Even in the 21st century, businesses are run by people, not computers. Being people, they face ethical challenges and sometimes flunk them. The ethical issues in business take different shapes than in schools or the home, even though they stem from the same impulses. It takes effort to keep a company ethical, but it's worth it. Going to the dark side can destroy a firm's reputation, and even lead to lawsuits or criminal charges.
Ethical Challenges and Cash
Most business owners see themselves as honest people. When money gets tight, however, it can trigger lots of ethical problems in business.
- Do you cheat on environmental or safety compliance to keep the lights on?
- Do you pay your workers late or hold off paying vendors?
- Do you let some bills go unpaid because your cash flow is low?
Even a business that doesn't engage in wage theft or fraudulent accounting may skate along the thin edge of ethics at times.
Harassment and Discrimination
Sexism and bigotry can crop up anywhere. In the working world, they're particularly toxic because of the power some employees have over others. Harassment not only makes employees miserable, it can affect their pay and their career. Movie mogul Harvey Weinstein, for example, has been accused of harassing and assaulting dozens of women. Women who resisted say Weinstein worked to blacklist them and ruin their careers.
If harassment and discrimination happen, that produces added ethical challenges: how does the company deal with the problem? Companies such as Fox News and MGM have "solved" harassment problems by covering them up or discrediting the victim. Seems they'd sooner protect the corporate image or its high-ranking employees than do the right thing.
It's perfectly normal for managers to hire people from their social network. It becomes an ethical issue if the social connection becomes more important than actual ability. Nepotism– hiring a relative – and favoritism are despised because they tell other workers that job performance is less important than blood, or being buddies with upper management. Even if the choice is a good one, it can alienate workers and raise doubts about the manager's decisions.
Protecting Client Privacy
It seems every week another company announces that customers' confidential data has been exposed or hacked. Sometimes it can't be helped: hackers are very good at what they do. Other hacks are preventable and only happen because of corporate negligence. For example, some security experts told Wired magazine in 2017 that Equifax could probably have prevented its massive data breach with better security.
If companies are negligent about security it becomes an ethical issue. It's also an ethical issue if they don't notify customers promptly. Equifax waited two months after learning of the breach.
Keeping Employees Safe
There are millions of workplace accidents and illnesses reported each year. According to the Bureau of Labor Statistics, there were 2.9 million non-fatal workplace injuries and illnesses in 2016. Some of those accidents were due to negligence with employers ignoring the legal requirements for keeping the workplace safe. Common problems often include not using guards on sharp cutting equipment, and not taking steps to prevent falls or electrical accidents.
- Forbes: How Small Business Owners Walk the Ethical Line
- Daily Beast: Hey, Hollywood: Hire the Women Whose Careers Were Destroyed by Harvey Weinstein
- Fortune: The 10 Biggest Business Scandals of 2017
- Vanity Fair: It Happened One Night ... at MGM
- Ethics Alarms: Why Don't People Understand What's Unethical About Nepotism?
- Wired: Equifax Officially Has No Excuse
- Florida Tech: The 5 Biggest Ethical Issues Facing Businesses
- Bureau of Labor Statistics: EMPLOYER-REPORTED WORKPLACE INJURIES AND ILLNESSES – 2016
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements. He's also run a couple of small businesses of his own. He lives in Durham NC with his awesome wife and two wonderful dogs. His website is frasersherman.com