Unethical business behavior is one of the most challenging issues for organizations today. It has the potential to lead to a downfall of an organization and therefore, it is important that it is dealt with utmost seriousness.
In today’s business environment, when competition is cut-throat, more and more individuals are resorting to unethical business practices to succeed. The common reason behind unethical behavior is that ‘business is warfare; and everything is fair in love and war.’ Highly qualified individuals, people who have had the best of University education are found to be indulging in unethical business practices and the sad part is that they don’t feel guilty about it. Blame it on our popular sub-culture, an individual who cheats his way up the ranks in organization is thought of as ‘cool’ and ‘smart’ and the age-old saying, “Hard work is the key to success”, has been replaced by “Smart work is the key to success.” It is very important that we go back to the basics and help employees in clearly distinguishing between ethical and unethical business practices.
Reasons for Unethical Behavior
Pressure from supervisors is one of the biggest reasons why people indulge in unethical practices. When managers set unrealistic and unachievable targets, they are indirectly communicating to their sub-ordinates that, “I want it done, no matter what”. Sub-ordinates on the other hand are under immense pressure to complete their targets as their career prospects, depend to a large extent, on their performance, and if the performance is not up to what the manager expects, the chances of growth are slim.
Personal greed and a desire to further one’s career are the other reasons that push people to indulge in unethical business practices. A lot of times, executives are promised a huge bonus if they achieve their targets and the lure of money compels them to cheat. Employees may also do certain things to prolong their career in a company as the thought that they may be fired is too repulsive to them. These factors compel employees to such an extent that they don’t think twice before behaving in an unethical manner, such as selling unsafe products, keeping customers in the dark, manipulating systems to their own advantage, etc.
Another reason that can lead to unethical behavior in the workplace is ignorance about the company’s policies. We as social beings have a clear-cut definition of what is legal and what is forbidden by law, but it is very difficult for organizations to come up with a handbook that covers essentially everything. Although every organization has a ‘Code of Conduct’ and the employees are made to go through it when they are hired, it leaves room for a lot of issues which can be manipulated and used to one’s advantage. Researchers do agree that it is important to have stringent policies in place to curb unethical behavior, but organizations should focus more on instilling ethical values in its employees.
In the book, The Ethical Traps, Robert Hoyk and Paul Hersey have extensively enlisted the reasons that cause employees to err and do things that are malicious. They have stated that sometimes employees may be displaying unethical behavior without even knowing it as they perceive that their acts are in accordance with what the organization is looking for, that is, maximization of profits. They also point out that most of the reasons are psychological in nature, and as they have put it, these are “webs of deception” which make it difficult for us to differentiate between ethical and unethical practices.
There are myriad examples of unethical business behavior that one gets to witness or hear about in today’s business environment. Some common examples are:
● One grave unethical businesses is manipulation of an organization’s financial reports with an intention to lure more investors or portray a positive image of the company. We all know that the accounting process is largely controlled by organizations themselves, and often vital information is misconstrued. Regulations in recent years have curbed this practice to a large extent, but still there are loopholes that the regulators need to look into.
● Invoice fraud is another common unethical business practice and because of this, customers end up paying higher amounts for a product. Employees may also inflate invoices so that they get their share of commission.
● Most business houses have gone online and it has created a new set of challenges as identity thefts have become commonplace. It is not only a breach of security, but it also puts the confidential data of an organization at risk.
● Sharing company’s confidential information with competitors or using it to your own financial gain strictly against the ethics of business. It can not only call for termination of an employee, but also a lawsuit.
It is imperative for organizations to keep a vigil on its employees, but as mentioned earlier, it is more important that you create an atmosphere where employees feel pride in their organization and stay away from committing any such acts. The Enron and Raj Rajaratnam scandals shook the very foundation on which an organization is built. In these scandals, it was surprising or rather disappointing that the owners and the CEOs were not only conducting their businesses unethically, but they were also encouraging other stellar managers to indulge in the scam. Therefore, it is high-time that we have strict rules in place to check the acts of people who think of themselves as invulnerable. Unethical business practices have no place in today’s business environment and we as individuals, also have a responsibility that we conduct ourselves ethically in our organizations.