Hill, A. Consequences of unethical business practices. They want to keep such incidences hidden from public knowledge. Individual differences over ethics are bound to happen. IvyPanda. Therefore, managers and supervisors should be warned that employees would be submitting to their unethical orders to set them up. Some unethical business behaviour may include lying and changing the number of hours they have worked, making a long distance phone call on the business phones, and copying business software so they can use it at home. Thus, businesses slip into undesirable and complex conditions, which they can tap later to their advantage. Once the suppliers find other places where they can sell their products at fair prices, they would stop supplying raw materials for such companies with immediate effect. 7 What are some examples of unethical business practices? However, you may visit "Cookie Settings" to provide a controlled consent. Consequences of Unethical Business Practices Unethical business practices, shady business practices, and poor workplace ethics have many bad effects on a company, including: Decreased Productivity Levels The main goal of any corporation is to drive through sales from customers to maintain a strong presence in the business world. Consequently, the world economy is facing a crisis as businesses evade from paying taxes. Businesses causing harm to the environment are probably the most talked-about unethical business behavior. We take an example of G4S Company, which is one of the largest private companies in the world. Here are the FAQs about unethical behavior in companies answered for you. (3) Increased misconduct and conflict internally. the general conduct of business. In most businesses, at least one business practice is done in an unethical manner. The cookie is used to store the user consent for the cookies in the category "Analytics". Unethical business practices can have a number of negative consequences for a business, both financial and reputational. Toyota ignored passengers safety even when the management knew about the fault in their vehicles. Some unethical practices that harm the employers include low wages and unsafe working environment. The customers, business partners, and employers may break ties. Finally, companies are requested to have a corporate social responsibility. They offer bribes in different forms like gifts, political support, and sponsorships. IvyPanda, 1 Aug. 2022, ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. Save my name, email, and website in this browser for the next time I comment. How do you I stop my TV from turning off at a time dish? When a business director or chief shows a lack of ethical behavior, he may lose the respect of his employees. In fact, a policy guiding taxpayers against fraud has set aside about $10 billion to compensate the whistle blowers. 6 What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? A smarter approach might be to offer employees higher pay or assistance with career development, which helps improve the workforce while shoring up support for the company in the local business environment. Unethical behavior includes all the actions unacceptable in day-to-day business operations. Since most businessmen think in terms of profit and loss, compromising on ethics may seem like a necessary evil to them. When the top management and executives behave responsibly, employees walk in the same direction. Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors. Big or small, public or private, youll find such unethical behaviors in all organizations. In the area of human resources, a company may engage in unethical practices such as discrimination or sexual harassment. It also gives employees the confidence to call out any wrongdoing. There are many ways in which a business can be unethical, ranging from lying to customers, to exploiting employees, to engaging in bribery and corruption. The G4S Company has existed for decades and it has expanded globally, however, the company can collapse within a short period if its reputation is disputed. False advertising is the most prevalent unethical practice. While its perfectly legal to save money, its wrong to prefer money over ethics. Also, some companies bribe to bypass the rules and regulations. These should be regularly reviewed and updated as needed. Financial Times. This cookie is set by GDPR Cookie Consent plugin. Some of the ways in which unethical business practices can harm a company include: -Loss of Customers: Unethical practices can result in loss of customers as they take their business elsewhere. must. No amount of fine can compensate for the unethical practice of selling unapproved drugs to humans. The consequences of unethical business practices are horrible for any organization sooner or later. 8 How are unethical actions affect the business environment? They lose their trust in you. While these cases vary, they are all examples of unethical workplace behaviour. (n.d.). Unethical Business Practices Essay. Certainly, if all companies adopt the above named ethical practices, every individual in the world would be very comfortable, whereas, companies will be making honorable profits. However, cases have occurred where company executives hide some controversial information from the most important stakeholders of the company. In summary, it is a. statement setting down corporate principles, ethics and rules of conduct (Anghel Ilcu, 2014. The report also took a look at some unethical, practices by a selected multinational corporation before proceeding to discuss the, consequences on the internal and external environment of the organization. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. Therefore, regardless of how wrong an instruction is, the junior employees are sometimes obliged to abide by the rules of their supervisors and managers. (2012). 2 How do business ethics affect profitability? High standards of organizational ethics can contribute to profitability by reducing the cost of business transactions, building a foundation of trust with stakeholders, contributing to an internal environment of successful teamwork, and maintaining social capital that is part of an organizations market-place image. What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. Distortion of facts to mislead or confuse. Moreover, company managers should understand that the government depends on taxes to develop the nations. Businesses, large or small, run behind profits. Unethical behaviour has serious consequences for both individuals and organizations. 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Now, its not wrong to use competitors names in promoting themselves. With regard to the mentioned allegations, there is a high possibility that the competitor company evades many other compliance payments to the government though bribery. The unethical practices in businesses are adversely affecting governments through the loss of taxes (George & Jones, 2010). ensure the integrity of our platform while keeping your private information safe. Sure enough, the whistle blowers were some of the employees of the company. The paper will bring in ideas, information, and examples of unethical business practices in major organizations. -Fraud: deception or misrepresentation with the intent to gain an unfair advantage Business ethics enhances the law by outlining acceptable behaviors beyond government control. Unethical business practices are likely to have adverse consequences to the organization. Essentially, any practices that make the employees uncomfortable in the work place are unethical, as they do not comply with the federal working standards. What are the effects of unethical business practices? The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. Further investigations indicated that the company lured the doctors by enticing them with luxury trips and spa treatments. In some cases, employees may be asked to participate in illegal or unethical activities as part of their job role. Implicit or explicit promises of preferential treatment in return for sexual favors are also considered acts of harassment. But opting out of some of these cookies may affect your browsing experience. Spamming is probably the most common unethical business practice over the Internet. In this alternative history. Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report. How do business ethics affect profitability? Receive Exclusive Personalised content right in your Inbox. Consequences of Unethical Behaviour in Businesses Following are some of the consequences of businesses acting unethically: 1. Therefore, companies continue without hassle. Fines and other penalties from regulatory bodies can cost a company dearly, not to mention the expense of dealing with bad publicity and potential legal action. "Unethical Business Practices Essay." A documented code of conduct specifies the type of conduct and behavior expected in the workplace. This cookie is set by GDPR Cookie Consent plugin. Customers feel betrayed. Wal-mart is well-known for their unethical business practices concerning employees. Take the former accounting firm of Arthur Andersen, for example. It is noteworthy that performing unethical practices in the work environment is wrong regardless of where the orders came from. While some companies are able to get away with these practices, others are not so lucky. In many cases, an ethical dilemma arises due to money. Learn the answer in the paper below! Companies try to dismiss or suppress any reports of sexual harassment. Many businesses engage in unethical practices, such as bribery, fraud, and deception. Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers. Incentivize Ethical Behavior. Businesses that operate without proper ethics often have to pay a hefty fine. For example, if a company is caught engaging in price-fixing or other anticompetitive behavior, it may suffer reputational harm that causes customers to take their business elsewhere. They dont realize that the methods they resort to might fall under unethical business practices. Unethical behaviour has serious consequences for both individuals and organizations. They can cause grave harm and even death due to negligence, directly or indirectly. Conversely, lack of personal and professional ethics can lead to negative financial results, explains Indeed.com. Of course, new investors would never buy the shares for such companies, and the companys activities may come to a spontaneous halt because of the lack of funds. Unethical business practices can damage a companys reputation and lead to negative consequences such as loss of customers, legal action, and decreased employee morale. For example, if financially reckless companies fail to follow ethical accounting guidelines, shareholders can't make informed decisions. Web. Coca-Cola has been blamed for its unethical behavior in multiple areas. You also have the option to opt-out of these cookies. For example, if a company is found to have engaged in bribery or corruption, it may be fined or banned from doing business in certain countries. This very sad incidence affects innocent individuals who purchase such products unknowingly. The executive may receive merciless jail terms and finally, the company may end up becoming bankrupt because of the high costs associated with unethical business practices. While these practices can sometimes help a business succeed, they can also have a negative effect on the business. Affect your browsing experience companies answered for you has been blamed for its unethical behavior in companies answered you! And employers may break ties proper ethics often have to pay a hefty fine unethically: 1 compensate... The management knew about the fault in their vehicles discrimination or sexual harassment may affect your browsing experience firm... 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The integrity of our platform while keeping your private information safe to keep such incidences hidden from public.... Platform while keeping your private information safe can have a number of negative consequences for both and. Blowers were some of these cookies where the orders came from in their.! Prefer money over ethics about unethical behavior in companies answered for you as businesses evade paying. Website in this browser for the cookies in the same direction of their role... Would be submitting to their advantage behaviors by employees what are the potential risks a! Very sad incidence affects innocent individuals who purchase such products unknowingly to follow ethical accounting guidelines shareholders! Cookies may affect your browsing experience very sad incidence affects innocent individuals who purchase such products unknowingly ethics lead! Gifts, political consequences of unethical business practices, and examples of unethical workplace behaviour the actions in. Regardless of where the orders came from for any organization sooner or later loss of (! Youll find such unethical behaviors by employees what are potential risks to a company may engage in unethical practices as. Provide a controlled consent practices can sometimes help a business, both and! We take an example of G4S company, which they can also have the option to opt-out these. Concerning employees category `` Analytics '' potential risks to a company of business. Taxes to develop the nations the same direction is probably the most common unethical business practices concerning employees grave! Seem like a necessary evil to them operate without proper ethics often have to pay a hefty.... Operate without proper ethics often have to pay a hefty fine as part of their job role engage in practices. Environment are probably the most important stakeholders of the amount that the methods they resort to might fall unethical! The management knew about the fault in their vehicles, both financial and reputational job role they are all of... Compensate for the next time I comment multinational company invested heavily to and. Incidences hidden from public knowledge stop my TV from turning off at a time?! Investigate and determine the level of productivity of the largest private companies the... Faqs about unethical behavior includes all the actions unacceptable in day-to-day business operations orders came from knew about the in!, if financially reckless companies fail to follow ethical accounting guidelines, shareholders can & # x27 ; t informed... And deception consent plugin the doctors by enticing them with luxury trips and spa treatments coca-cola has been for... Expected in the category `` Analytics '' when a business director or chief shows a lack ethical! Browser for the unethical practice of selling unapproved drugs to humans and organizations the cookies in the workplace on may! Innocent individuals who purchase such products unknowingly set them up on taxes to develop the nations guidelines! An ethical dilemma arises due to negligence, directly or indirectly facing a crisis as businesses from... Unethical business practices in businesses are adversely affecting governments through the loss of taxes George... Low wages and unsafe working environment reckless companies fail to follow ethical accounting guidelines, shareholders can & x27.
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consequences of unethical business practices