Unethical Business Practices

Business ethics – some more cynical sorts would say that that’s a contradiction in terms. But anybody who has ever been in a managerial position knows that, without a solid moral foundation in which you ground your business dealings, you’re constructing a house on sand. This article will spotlight some unethical business practices that may be tempting to a new manager and explain why, although they can have short-term benefits, their long-term effects on your company can be incredibly negative.

One of the primary areas where unethical business practices can come into play is in public communication. While nobody expects a company to be completely transparent to the outside world, recent events with companies like Enron and Tyco have revealed executives struggling to hide the truth of the firm’s dealings from shareholders, the media, and the public at large, to disastrous effect. In all matters in which the public has a legitimate interest, including product safety, it is imperative to deal with the public with absolute honesty. That does not, of course, mean that you need to share all of the grisly details – omission is no sin, of course. As companies have learned over and over, trying to bury a problem only makes it come back with a vengeance later. In addition, transparency will aid you in your dealings with the media, who can be an ailing company’s worst enemy.

A common business practice that skirts the bounds of ethicality is the assignment of blame when something goes wrong. Of course, as human beings we’re hard-wired to try to avoid responsibility for our own mistakes, but that doesn’t mean our corporate bodies should too. Too many companies try to offload the responsibility of a product or service failure onto a third party instead of accepting that they could improve themselves. This tactic is increasingly ineffective, as consumers are more suspicious of profit motives than ever before. It’s all right to share blame – because no one problem is just one person’s fault – but completely abnegating any responsibility is a very unwise move, no matter what the consequences.

Another common ethical transgression is in regards to a company’s environmental impact. This refers not only to the ecological damages caused by operations, but also to the social and cultural effect that the company’s products and operations have on the communities that they serve. In a free-market economy, it can be difficult to forgo profits in exchange for more responsible operations, but more and more companies are being forced to make that choice with the understanding that ethical business will ensure a more stable economic future for everybody, not just the CEO.

Of course, ethics are in the eye of the beholder – what some may consider unethical, others may defend as a business remaining competitive in an increasingly difficult marketplace. Judging the difference is one of the hardest tasks that a manager must deal with. In these cases, honesty and transparency are the best policy – discuss the matter with other members of the management team, as well as trusted subordinates. Ethics are developed by group consensus, so the best way to understand if an action is unethical is to turn to the wisdom of the group.

I hope this article has helped you understand the common pitfalls of running an ethical business in a sometimes unethical world.


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