businesses, customers and employees can all be affected. Below, eight leaders from Young Entrepreneur Council examine some of the more common ethical dilemmas business owners may face and offer their advice on how to overcome them.

Young Entrepreneur Council members offer their tips for how to overcome these ethical dilemmas.

Photos courtesy of the individual members.

1. Supporting Other Businesses When Money Is Tight

Sometimes business owners have to choose between keeping costs down to survive and supporting other businesses. This is a difficult choice to make and one with significant impact on different people. It helps to find alternative ways to do your part in helping other businesses. It doesn’t always have to be about money. If you want to support other businesses and avoid losing money, you could cross-promote other businesses or help in different ways. Keep an open mind and keep looking for solutions and you could come up with interesting ways to help your business and others around you. – Syed Balkhi, WPBeginner

2. Compromising On Product Quality

Compromising on product quality is usually the first place business owners go to make a few extra bucks. Cheaper cost of goods sold looks great on a spreadsheet, but the reality of the situation is your customers will notice. In most industries, the goal is to maximize the lifetime value of the customer. It is very important to put your best foot forward with your product quality and not try to cut corners. If there’s a manufacturing error, don’t sell it. If the software is buggy, don’t ship it. If the food isn’t cooked right, send it back. It’s always financially beneficial in the long term to do the right thing. Give the customer the highest quality you can for the money they’re paying you. – Michael Fellows, Patriot Crew

3. Offshoring Your Manufacturing

I once consulted with an entrepreneur who was passionate about manufacturing in the U.S., but who unfortunately found out through market testing that the customers could only tolerate a price point that was too low for this manufacturer to provide. So their ethical dilemma was whether or not to offshore their manufacturing. In the end, they came to terms with the market price, and then, while they chose to manufacture offshore, they ended up forming a strong relationship with the provider and built up enough trust in ethical practices. This was the only way for the small brand to take a toehold in the market. Once they gain enough traction, they hope to move their operations back to the U.S. and command a higher price point. – Kaitlyn Witman, Rainfactory

4. Letting Clients Go

Walking away from toxic clients can be a common ethical dilemma. It’s hard to know what the right thing to do is if they are bringing good income into your company and there are contracts signed. But if it’s a toxic relationship, boundaries need to be set. If those aren’t working, the relationship needs to end—as difficult as that can be. – Diego Orjuela, Cables & Sensors

5. Responding To Employee Social Media Behavior

The question of how to respond to employees’ social media behavior outside of work is a difficult one. It’s sometimes hard to draw the line. It’s entirely justifiable to fire an employee over poor behavior on their personal social media accounts, but it’s sometimes tricky to determine exactly when that line is crossed. In today’s day and age, there’s no excuse for crossing a boundary on social media. Internet etiquette is taught to everyone these days. So if your employee, no matter how valuable they are, crosses a line into propagating hate speech or is discriminating against a particular community of people, then I’d let them go. – Amine Rahal, IronMonk Solutions

6. Keeping Employees Because Of Seniority

Keeping employees around because of seniority is an ethical dilemma. It’s normal for business owners to feel that they should be good to people who have been around a company for a long time. However, the people who got you to where you are today are not necessarily the ones who are going to get you to where you need to go in the future. It can be counterintuitive and downright heartbreaking, but keeping people around too long is actually unethical. Business owners may want to keep a “family” atmosphere within their team, but as Reid Hoffman, founder of LinkedIn, says in his book The Alliance, teams are gauged on performance, and you can be cut from the team. Having people on the team who are incompetent destroys the morale of the competent ones on the team. Know when to terminate! – Matt Wilson, Under30Experiences

7. Accepting Job Applicants From Competitors

We recently had an implementation consultant apply to our firm who was coming from another firm in a similar space. The applicant was willing to jump ship without notice and even threw out that some clients would probably come with her. While it could seem easy to take a person with such experience, how they treat their former employers is how they will also treat you one day. If things don’t feel right in your gut before day one even happens, it may be best to steer clear. – Marjorie Adams, Fourlane

8. Creating Honest Marketing

Being honest with your marketing message is one of the biggest ethical dilemmas that the modern business owner faces. A casual review of your social media feeds will quickly reveal that using unethical manipulation, misleading your market and overpromising benefits is still rampant across industries. The good news is one of the best ways to stand out in your marketplace is to actually care about your customers and tell the truth. Instead of rushing the sale, what I’ve found that works really well is to show your marketplace that you can help them by delivering valuable content that actually helps them solve real challenges they’re having. By doing this, you generate incredible amounts of goodwill and trust with your market and this trust leads to more sales over a longer period of time. – Joe Stolte, The Tractionology Group