The 5 Biggest Ethical Issues Facing Businesses


From factory working conditions at the turn of the 20th century, to today’s emphasis on diversity training, the history of workplace ethics is the ongoing story of the relationship between employees and employers.

Ethical Issues in Business

According to the Global Business Ethics Survey of 2018, employees (40%) believe that their company has a weak leaning ethical culture, and that little progress has been made to mitigate wrongdoing. Here are some of the ethical issues in business and real-world cases of how these ethical issues have affected companies.

1.    Unethical Accounting

“Cooking the books” and otherwise conducting unethical accounting practices is a serious problem, especially in publicly traded companies. One of the most infamous examples is the 2001 scandal that enveloped American energy company Enron, which for years inaccurately reported its financial statements and its auditor, accounting firm Arthur Andersen, signed off on the statements despite them being incorrect. When the truth emerged, both companies went out of business, Enron’s shareholders lost $25 billion, and although the former “Big Five” accounting firm had a small portion of its employees working with Enron, the firm’s closure resulted in 85,000 jobs lost.

Although the Federal Government responded to the Enron case and other corporate scandals by creating the Sarbanes-Oxley Act in 2002, which mandates new financial reporting requirements meant to protect consumers, the “Occupy Wall Street” movement of 2011 and other issues indicate that the public still distrusts corporate financial accountability.

2.    Social Media Ethics

The widespread nature of social media has made it a factor in employee conduct online and after hours. Is it ethical for companies to fire or otherwise punish employees for what they post about? Are social media posts counted as “free speech”? The line is complicated, but it is drawn when an employee’s online activities are considered disloyal to the employer, meaning that a Facebook post would go beyond complaining about work and instead do something to reduce business.

For example, a Yelp employee wrote an article on Medium, a popular blogging website, about what she perceived as awful working conditions at the influential online review company. Yelp fired her, and the author said she was let go because her post violated Yelp’s terms of conduct. Yelp’s CEO denied her claim. Was her blog post libelous, or disloyal conduct, and therefore a legitimate cause for termination? In order to avoid ambiguity, companies should create social media policies to elucidate what constitutes an infringement, especially as more states are passing off-duty conduct laws that prohibit an employer’s ability to punish an employee for online activities.

3.    Harassment and Discrimination

Racial discrimination, sexual harassment, wage inequality – are all costly ethical issues that employers and employees encounter on a daily basis across the country. According to a news release from the Equal Employment Opportunity Commission (EEOC), the EEOCC secured $505 million for victims of discrimination in the private sector and government workplaces in 2019. The EEOC states that there are several types of discrimination, including age, disability, equal pay, genetic information, harassment, national origin, race, religion, retaliation, pregnancy, sex and sexual harassment.

One type of discrimination, families responsibilities discrimination (FRD), has had an increase in cases of 269% over the last decade, even as other forms of employment discrimination cases have decreased. FRD is found in every industry and at every level within the company, according to a 2016 report by the Center for WorkLife Law at the UC Hastings College of Law. The report defines FRD as “when an employee suffers an adverse employment action based on unexamined biases about how workers with caregiving responsibilities will or should act, without regard to the workers’ actual performance or preferences.” FRD includes many types of family responsibilities and caregiving, including pregnancy and eldercare. For example, a father being fired for wanting to stay home to care for his sick child, or a pregnant employee not being allowed to take a break even though it was her doctor’s orders.

These cases are expected to continue to rise due to the growing number of family members who have disabilities, the increase in people 65 and older who need care, the increase of men who are becoming caregivers, and growing expectation for employees that they can work and provide family care. Employers will need to adjust to these employee perspectives and restructure how work can be accomplished to reduce FRD.

4.    Health and Safety

The International Labour Organization (ILO) states that 7,397 people die every day from occupational accidents or work-related diseases. This results in more than 2.7 million deaths per year. According to the Occupational Safety & Health Administration, the top 10 most frequently cited violations of 2018 were:

  1. Fall Protection, e.g. unprotected sides and edges and leading edges
  2. Hazard Communication, e.g. classifying harmful chemicals
  3. Scaffolding, e.g. required resistance and maximum weight numbers
  4. Respiratory Protection, e.g. emergency procedures and respiratory/filter equipment standards
  5. Lockout/Tagout, e.g. controlling hazardous energy such as oil and gas
  6. Powered Industrial Trucks, e.g. safety requirements for fire trucks
  7. Ladders, e.g. standards for how much weight a ladder can sustain
  8. Electrical, Wiring Methods, i.e. procedures for how to circuit to reduce electromagnetic interference
  9. Machine Guarding, e.g. clarifying that guillotine cutters, shears, power presses and other machines require point of operation guarding
  10. Electrical, General Requirements; i.e. not placing conductors or equipment in damp or wet locations

Physical harm isn’t the only safety issue to be aware of, though. In 2019, an ILO report focused on rise of “psychosocial risks” and work-related stress.  These risks, which include factors like job insecurity, high demands, effort-reward imbalance, and low autonomy, have been associated with health-related behavioral risks, including a sedentary lifestyle, heavy alcohol consumption, increased cigarette smoking, and eating disorders.

5.    Technology/Privacy

With developments in technological security capability, employers can now monitor their employees’ activity on their computers and other company-provided electronic devices. Electronic surveillance is supposed to ensure efficiency and productivity, but when does it cross the line and become spying? Companies can legally monitor your company email and internet browser history; in fact, 66% of companies monitor internet connections, according to 2019 data from the American Management Association. 45% of employers track content, keystrokes, and time spent on the keyboard, and 43% store and review computer files as well as monitor email. Overall, companies aren’t keeping this a secret: 84% told employees that they are reviewing computer activity. Employees should review the privacy policy to see how they are being monitored and consider if it can indicate a record of their job performance.

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