Ethical Issues in Business: The Definition

Ethics is a studies what is morally right or wrong, just or unjust. In a broader

sense, ethics reflects on human beings and their interaction with nature and with
other humans, on freedom, on responsibility and on justice.
Before going any further, it’s important to understand what we mean by ethical
issues in business today.
Ethics is a broad term. At its core, acting ethically in business means building a
company around integrity and trust as well as complying with regulations.
However, there are many other issues that fall under the ethical issues in business
definition, including empathy, diversity and acceptance, and carrying out business
in accordance to the company’s values.
Types of Ethical Issues in Business
If you are to run an ethical business, you first need to know what types of issues
you can expect to face and may need to overcome.
1. Discrimination
One of the biggest ethical issues affecting the business world in is discrimination.
Discrimination can occur at businesses of all sizes. It applies to any action that
causes an employee to receive unequal treatment.
Discrimination is not just unethical; in many cases, it is also illegal. There are
statutes to protect employees from discrimination based on age, gender, race,
religion, disability, and more. Nonetheless, the gender and race pay gaps show
that discrimination is still rampant. Other common instances of discrimination
include firing employees when they reach a certain age or giving fewer
promotions to people of ethnic minorities.
2. Harassment (it is illegal behavior toward person that cause mental or
emotional suffering)
The second major ethical issue businesses face is harassment, which is often
related to racism or sexism. This can come in the form of verbal abuse, sexual
abuse, teasing, or bullying. Harassment can come from anyone in the company, as
well as from customers. In particular, it is an ethical issue for the business if a
supervisor is aware of harassment from a client and takes no action to prevent it.

In addition to causing a toxic workplace, harassment can cause employees to

leave the company prematurely. Harassment can have a long-term impact on
employees: psychologically, in terms of earnings, and even impacting a person’s
entire career path.
3. Unethical Accounting
Publicly-traded companies may engage in unethical accounting to appear more
profitable than they actually are.
4. Abuse of Leadership Authority
Abuse of power often manifests as harassment or discrimination. However, those
in a leadership role can also use their authority to pressure employees to skip
over some aspects of proper procedure to save time (potentially putting the
employee at risk), punish workers who are unable to meet unreasonable goals, or
ask for inappropriate favors.
In addition, abuse of authority can extend beyond the workforce. Managers can
use their position to change reports, give themselves credit for the work of a
subordinate, misuse expenses, and accept gifts from suppliers or clients.
5. Nepotism and Favoritism
Nepotism is when a company hires someone for being a family member.
Favoritism occurs when a manager treats an employee better than other workers
for personal reasons.
Not only are nepotism and favoritism unfair, they are also disheartening to
employees. Workers often find they have to work much harder to receive a
promotion or other rewards.
6. Privacy
Employees have recently found that the distinction between work life and
personal life has become less clear. This is mainly due to the advances in
technology.
For one thing, employers may punish for posts on social media, particularly if they
complain about work conditions or the company as a whole. Employers may even
fire workers who post controversial statements that go against company values.
Another ethical issue surrounds the use of devices belonging to the company.
Employers can now monitor all worker activity on laptops and cellphones.
Whereas this is supposed to check that employees are sticking to work-related
activities during the business day, some employers take it further, tracking
keystrokes and reading emails. The question is where to draw the line between
monitoring and spying.
7. Corporate Espionage
The opposite to the above can also happen: workers can misuse company data.
An employee may steal intellectual property or provide a competitor with
information about a client. Usually, this is for monetary purposes, but it can also
help an employee secure a position at another firm.
How to Avoid Ethical Issues in Business
A common method businesses use to manage ethical issues is to simply deny the
problem exists. Companies often combine this with a gag order to stop employees
talking. If you want to maintain a good reputation, this is the worst thing you can
do. After all, sooner or later, the unethical behavior will come to light.
A better strategy is to take an active role, seeking out and correcting unethical
behaviors as early as possible. There are a few key points that every business
owner needs to implement.
Create Company Policies
Make sure employees read company policies when they start working at your
business. Include both a privacy policy and a social media policy. The first should
tell workers what computer activity and other information you will be able to
access; the second should lay out how you expect employees to behave publicly
on social media.
Monitor Only Pertinent Information on Laptops and Other Devices
It may be necessary to track employee activity to some extent (particularly if you
are concerned that workers are spending too much work time on personal
activities — which, in itself, can be an unethical behavior). However, you don’t
want to go overboard and create a culture of distrust.
Provide Ongoing Training
This should cover aspects like harassment prevention. It’s worthwhile seeking
outside support for this from a reputable agency or professional, as low-quality
training can even make the problem worse.
Require Employees to Sign a Nondisclosure Agreement
Employees should sign a nondisclosure agreement before they start working with
any sensitive information. To create an effective deterrent, specify that violating
agreements will result in severe penalties.
Create a Meritocracy
Strive to create a meritocracy where you reward employees according to
performance.