Unethical behavior in the workplace doesn’t have to be rampant or extravagant to be costly. Corporate scandals that culminate with the arrests of nefarious executives may garner the headlines. But the cumulative damages caused by the seemingly small indiscretions that employees and managers commit every day are just as bad.

Almost half of the 120 million workers in the United States have acknowledged witnessing ethical misconduct. Whether it’s a common infraction like misusing company time, mistreating others, lying, stealing or violating company internet policies, unethical behavior in the workplace is widespread. These are the causes.


Lacking a code of ethics and bad leadership example are two causes of ethical misconduct in the workplace.

No Code of Ethics

Employees are more likely to do wrong if they don’t know what’s right. Without a code of ethics, they may be unscrupulous. A code of ethics is a proactive approach to addressing unethical behavior. It establishes an organization’s values and sets boundaries for adhering to those values. Everyone is accountable.

Fear of Reprisal

When explaining why they don’t report ethical misconduct that they witness, people often say it is because they worry about the ramifications. They don’t want to damage their career or incur the wrath of the offender. Or, sometimes, they let the infraction go because they don’t know how to report it or they feel that their report may be ignored.

Impact of Peer Influence

If everyone is doing it, it must be right. Or is it? What’s to stop someone from padding their expense report when their co-workers do it but don’t get caught? Too often people lapse into the bad behavior of others. People behave unethically because they tend to perceive questionable behaviors exhibited by people who are similar to them — like their co-workers — to be more acceptable than those exhibited by people who they perceive as dissimilar, researchers say.

Going Down a Slippery Slope

Misconduct starts small, such as the exaggeration of a mileage report. But the longer it goes unchecked, the worse the offenses become. The few extra dollars that came from the mileage report may eventually be dwarfed by larger falsified expenses or perhaps even outright embezzlement. People who are faced with growing opportunities to behave unethically are more likely to rationalize their misconduct because unethical behavior becomes habit.

Setting a Bad Example

Ethical behavior starts at the top. Employees emulate their leaders, and the most significant factor in ethical leadership is personal character. Corporate leaders who employees view as demonstrating personal character are more likely to be perceived as setting a strong tone, researchers say. If employees see the boss knocking off early every day, they may do likewise.

Ignoring the small stuff will not necessarily lead to the type of scandals that make the news. But ethical misconduct could prove costly if it is not stopped. Identifying these causes of unethical behavior in the workplace could prevent problems and minimize damages.