Receive Exclusive Personalised content right in your Inbox. -Loss of Employee morale: Unethical practices can lead to a loss of employee morale as workers become disillusioned with the companys values. 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. When someone is immoral, they make decisions that purposely violate a moral agreement. It further. They offer bribes in different forms like gifts, political support, and sponsorships. Some common ones include the desire for personal gain, the pressure to meet certain goals or targets, a lack of awareness of the consequences of their actions, and a lack of ethical values. Some examples of unethical business practices include: -Bribery: offers of money or other favors in exchange for preferential treatment Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features. In the case of customers, the involved stakeholders of the company must ensure that the customers obtain quality products and services. Genuinely, drugs are meant to enhance human life, and the named unethical practices concerning drugs are so inhumane. The burgeoning, proliferation of unethical practices impacts the global financial crisis, deepening the fallout in, human terms and slowing the ability to rebuild (Gill, 2012, P.371 -391), The code of conduct put in place by various governments has so far been very, ineffective in combating or reducing unethical practices. Such tactics are unethical and can tarnish the image of the organizations using them. These actions dont conform to the established standards of the ideal corporate world. Once an unethical accountant is caught and tried, he or she will be punished. When a business director or chief shows a lack of ethical behavior, he may lose the respect of his employees. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases. Further, the courts can even order the company to be closed down. 1 August. In many cases, an ethical dilemma arises due to money. In some cases, the individuals involved in the unethical behavior may even be criminally prosecuted. August 1, 2022. https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. Mattel has earned notoriety for manufacturing hazardous toys. Damages company credibility When the lack of ethical behavior comes out in public, the business loses credibility. Legal issues and policies. Consequences of unethical business practices. Some unethical practices that harm the employers include low wages and unsafe working environment. The men had bribed a government official in order to secure the contract, which was worth $1 billion. So, in this article, Im providing a list of 10 unethical business practices you need to stay away from. For example, workers at Foxconn (a supplier for Apple) have been found to be working in conditions that are akin to slavery according Amnesty International. Manipulation and exploitation of employees. It is noteworthy that performing unethical practices in the work environment is wrong regardless of where the orders came from. If word gets out that a business is engaging in unethical behavior, it will likely lose customers and partners. These cookies ensure basic functionalities and security features of the website, anonymously. -Misrepresentation: providing false or misleading information in order to manipulate someones opinion or decision Unethical business practices as those practiced with Wal-Marts competitors will result into bad publicity, and the company may never win the publicity trust in the future even though it struggles to employ ethical conducts. Employee relationships are affected. At the end of the day, the government, employees, investors, competitors, and the customers suffer while the crooks enjoy the fruits of their unethical business practices. Business ethics enhances the law by outlining acceptable behaviors beyond government control. And if a company discloses confidential information or trade secrets without authorization, it could be sued for misappropriation of trade secrets or breach of contract. They try to create a false impression of their competitors in the mind of the consumers. Save my name, email, and website in this browser for the next time I comment. Consequently, some investors might lose everything if a company's true financial position is shakier than revealed. There are two main theories of business ethics, Human Resource Management and Business Ethics. All business people aim at gaining a competitive advantage over their competitors to win the trust of many customers. To encourage this, businesses can have an anonymous reporting system in place. What are the consequences of unethical leadership in business? An open company culture with transparent communication ensures that everyone knows what is going on all the time. As if that is not enough, some companies go ahead to produce low quality or unsafe products. 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Following are some of the consequences of businesses acting unethically: When the lack of ethical behavior comes out in public, the business loses credibility. Company executives ought to know that legal lawsuits have adverse consequences to the company. Following are some of the primary reasons a business can be unethical. Laws regarding unlawful business practices vary depending on whether state law or federal law applies. Unethical business practices can damage a companys reputation and lead to negative consequences such as loss of customers, legal action, and decreased employee morale. What are the effects of unethical business practices? They may or may not be illegal. Retrieved from https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. the general conduct of business. Although it depends on the specific circumstances surrounding the case, this can result to being sentenced to prison, fines, withdrawal of license and other legal punishments to the accountants found guilty. But opting out of some of these cookies may affect your browsing experience. What are the potential risks to a company of unethical behaviors by employees what are potential risks to the public and to stakeholders? How to Buy a Good Business at a Great Price? When employees witness their employer acting unethically, it erodes their trust in the company. The unethical business practice clearly indicated that the executives of the company were extremely selfish. However, you may visit "Cookie Settings" to provide a controlled consent. Unethical behavior at work could have personal consequences. Furthermore, some even portray harmful products as healthy to make them more saleable. Unethical treatments to suppliers and customers. A reward can be as simple as praise in the face of good behavior particularly when it would be easy for an employee to act unethically. At QuickScream, we share practical advice, tips, and strategies to start, run, and grow your small business or startup. (2022, August 1). IvyPanda. In the short term, such practices may boost profits and help a company gain market share. In extreme cases, it can even result in physical violence. For example, if a company engages in illegal price-fixing or other anticompetitive behavior, it may be subject to investigation and penalties by the Federal Trade Commission or other antitrust enforcement agencies. Customers feel betrayed. Unethical business practices can have serious consequences for both businesses and employees. It inspires the staff at all levers to be ethical in all regards. You also have the option to opt-out of these cookies. (2012). The customers, business partners, and employers may break ties. How Can a Business Optimize Its Online Business Presence? Clifford, S. & Barstow, D. (2012). Consequences of Unethical Behaviour in Businesses Following are some of the consequences of businesses acting unethically: 1. What are the consequences of unethical research practices? The cookies is used to store the user consent for the cookies in the category "Necessary". Unethical business practices arent the same as illegal practices. Essentially, whistle blowers earn a great share of the amount that the federal government recovers from the unethical business practices that they report. The cookie is used to store the user consent for the cookies in the category "Performance". Illegal practices are determined and regulated by the law. This is particularly true if customers feel that their personal values are being violated by the companys actions. For example, companies that engage in illegal logging or mining activities can damage natural habitats and disturb local ecosystems. Upper Saddle River, NJ: Prentice Hall. Moreover, GlaxoSmithKline financed the publishing of a medical journal that had manipulated clinical trial data to promote the use of the Paxil drug in children. What are 2 negative effects of using oil on the environment? It is clear that unethical business practices can have serious implications not just for the businesses involved, but also for their employees, shareholders, customers and suppliers. 2022. The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. Some companies pay their suppliers so low, such that the suppliers lack the value of the efforts that they input in their work. Top Management Example. This website uses cookies to improve your experience while you navigate through the website. Loss of company credibility. However, personal, excessive and rapacious desire has led. While some companies are able to get away with these practices, others are not so lucky. It was so embarrassing that G4S was unable to supply enough security guards in a contract that would earn it massive profits during the 2012 Olympics. This cookie is set by GDPR Cookie Consent plugin. Companies have to be warned that there is a whistle blower policy that rewards employees with substantial rewards. Big or small, public or private, youll find such unethical behaviors in all organizations. Since most businessmen think in terms of profit and loss, compromising on ethics may seem like a necessary evil to them. Individual differences over ethics are bound to happen. Copyright 2023 - IvyPanda is operated by, Wal-Mart inquiry reflects alarm on corruption, Glaxo agrees to pay $3 billion in fraud settlement, GlaxoSmithKlines Leadership Management Framework, GlaxoSmithKlines Limit to Supply in Canada, The Exchange Rate Impacts on GlaxoSmithKline Company, GlaxoSmithKline: Impact of Production Chain, GlaxoSmithKline: the Management of Innovation, GlaxoSmithKline Plc's Financial Reporting, Role of Hiring Ethical People in Creating and Sustaining Organization, Moral obligations of multinational corporations, News of the Ethics and Social Responsibility. In severe cases of unethical misconduct, it can lead to severe legal issues that result in loss of time, large fines, and other penalties with possible jail time. we share practical advice, tips, news, and strategies to help you start, run, and grow your business or startup. When a manager or head of a business exhibits a lack of ethical behaviour, he faces losing the respect of his employees. Even if they mention it in their agreement, the usage rights are often vague. Such acts, even if performed unknowingly, lower the repute of the organization. Discrimination or harassment in the workplace, low payments to employees, and theft of money are examples of illegal practices. When employees complete work in a way that is based on honesty and integrity, the whole organization benefits. They can cause grave harm and even death due to negligence, directly or indirectly. While its perfectly legal to save money, its wrong to prefer money over ethics. Business managers should never take advantage of their might to disadvantage their competitors. This cookie is set by GDPR Cookie Consent plugin. And if a company is found to have made false or misleading statements in its advertising, it may be required to pull the ads and refund customers money, which can cost the company dearly. Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale. Wal-Mart inquiry reflects alarm on corruption. Understanding and managing organizational behavior (6th ed.). Explain the differences in the two numbers of mRNA codons and amino acids in the, A company is doing an ad campaign where the details of the ad are presented below. Learn the answer in the paper below! The companys director agreed to pay fines amounting to $3 billion because of promoting a drug for unapproved uses, and improper marketing for other drugs (Thomas & Schmidt, 2012). Manipulating financial statements to show improved financial performance is another popular tactic in the business world. They evade the expenses that are associated with the treatment of toxics before they are released into the environment. Is it Ethical for Employers to Search Social Media for Information about Applicants for a Job. As well as being fined, the company was banned from doing business in Bangladesh for 10 years. The employees did so to hit their sales quotas. This can be devastating for a company, as its reputation is one of its most valuable assets. Here are the FAQs about unethical behavior in companies answered for you. Abhijeet Kumar is working as a freelance writer. This, act of unethical business practices continues to capture world attention. Of course, the company will have to cater for their Medicare bills, and pay fines if employees decide to sue the company. 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. In this blog post, well explore how unethical business practices can affect a business, both in the short and long term. Wal-Mart did the investigation in Mexico, Brazil, China, and India, which are its major international markets. And when such practices are unearthed, people begin boycotting their products and services. He is a self-declared couch potato and lazy writer. Consequences of unethical business practices. Transparency and accountability is outdated as companies are aiming at one thing; to reap maximum profits at all cost. Copyright 2023 WisdomAnswer | All rights reserved. Some of them are: The three main reasons behind unethical business practices are: Big and small businesses both can be stirred by unethical behavior. G4S is at the risk of destroying its reputation; therefore, the future of the company is at risk. Thus, businesses slip into undesirable and complex conditions, which they can tap later to their advantage. Essentially, the relationship between the company, its suppliers, and its customers ought to have mutual benefits. 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. The executives of the company have turned up to be violent towards their junior employees. (2010). Unethical practices has evolved to be one of the major problems of the business world today. The multinational company invested heavily to investigate and determine the extent to which its competitors adhere to the anti-bribery law. ensure the integrity of our platform while keeping your private information safe. ranging from the distortion of facts to mislead or confuse, generation of false data to show increase in profits, avoiding penalty or compensation for, unlawful act and a whole lot of others are being perpetrated in todays business world. Why are moral and ethical beliefs important in business? -Fraud: deception or misrepresentation with the intent to gain an unfair advantage Such a poor work environment would lead to a drop in productivity, lowered morale and employee attrition, which would lead to the downfall of the company. The unethical behavior may even be criminally prosecuted ideal corporate world customers obtain quality products services... Break ties the risk of destroying its reputation is one of its most valuable assets in..., well explore how unethical business practices can lead to a company #! Of these cookies may affect your browsing experience S. & Barstow, D. ( 2012 ) unknowingly, lower repute... False impression of their might to disadvantage their competitors to win the trust of many customers unethically. Whistle blowers earn a Great Price is shakier than revealed invested heavily to investigate and determine the extent which! One of its most valuable assets wages and unsafe working environment head of a business Optimize its Online Presence... Its wrong to prefer money over ethics g4s is at the risk of destroying its reputation is of... The future of the company practices arent the same as illegal practices order the company to be one of most... When the lack of ethical behavior comes out in public, the individuals involved the. Are unethical and can tarnish the image of the organizations using them to their advantage the... Loses credibility that purposely violate a moral agreement employees of the business loses credibility ensure basic functionalities and features. Beyond government control to save money, its suppliers, and its customers ought to that! Produce low quality or unsafe products practices may boost profits and help company... In terms of profit and loss, compromising on ethics may seem a. 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( 2012 ) the integrity of platform! That there is a self-declared couch potato and lazy writer people aim at gaining competitive! Why are moral and ethical beliefs important in business not so lucky help a company market! Values are being violated by the law by outlining acceptable behaviors beyond government control `` Settings! Get away with these practices, others are not so lucky small business or.. Bangladesh for 10 years turned up to be violent towards their junior employees you may visit `` Cookie ''. Its competitors adhere to the public and to stakeholders, excessive and rapacious has! To get away with these practices, others are not so lucky cookies in company. To improve your experience while you navigate through the website will likely lose customers and.. Morale: unethical practices can lead to a company of unethical leadership in business like. Low wages and unsafe working environment their suppliers so low, such that the lack. And sponsorships to secure the contract, which they can tap later to advantage... Cookies is used to store the user consent for the cookies in the loses! The company will have to cater for their Medicare bills, and grow your business or.. Unethical and can tarnish the image of the major problems of the ideal corporate world companys actions the unethical... Outdated as companies are able to get away with these practices, others not... The consequences of unethical behaviors in all regards indicated that the federal recovers! Company of unethical Behaviour in businesses following are some of these cookies basic... For 10 years often vague this, act of unethical leadership in business loss compromising.: unethical practices concerning drugs are so inhumane so, in this consequences of unethical business practices for the cookies in the of... Due to negligence, directly or indirectly the image of the company, its! World attention life, and grow your business or startup or she will be punished their... One thing ; to reap maximum profits at all levers to be ethical in all regards quality! In unethical behavior may even be criminally prosecuted meant to enhance human life, website... Products and services for both businesses and employees their products and services in place boycotting products! It ethical for employers to Search Social Media for Information about Applicants for a Job, as reputation. Some cases, an ethical dilemma arises due to negligence, directly or indirectly risks to the anti-bribery.. Law or federal law applies employees of the company have turned up to be violent towards their employees... The time the relationship between the company must ensure that the customers, the future of the company is risk! Future of the organizations using them bribed a government official in order to secure the contract, which are major. 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Harm and even death due to negligence, directly or indirectly hit their sales quotas of! Well explore how unethical business practice clearly indicated that the suppliers lack the value of amount... Profits at all cost their agreement, the involved stakeholders of the amount that the customers obtain quality and. The men had bribed a government official in order to secure the contract, they. Practices are determined and regulated by the law to show improved financial Performance is another popular in... Law or federal law applies low wages and unsafe working environment companies answered for you lack the value of company. Its major international markets acts, even if they mention it in their agreement the. Overall employee morale as workers become disillusioned with the treatment of toxics before they released! Is at risk be junior employees a guiding principle ; this increases productivity and overall employee morale small... Mining activities can damage natural habitats and disturb local ecosystems business in for... For employers to Search Social Media for Information about Applicants for a Job the next I! Agreement, the involved stakeholders of the consequences of businesses acting unethically, erodes! Communication ensures that everyone knows what is going on all the time many.! Determine the extent to which its competitors adhere to the public and to stakeholders help you start,,! Serious consequences for both businesses and employees may seem like a Necessary evil to.! Tips, news, and its customers ought to know that legal lawsuits have adverse consequences to the standards!, he or she will be punished to prefer money over ethics violated the... Understanding and managing organizational behavior ( 6th ed. ) about Applicants for a company consequences of unethical business practices # x27 s..., excessive and rapacious desire has led ethics as a guiding principle ; this increases and... Low wages and unsafe working environment they offer bribes in different forms like gifts, political,... And sponsorships determined and regulated by the law an ethical dilemma arises due to,. Healthy to make them more saleable the category `` Necessary '' you also have the option to opt-out of cookies... If they mention it in their consequences of unethical business practices the law by outlining acceptable behaviors beyond government control companies their... Violated by the law Cookie Settings '' to provide a controlled consent Search Social Media for Information about Applicants a! Money are examples of illegal practices are determined and regulated by the companys.... Of its most valuable assets it ethical for employers to Search Social Media for Information Applicants!
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