Business Ethics

Business ethics refers to contemporary organizational standards, principles, sets

of values and norms that govern the actions and behavior of an individual in the
business organization. Business ethics have two dimensions, normative business
ethics or descriptive business ethics. As a corporate practice and a career
specialization, the field is primarily normative. Academics attempting to
understand business behavior employ descriptive methods. The range and
quantity of business ethical issues reflects the interaction of profit-maximizing
behavior with non-economic concerns.

Business Ethics: Definition, Principles, Why

They're Important
What Is Business Ethics?
Business ethics studies appropriate business policies and practices regarding
potentially controversial subjects, including corporate governance, insider
trading, bribery, discrimination, corporate social responsibility, fiduciary
responsibilities, and much more. The law often guides business ethics, but at
other times business ethics provide a basic guideline that businesses can
follow to gain public approval.

Business Ethics: Importance

Why Is Business Ethics Important
IMPORTANCE OF BUSINESS ETHICS
There are several reasons business ethics are essential for success in
modern business. Most importantly, defined ethics programs establish a code
of conduct that drives employee behavior—from executives to middle
management to the newest and youngest employees. When all employees
make ethical decisions, the company establishes a reputation for ethical
behavior. Its reputation grows, and it begins to experience the benefits a
moral establishment reaps:
 Brand recognition and growth
Increased ability to negotiate
Increased trust in products and services
Customer retention and growth
Attracts talent
Attracts investors
When combined, all these factors affect a business' revenues. Those that fail
set ethical standards and enforce them are doomed to eventually find
themselves alongside Enron, Arthur Andersen, Wells Fargo, Lehman
Brothers, Bernie Madoff, and many others

Principles of Business Ethics

Leadership
Accountability
Integrity
Respect for others
Honesty
Respect for laws
Responsibility
Transparency
Compassion
Fairness
Loyalty
Environmental concern

Principles of Business Ethics

It's essential to understand the underlying principles that drive desired ethical
behavior and how a lack of these moral principles contributes to the downfall
of many otherwise intelligent, talented people and the businesses they
represent.

What Are the 12 Ethical Principles?

Business ethics is an evolving topic. Generally, there are about 12 ethical
principles: honesty, fairness, leadership, integrity, compassion, respect,
responsibility, loyalty, law-abiding, transparency, and environmental
concerns.
Leadership: The conscious effort to adopt, integrate, and emulate the
other 11 principles to guide decisions and behavior in all aspects of
professional and personal life.

Accountability: Holding yourself and others responsible for their actions.

Commitment to following ethical practices and ensuring others follow
ethics guidelines.

Integrity: Incorporates other principles—honesty, trustworthiness, and

reliability. Someone with integrity consistently does the right thing and
strives to hold themselves to a higher standard.

Respect for others: To foster ethical behavior and environments in the

workplace, respecting others is a critical component. Everyone

deserves dignity, privacy, equality, opportunity, compassion, and empathy.

Honesty: Truth in all matters is key to fostering an ethical climate. Partial

truths, omissions, and under or overstating don't help a business improve
its performance. Bad news should be communicated and received in the
same manner as good news so that solutions can be developed.

Respect for laws: Ethical leadership should include enforcing all local,
state, and federal laws. If there is a legal grey area, leaders should err on
the side of legality rather than exploiting a gap.

Responsibility: Promote ownership within an organization, allow

employees to be responsible for their work, and be accountable for yours.

Transparency: Stakeholders are people with an interest in a business,

such as shareholders, employees, the community a firm operates in, and
the family members of the employees. Without divulging trade secrets,
companies should ensure information about their financials, price
changes, hiring and firing practices, wages and salaries, and promotions
are available to those interested in the business's success.

Compassion: Employees, the community surrounding a business,

business partners, and customers should all be treated with concern for
their well-being.

Fairness: Everyone should have the same opportunities and be treated

the same. If a practice or behavior would make you feel uncomfortable or
 place personal or corporate benefit in front of equality, common courtesy,
and respect, it is likely not fair.

 Loyalty: Leadership should demonstrate confidentially and

commitment to their employees and the company. Inspiring loyalty in
employees and management ensures that they are committed to best
practices.
 Environmental concern: In a world where resources are limited,
ecosystems have been damaged by past practices, and the climate is
changing, it is of utmost importance to be aware of and concerned
about the environmental impacts a business has. All employees should
be encouraged to discover and report solutions for practices that can
add to damages already done.

Types of Business Ethics

Corporate social responsibility
Transparency and trustworthiness
Technological practices and ethics
Fairness

Types of Business Ethics

There are several theories regarding business ethics, and many different types can be found, but
what makes a business stand out are its corporate social responsibility practices, transparency
and trustworthiness, fairness, and technological practices.

 Corporate Social Responsibility

Corporate social responsibility (CSR) is the concept of meeting the needs of stakeholders while
accounting for the impact meeting those needs has on employees, the environment, society, and
the community in which the business operates. Of course, finances and profits are important, but
they should be secondary to the welfare of society, customers, and employees—because studies
have concluded that corporate governance and ethical practices increase financial performance.1

Businesses should hold themselves accountable and responsible for their environmental,
philanthropic, ethical, and economic impacts.
Transparency and Trustworthiness

It's essential for companies to ensure they are reporting their financial performance in a way that
is transparent. This not only applies to required financial reports but all reports in general. For
example, many corporations publish annual reports to their shareholders.

Most of these reports outline not only the submitted reports to regulators, but how and why
decisions were made, if goals were met, and factors that influenced performance. CEOs write
summaries of the company's annual performance and give their outlooks.

Press releases are another way companies can be transparent. Events important to investors and
customers should be published, regardless of whether it is good or bad news.

Technological Practices and Ethics

The growing use of technology of all forms in business operations inherently comes with a need
for a business to ensure the technology and information it gathers is being used ethically.
Additionally, it should ensure that the technology is secured to the utmost of its ability,
especially as many businesses store customer information and collect data that those with
nefarious intentions can use.

Fairness

A workplace should be inclusive, diverse, and fair for all employees regardless of race, religion,
beliefs, age, or identity. A fair work environment is where everyone can grow, be promoted, and
become successful in their own way.

Ethical Dilemmas in Business

Ethical Dilemma Examples in Business
Many of the ethical dilemmas that workers face in business are considerably different
from those experienced by healthcare workers and individuals who are employed in
public sector jobs like law enforcement, government and public education. There are
ethical dilemma examples in business that also appear in nonprofit and government
workplaces, as well.

Common ethical dilemma examples in business include:

Deciding how to handle a romantic attraction to a colleague in a workplace that

forbids such relationships.
 Feeling pressured to work with vendors who are personal friends of the boss,
rather than those who offer the best value for a job.

Having to decide whether to keep a contract with a supplier whose own ethical
misconduct has been exposed.

Having the opportunity to increase profits by working with suppliers that do not pay
workers a living wage.

Being pressured to hire an applicant because he is related to a colleague, rather

than because he is the best fit for the position.

Scaling back safety precautions to finish a job faster or cheaper.

Adjusting figures in a company’s financial statements to make the company look

more – or less – profitable than it really is.

Sharing collected customer data with other companies.

Violating the terms of a noncompete, nonsolicitation or nondisclosure agreement

for personal gain when there is little chance one’s employer will find out.

Smoothing out ethical dilemma

How To Handle Ethical Dilemmas in the

Workplace (With Tips)
In the workplace, you might face ethical dilemmas in relationships with
colleagues, leaders, clients and business partners. Your ability to exercise
critical thinking and find the best solutions to ethical challenges can help
you create or uphold a professional reputation and prevent
consequences for your organization. Knowing more about ethical
dilemmas and how to resolve them can help you become a respected
professional in nearly any industry.

In this article, we explain how to handle an ethical dilemma in the

workplace, offer tips for the process and define what an ethical dilemma
is.
How to handle an ethical dilemma in the workplace
Here are seven steps for how to handle an ethical dilemma in the
workplace:

1. Analyze what's at risk

Weigh the pros and cons of what's at risk in the scenario to help you
determine what steps to take. For example, if your colleague clocks out
early every day, one might consider that theft of company time. If your
coworker routinely meets goals and completes their work, someone else
might not see the situation as an ethical concern. Before bringing the
matter to someone's attention, find clarity on the issue by assessing the
risk. If you ultimately find the risk is high, consider taking appropriate
action.

Read more: The Importance of Ethics in the Workplace: 6 Significant

Benefits

2. Rely on your training

Many companies provide ethical training for employees, especially for

leaders. When in doubt about what to do in an ethical dilemma, consider
reflecting on your training as guidance on what next steps to take. The
training exists to both guide you in such situations and helps the
company reduce its liability for such dilemmas, so you can rely on it as
much as you need to.

Related: Social Responsibilities and Ethics: 8 Best Business Practices

3. Review your company handbook

Many organizations have an employee handbook that outlines

professional conduct and behavior expected. Check for a chapter about
ethics to see what information might influence your decisions. You might
have a compliance and ethics hotline at your place of employment, for
example. You can use this number to confidentially or anonymously
report misconduct or corporate ethics violations. Some people prefer this
option rather than reporting directly to leadership to reduce any
concerns about retaliation.

Related: Business Ethics: Definition and 11 Workplace Examples

4. Refer to industry guidelines

Some professions, like lawyers, accountants and doctors, have industry

guidelines or legal regulations that uphold ethical and moral behavior.
Often, violations can lead to disciplinary action or a loss of licensing, for
example. Referring to codes of conduct and ethics can help you
determine what steps to take when solving challenging moral dilemmas.
Similar to a company's own ethics hotline, many industries have ones of
their own. For example, you can report a lawyer's ethics violation to the
state bar association for an investigation.

Read more: Professional Code of Ethics: Definition and Examples

5. Trust your instincts

There may be times when you sense something isn't right at work and it's
often worth exploring rather than ignoring. This can help protect both
your company and yourself if there is unethical activity happening.
Trusting your instincts might also mean you first confirm or investigate
your suspicions before taking other actions. For example, you might
become more observant of a colleague you think is manipulating the
time clock before confronting them or going to a supervisor.

Related: Personal Ethics and Business Ethics Compared

6. Have a conversation

Consider discussing the ethical dilemma with the person directly to help
manage the situation. You can gain perspective, ask clarifying questions
and attempt to influence your colleague to make a more ethical decision.
They might appreciate your directness and correct their actions.

For extreme ethics violations, like discrimination or harassment, you

rarely need this approach. If the issue remains unresolved after speaking
with the person directly, consider connecting with a leader, human
resources representative or your company's ethics hotline.

Related: FAQ: Business Ethics (With Examples)

7. Remove yourself from the situation

If you find yourself in ethical dilemmas consistently within a team or

organization, consider leaving if no other attempts or actions resolve the
situation. Finding other employment can help you ease stress and allow
you to uphold your own personal standards and ethics. You might look to
exhaust other options before committing to leaving.

Related: Developing Personal Ethics: Examples and Tips

What is an ethical dilemma?

An ethical dilemma is an issue, problem or concern in your decision-
making process, in which neither choice you make offers a great
outcome. Also called a moral dilemma or ethical paradox, you often face
these challenges in professional settings. For example, you might bear
witness to ethical dilemmas or get asked to do something you think is
wrong. Your concern might be whichever decision you choose could lead
to repercussions for yourself or others. Ethical dilemmas might
sometimes happen because of:

 Managerial pressure
  Ignorance
 Personal ambitions
 Discrimination

Related: 12 Examples of Business Ethics and Why They're Important

Tips for handling ethical dilemmas

Here are five tips on how to handle an ethical dilemma in the workplace:

 Apply the value theory approach: When considering your options

to resolve the ethical dilemma, the value theory approach means
selecting the option that offers the greater good or lesser evil. This
can be helpful when neither of the options is ideal.
 Brainstorm other solutions: Some dilemmas might have
alternative options to consider when reevaluating the problem from
an unbiased position.
 Ask rather than accuse or assume: Approach someone with
questions about their behavior instead of with accusations and
assumptions that their actions are ethically wrong. It can help the
conversation from escalating and often gives you insight into
whether someone is receptive or if you need to take other actions.
 Make a plan: Give consideration and thought to what steps you
might take or how to approach someone about an ethical dilemma
you witnessed. This can give you confidence and a strategy to
follow through.
 Examine your assumptions: Question your reaction or
rationalizations you might try to apply when learning about an
ethical dilemma. For example, you might react with the assumption
that it's not a big deal or that you can't change the course of events
to avoid confrontation or retaliation if you were to take action.

i. Examining ethical dilemma

 a. Overcome ethical dilemmas of business owners

Common Ethical Dilemmas in Business and

How to Address Them
Smoothing Out Ethical Dilemmas
To tackle the common ethical dilemmas in business, start with setting the right
foundation. Let your employees know your best practices. You also want to make sure
everyone is on board. The right team can handle these issues with grace, so why not
strengthen your bonds? There’s definitely a Let’s Roam team-building event for you.
Whether it’s a virtual office party or a hybrid event for those away and in-person, you
can find what fits. Strengthen your team today!

Examining Ethical Dilemmas

Your decisions really matter when it comes to ethical problems. The consequences
may be far-reaching, so it’s important to have a firm grasp of what an ethical dilemma
is. Put simply, this problem involves a moral situation that requires you to make a
choice. You can do what is at least perceived as right, or you can choose a less
desirable and possibly immoral alternative course of action.
Moral dilemmas can rear their figurative heads in a given work environment for a
variety of reasons. An employee may wrestle with a dilemma as a result of a flaw in
their personal character or conscience, for example. Another worker might grapple
with an issue because their company’s business practices and stated goals conflict
with their personal values. Yet another employee may face a tough decision when
forced to make a choice that’s aligned with their social values or their employer’s
documented beliefs.

Establishing Business Ethics

Handling ethical issues at work is less difficult if you establish clear business ethics
for everyone to follow. In general, it’s advisable to start with a code of ethics
everyone can refer to when they’re faced with difficult decisions. It’s also wise to
create a mission statement that outlines your company’s values, goals, and current
purpose.
Drafting a vision statement is a good idea, too. This statement should explain the
direction your organization is going in, where it will land years from now, and the
values and goals that will drive your company’s future evolution. A vision statement
can motivate and inspire team members to make the appropriate ethical decisions at
work. Make this easier for your team members by writing it down for all to see.
That “all to see” part of the last sentence is important. Having a code of ethics and
mission and vision statements is pointless unless they’re well-circulated among your
staff members. In addition to giving these documents to new hires during the
onboarding process, you should make them readily available on your website. Also,
share links to them on your company’s social pages so current and prospective
stakeholders can learn what your business does and will stand for.

Ethical Issues Facing Many Business Owners

We can easily picture managers and owners of medium-sized organizations and global
enterprises tackling common ethical issues. However, their counterparts who oversee
small businesses must address these troubles, too. Working through ethical dilemmas
is often challenging because the risks and rewards aren’t normally as clear-cut as they
are for mundane, day-to-day decisions. Enforcing your ethical standards is even more
difficult because your decisions and actions have the potential to impact so many
players.
Making ethical decisions and taking actions that are aligned with your organization’s
goals and values don’t have to be difficult. They’re made easier when you’re familiar
with some of the common dilemmas other businesses must confront. As you’ll
quickly realize, there isn’t a shortage of dilemmas that have the potential to impact
every aspect of your business.

Unethical Accounting

It doesn’t matter if you launch a startup with a handful of employees or manage a

business that employs thousands. In any case, it’s vital for you to pay close attention
to your company’s accounting practices. Rather, it’s important to ensure you prepare
financial statements using accounting best practices and that the statements are truly
reflective of the way your business handles its revenue, operating expenses, and debt
service.
Some of the best practices you may want to adopt include

 Hiring experts
 Tracking cash flow to the penny
 Keeping your personal expenses separate from your business expenses
 Choosing the cash or accrual accounting method and sticking with it
  Mastering key financing statements, including your balance sheet, income
statement, and cash flow statement

Neglecting your organization’s accounting practices or turning a blind eye to what

you know is unethical accounting can have dire consequences. For years before the
scandal broke in 2001, oil giant Enron deliberately issued financial statements that
were wildly inaccurate. They were purposefully difficult to interpret even when
reviewed by financial experts. To compound the problem, Enron’s accounting firm
Arthur Anderson signed off on the statements knowing they were inaccurate.
By cooking the books for years, Enron misled its employees, stockholders, board
members, and the public. As a result of its deception, public shareholders lost more
than $25 billion. Certain Enron executives were sentenced to lengthy prison sentences
for their involvement in the accounting scheme, including the company’s CEO,
Jeffrey Skilling, who earned a 24-year prison sentence.
Both Enron and Arthur Anderson were forced to close their doors and shutter their
windows permanently. By the time Enron filed for bankruptcy, its stock had dropped
from a high of $90.75 per share to a meager $0.26 per share, hitting millions of
victims directly in their retirement accounts.
For a more recent example of unethical accounting, all you have to do is look at Sam
Bankman-Fried, the co-founder of FTX and Alameda Research. Now bankrupt, FTX
was a cryptocurrency exchange that traded in FTT tokens. Also shuttered, Alameda
used to be a cryptocurrency trading company. With his then-girlfriend in charge of
Alameda’s books and other “confidants” in positions of power, Bankman-Fried
masterminded illegal financial transactions between his two organizations.
The net result of those transactions resulted in investors losing billions of dollars.
They’re unlikely to recover their losses even with the intervention of the federal
government. Bankman-Fried transferred valuable assets to family members, including
his parents, at the cost of those who once considered him a darling of Wall Street
while claiming he “only” had about $100,000 in his bank account at the time of his
arrest in Bermuda.
Bankman-Fried has been accurately and sometimes hilariously compared to Jeffrey
Skilling and the even more notorious fraudster Bernie Madoff since FTX’s scandal
came to light in the fourth quarter of 2022. At just 30 years old, Bankman-Fried may
end up spending the rest of his life in jail for his financial indiscretions and ethical
violations, something that’s even more likely now that former Alameda CEO Caroline
Ellison and FTX co-founder Gary Wang have reached plea deals with the federal
government.

Nondisclosure Agreements
In a perfect world, business owners wouldn’t have to concern themselves with either
their current or former employees stealing their company’s critical data. Sadly, the
world is far from perfect in this context, forcing business owners and managers to
concern themselves with their employees as much as they worry about hackers
accessing proprietary information.
As disappointing as it might be to have to update your cybersecurity to guard
information against your staff members, doing so can protect your employees from
their own temptation. Similarly, having workers who have access to critical data sign
nondisclosure agreements can cause them to pause if they’re even thinking about
stealing data and sharing it with your competitors.
A typical NDA includes financial penalties that are actionable and enforceable in the
event an employee steals information. Those penalties normally combine into a
weighty deterrent for unethical behaviors that put a company’s data at risk.

Discrimination

Today more than ever, businesses need to prioritize diversity, equity, and inclusion. A
diverse workforce increases the attractiveness of your company among job seekers,
particularly younger prospects who tend to consider diversity when they’re
contemplating offers of employment.
Although it’s important to incorporate DEI initiatives into your workplace culture,
hiring people with different backgrounds and lifestyles can lead to some employees
being discriminated against. Whether it’s explicit or unconscious bias, there should be
no room for discrimination of any sort in your workplace.
The Equal Employment Opportunity Commission (EEOC) has identified several
factors that employers cannot use to discriminate against job candidates and
employees, which include

 Disability or genetic information

 Age
 National origin
 Sex, including pregnancy, sexual orientation, and gender identity
 Religion
 Color
 Race

According to the EEOC, it’s also illegal to base employment decisions on whether an
employee complained about discrimination or filed a charge about being
discriminated against. The EEOC claims that retaliating against whistleblowers
because they participated in a discrimination investigation or a legal case is illegal as
well.
Too many business owners and managers don’t realize it, but it’s illegal for them to
publish job advertisements that exhibit a preference for certain types of workers. It’s
also illegal to promote job listings that discourage talent from select groups from
applying for an open position.
For example, a job posting that solicits applications from people who can stand for
eight hours straight may discourage people with physical disabilities from applying.
An advertisement encouraging recent graduates to apply may be attractive to younger
workers but off-putting to talent above 40 years old.
To protect your business from claims of discrimination, adopt DEI initiatives in your
workplace and weave them into your office culture. Make sure your job listings will
pique interest among talent with diverse backgrounds. Train your hiring managers so
implicit and explicit bias can be eliminated from your hiring process. Treat everyone
on your payroll fairly and equally and take any charge of discrimination seriously.

Harassment

One of the most serious ethical violations you may have to overcome is harassment.
Often associated with discrimination, harassment refers to different kinds of aberrant
behaviors, such as teasing, bullying, and sexual harassment or abuse.
Data published by the Equal Employment Opportunity Commission shows that sexual
harassment claims have accounted for a growing number of overall harassment
charges in recent years. Between FY 2018 and FY 2021, sexual harassment claims
accounted for 9.8 percent of all charges under all statutes received by the EEOC, up
from a 7.7 percent increase between FY 2014 and FY 2017.
Even though 98 percent of organizations operating in the United States have a sexual
harassment policy, too many workers are still experiencing problems. A whopping 68
percent of the LGBTQAI population experience harassment on the clock. Of the
people who experience harassment, 79 percent of men and 63 percent of women
won’t file a complaint. A disturbing 55 percent of victims fear they’ll suffer retaliation
if they file a complaint or speak about their experiences.
Although the majority of organizations in the U.S. have a sexual harassment policy,
just three out of every ten employees feel as if their employers take sexual harassment
seriously. Providing regular training to all your employees, including your managers
and team leads, will demonstrate how seriously you take harassment. Creating or
updating your harassment policy and enforcing it will do the same.
Like discrimination, charges of harassment need to be taken seriously and handled
with the utmost respect. Every complaint should be fully investigated by an unbiased
third party. If a complaint is proven to be true, disciplinary action should be taken.
You should put measures in place to protect whistleblowers who come forward so that
future victims and observers of harassment won’t hesitate to come forward.
Social Media Posts

Statista reports that 4.26 billion people across the globe were using social media in
2021, a number expected to rise to nearly six billion users by 2027. Research
conducted by Global WebIndex shows that 59 percent of the world’s population was
using social sites as of July 2022, with the average daily user spending two hours and
29 minutes on social platforms daily.
With so many people using social media and spending a considerable amount of time
on those sites on a daily basis, the platforms themselves and your employees’
activities on them may combine to be one of the ethical dilemmas you’ll need to
tackle head-on. In other words, you may need to consult with human resources to
determine whether your employees can use their personal social pages at work and if
their posts might be cause for disciplinary action, which may include termination.
If you talk to the professionals in your HR department, you’ll learn that most states
are considered at-will territories when it comes to employment. That means workers
can quit at any time and employers can terminate working relationships with their
employees for any reason that’s legal.
Many organizations ban the use of personal social media accounts while employees
are on the clock. Employers that have this type of policy in place can discipline or
terminate workers who use their social accounts during work hours regardless of what
they post online when they’re at work.
As things relate to the material employees share online, determining what is and isn’t
ethical behavior is a bit harder to discern. The National Labor Relations Board
declared that workers cannot be terminated for their protected concerted activity
online. That means employees can’t be fired for criticizing their employers for things
like poor work conditions, employment policies, and decision-making when they’re
discussing those topics with their co-workers.
Regardless of whether they belong to a union or work in a union state, employees
have the right to join together to attempt to improve their work environment and the
conditions in which they work. If those workers are simply bashing their employers
on social sites without any obvious attempt to discuss the upsetting issues, their
conduct isn’t ethical, protected activity. Instead, their social posts may be grounds for
termination.
Whistleblowers who reveal that their companies are engaged in illegal activities on
social platforms are protected from disciplinary action and termination. They’re also
protected by anti-retaliation statutes, something human resources should remind
managers and team leads about to guard against potential litigation filed by a
whistleblower who might otherwise be wronged.
In addition to workers who bad-mouth their employers without attempting to right
their companies’ wrongs, employees who share trade secrets or sensitive client data
on social sites are subject to termination. Content that reflects negatively on an
employee may also lead to disciplinary action. If workers share content that represents
their company in a negative light, such as lewd or drunken photos or pictures of illegal
acts, they may end up having to seek employment elsewhere.
Political viewpoints shared on social sites can make things difficult for an ethical
business that wants to protect its reputation. The laws that govern businesses’ rights to
terminate employees for the political statements they make online vary from state to
state. Some states may protect workers from disciplinary action if they express their
political views during their personal time. Others may not protect them regardless of
whether they post them on or off the clock.
Given the uncertainty about what you can and cannot do when someone’s published
political views don’t align with your organization’s opinions, it’s wise to have a sit
down with the experts in your HR department. By doing so, you can create a
documented policy about potential repercussions for workers who share their political
views online.

Nepotism

Collins Dictionary defines nepotism as “the unfair use of power in order to get jobs or
other benefits for your family or friends.” Favoritism that’s based on personal
connections isn’t always unethical behavior as long as employment offers,
promotions, and benefits are given in accordance with pre-set rules and requirements.
Nepotism can present ethical issues when people receive preferential treatment for no
apparent reason or others perceive it as unfair, however.
To prevent favoritism from becoming a problem for your organization, you must
establish hiring policies and procedures that evaluate candidates on their credentials,
skills, and experience, not their personal relationships with people affiliated with your
company. You should also document the criteria necessary for employees to earn
promotions and benefits that are independent of the connections they may have with
senior executives or others in positions of power.

Product Quality

When supply chain issues were at their worst, Brit went to a local restaurant in
Washington, D.C., to catch the big game. Without even having to look at the menu,
Brit ordered his usual 12 wings smothered in hot sauce and a cold, frosty craft beer.
Being a regular, Brit was happy when his drink arrived but shocked when his food
made it to the bar top.
Instead of the wings he’d looked forward to all day, Brit was served a dozen chicken
legs. Noticing Brit’s reaction to his fare, the bartender quickly explained that the
watering hole’s vendor couldn’t get its hands on wings due to supply chain issues.
Brit said he’d wished he’d known that ahead of time, paid for his uneaten food and
barely touched drink, and walked out of his formerly favorite eatery for the last time.
The lesson here is that customers expect and deserve what they pay for. While it
might be tempting to save money by compromising on the quality of your goods or
services, it’s widely viewed as unethical behavior, among customers at least. With
internet connections available just about everywhere, comments and videos of your
poor product or service quality can easily go viral. Is saving a few cents per unit really
worth harming your company’s hard-earned reputation?

Prevention and Preservation

Ethical dilemmas in business can be difficult to address, but you have to handle them.
If you don’t, you run the risk of going the way of the dodo bird, Enron, and FTR, and
no one wants that, except for your competitors, perhaps. Do you need to have a talk
with HR? Don’t shy away from handling difficult issues head-on. A little prevention
here will go a long way.
Don’t be afraid to take this time to examine what you offer as a company, as well.
Read up on “Anti-Perks: Why Some ‘Benefits’ Might Scare Candidates Away.”

Frequently Asked Questions

What are some common ethical dilemmas in business?
How can I address an ethical dilemma?
Is sexual harassment an ethical issue?

i. Supporting other businesses when money is tight

ii. Compromising on product quality
iii. Offshoring manufacturing
iv. Letting clients go
v. Responding to employee social media behavior
vi. Keeping employees due to seniority
vii. Accepting job applicants from competitors
viii. Creating honest marketing
How to Implement Good Business Ethics
Fostering an environment of ethical behavior and decision-making takes time and effort—it
always starts at the top. Most companies need to create a code of conduct/ethics, guiding
principles, reporting procedures, and training programs to enforce ethical behavior.

Once conduct is defined and programs implemented, continuous communication with employees
becomes vital. Leaders should constantly encourage employees to report concern behavior—
additionally, there should be assurances that if whistle-blowers will not face adversarial actions.

A pipeline for anonymous reporting can help businesses identify questionable practices and
reassure employees that they will not face any consequences for reporting an issue.

Monitoring and Reporting Unethical Behavior

When preventing unethical behavior and repairing its adverse side effects, companies often look
to managers and employees to report any incidences they observe or experience. However,
barriers within the company culture (such as fear of retaliation for reporting misconduct) can
prevent this from happening.

Published by the Ethics & Compliance Initiative (ECI), the Global Business Ethics Survey of
2021 surveyed over 14,000 employees in 10 countries about different types of misconduct they
observed in the workplace. 49% of the employees surveyed said they had observed misconduct
and 22% said they had observed behavior they would categorize as abusive. 86% of employees
said they reported the misconduct they observed. When questioned if they had experienced
retaliation for reporting, 79% said they had been retaliated against.23

Indeed, fear of retaliation is one of the primary reasons employees cite for not reporting unethical
behavior in the workplace. ECI says companies should work toward improving their corporate
culture by reinforcing the idea that reporting suspected misconduct is beneficial to the company.
Additionally, they should acknowledge and reward the employee's courage in making the report.

What Is Business Ethics?

Business ethics concerns ethical dilemmas or controversial issues faced by a company. Often,
business ethics involve a system of practices and procedures that help build trust with the
consumer. On one level, some business ethics are embedded in the law, such as minimum wages,
insider trading restrictions, and environmental regulations. On another, business ethics can be
influenced by management behavior, with wide-ranging effects across the company.

What Are Business Ethics and Example?

Business ethics guide executives, managers, and employees in their daily actions and decision-
making. For example, consider a company that has decided to dump chemical waste that it
cannot afford to dispose of properly on a vacant lot it has purchased in the local community. This
action has legal, environmental, and social repercussions that can damage a company beyond
repair.

Ethics and Ethical Challenges Across Industries

Ethics vary from industry to industry. Although there are some universal ethics that
individuals and companies across industries follow, many other ethical positions are
only applicable in specific fields. A few examples of field-specific ethical positions
include:

 For a restaurant, sourcing food only from farms and suppliers that humanely
raise animals.
 For a financial advisor, discussing in-depth with clients the companies
represented in funds so they can choose funds with industries and companies
they want to own.
 For a jewelry maker, choosing to use only lab-grown diamonds in designs.
 For a pest control company, using only organic compounds for pest control.
 For a small construction company, always complying with OSHA guidelines.

These dilemmas have been part of the human experience since the dawn of
creation. They are prevalent today and guaranteed to drive people crazy in the
future. As business leaders we're sure to face them, so what can we do?
1. Solve ethical dilemmas by adopting "and."
Peak performers recognize collisions of "rights" and move the group away
from making each other wrong and towards resolving the dilemma. To do
this, invite the group to design a solution that embodies the magic of "and."
The narrative then becomes:
 Good for the unit AND good for the whole.
 Good for the long term AND good for the short term.
 Truth AND loyalty.
 Justice AND mercy.
When leaders can get the group to use this powerful orientation, they will
most likely resolve the dilemma.
2. Think about outcomes.
If you find yourself in a situation when this approach doesn't work, you can
resolve a right versus right dilemma by finding the highest "right." Kidder
wrote that there are three ways to make the best choice when faced with these
types of dilemmas:
 Ends-based: Select the option that generates the most good for the
most people.
 Rule-based: Choose as if you're creating a universal standard.
Follow the standard that you want others to follow.
 Care-based: Choose as if you were the one most affected by your
decision.
Once you've identified an ethical right versus right dilemma, lay out your
options according to these three principles. One approach will immediately
present itself as the "most right."
3. Keep the group committed to the decision.
No matter what decision-making approach makes the most sense for a given
situation, it's important to keep the group committed to the decision. To do
this, adopt a working definition of consensus as the group tries to resolve
these dilemmas. Instead of using the traditional definition of consensus where
everybody is expected to agree with everything, switch it up to use the
following definition:
 Was the process to make the decision deemed rational and fair to
all involved?
 Was each person involved in the discussion treated well and
listened to?
  Assuming the group is satisfied with No. 1 and No. 2, can they
live with and commit to the outcome? (Notice it does not
say agree with the outcome.)
Listen carefully when people unknowingly argue about right versus right.
Often it's not apparent to the people involved. Point it out and they will begin
to think about these situations differently. And make sure they are using the
working definition of consensus when forging their agreements.
Using these skills, you will become intensely important to the vitality of the
company -- you keep the group moving forward in spite of their inevitable
encounter with ethical dilemmas.

CODE OF ETHICS AND PROFESSIONAL CONDUCT SAMPLE TEMPLATE

a. State the 3 importance of work ethics

1. Productive work
2. Cooperation
3. Ethics in organizational culture

b. State the 10 Work Values Employers Look for

a. Strong Work Ethics
b. Dependability And Responsibility
c. Possessing Positive Attitude
d. Adaptability
e. Honesty and Integrity
f. Self – Motivated
g. Motivated to Grow and Learn
h. Strong Self - Confidence
i. Professionalism
j. Loyalty

Business Ethical Dilemma Examples

1. Using company time for personal purposes
Many people believe it is wrong to conduct personal business on company time,
but several gray areas can make this decision difficult.
For example, co-workers often use company time to check personal email or
make phone calls. Furthermore, many employers allow employees to take
breaks for personal errands or activities.
So long as these activities do not interfere with work duties, most employers
turn a blind eye. But, ultimately, whether or not to conduct personal business on
company time depends on the individual’s ethical standards and the company’s
policies.

2. Crediting others’ work

Taking credit for someone else’s work is a moral dilemma that can arise in
business. For example, let’s say you’re working on a project with a team of
people.

One team member does most of the work while the others contribute a few
ideas. Then, when it comes time to present the project, you receive all the credit
even though you didn’t do most of the work. This is an ethical dilemma because
you are not being truthful about your involvement in the project.

On the one hand, you may feel like you deserve the credit because you were the
one who presented the project. But, on the other hand, you know that taking
credit for someone else’s work is wrong, and it goes against your ethical
standards.

3. Sexual harassment and inappropriate behavior

It is not uncommon for employees to experience harassing or inappropriate
behavior from superiors or other employees. While such situations can be
challenging, it is essential to remember that you have rights and options.

If you feel that you are being harassed or mistreated at work, the first step is to
report the behavior to your supervisor or HR department. Once a formal
complaint has been filed, an investigation will be launched.

In some cases, the victim of such behavior may also pursue legal action.
Remember, if you are being harassed or mistreated at work, you are not alone—
some people can help you through this challenging situation.

4. An employee who steals at work

Many rationalize taking office supplies from work by saying the company won’t
miss a few pens or paperclips. But this is simply stealing, and it is unethical.

When everyone takes something without paying for it, it does add up against
company profits. This can lead to falling profits, which affects everyone in the
company, even future raises, bonuses, or layoffs.

Therefore, it is always ethical to pay for office supplies you take from work,
regardless of how small the item may be.

5. Lying to customers about a defective product

Lying to customers about a defective product is one example of unethical
business practice. Sometimes, sales representatives may knowingly sell a
defective product to unsuspecting customers. In other cases, businesses may
make false claims about a product’s quality or performance to boost sales
figures.

Either way, lying to customers is dishonest and damages the company’s

reputation. In addition, it can lead to legal problems if the customer discovers
the truth about the product. As such, businesses should avoid lying to customers
about their products altogether.

6. Resisting a sale based on race or religion

Many companies have strict policies in place regarding discrimination. These
policies are implemented to ensure that all customers are treated fairly and
equally, regardless of race or religion.

However, there are some instances where company policy may conflict with
personal beliefs. Not only does it prevent them from accessing the product or
service they need, but it also sends a message of intolerance and hate.

In some cases, it may even lead to physical violence. As a result, it is essential

for businesses to carefully consider their policies and procedures to avoid any
form of discrimination.

7. Making the company look more profitable than it is

Many business ethical dilemmas arise from business practices designed to
manipulate financial reports to make the company look more profitable than it
is. They may also understate their expenses by classifying them as something
other than what they are, such as research and development costs.

Additionally, companies may use aggressive accounting practices to

overestimate their assets and underestimate their liabilities. These practices may
give the appearance of short-term profitability.

8. Offering kickbacks to vendors in exchange for business

Ethical dilemmas in business can also arise when employees must choose what
is best for the company and themselves.

For example, a salesperson may be offered a large commission by a client in

exchange for cheating on the company’s taxes. The ethical dilemma then
becomes whether to accept the commission and cheat on the taxes or refuse the
commission and risk losing the business.

In these cases, it is often difficult to know the ethical choice, but good
employees will always try to do what they believe is right, even if it means
sacrificing their interests.

How To Handle Ethical Dilemmas At Work?

Follow these steps if you want to be prepared to handle ethical dilemmas in your
company.

→ Identify your ethical standards before you begin work

Making ethical decisions can be tricky, even for the most conscientious among
us. When faced with a choice between right and wrong, you may find
yourselves torn between our values and the demands of the situation.

However, by taking the time to understand your values, personal mission

statement, and goals, you can make the process of deciding what to do much
more accessible.

Communicate with your manager

In the business world, it is not uncommon for employees to encounter situations
that they feel are ethically questionable. Whether being asked to complete a task
that seems unethical or witnessing a manager behaving unethically, these
situations can be challenging to navigate.
The best course of action is to always consult with your manager. This way, you
can discuss the situation and reach an acceptable resolution for both parties.

→ Work with HR if necessary

Bringing up ethical dilemmas at the office can sometimes be met with no
response or reaction from management. As a result, you should go directly to
your human resource manager and ask them how you can best handle the
situation in this situation.

→ Know when to get out

If you discover that a company you work for is engaged in unethical behavior, it
is your responsibility to take action. You can start by raising your concerns with
your supervisor or HR department.

It’s essential to find a company that shares your ethical values, as this will create
a more positive and productive work environment. In the long run, leaving an
unethical company can benefit your career and peace of mind.

FAQ
What are some real-life examples of ethical dilemmas?
Here are some real-life examples of ethical dilemmas:
• Should you tell your friend if you know they are cheating on their significant
other?
• Is it ethically wrong to lie to protect someone’s feelings?
• If you witness a crime, is it your ethical duty to report it to the authorities?

What is an ethical problem in the workplace?

One common ethical dilemma is the “no good deed goes unpunished” scenario.
For example, imagine you are a good employee and always do your job to the
best of your ability. However, one day your boss asks you to do something that
goes against your morals or beliefs. What should you do?

What are some business ethics situations?

Countless business ethics situations could be enumerated, but some of the most
common revolve around issues of employees and conflicts of interest. For
instance, employees may find themselves in a situation where they must choose
what is best for their employer and themselves.

What are some real-life examples of ethical dilemmas?

One example of an ethical dilemma is when a good employee is asked to do
something against their morals. For example, an employee might be asked to
cheat on behalf of the company or perform unethical tasks

What are some scenarios that express ethics in business?

Every time employees treat a customer with respect, keep their word, or work
hard to do the right thing. They’re expressing ethics in business. Always
behaving ethically creates an environment where everyone can feel good about
doing business.