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WHY ETHICAL PROBLEMS OCCUR IN BUSINESS

Obviously, ethics problems in business appear in many forms. Although not common or universal, they occur frequently. Finding out what is responsible for causing them is one step that can be taken toward minimizing their impact on business operations and on the people affected. Some main reasons are as follows:

Personal Gain and Selfish Interest

Personal gain, or even greed, cause some ethics problems. Businesses sometimes employ people whose personal values are less than desirable. They will put their own welfare ahead of all others, regardless of the harm done to their employees, the company, or society. In the process of hiring employees, managers make efforts to weed out ethically undesirable applicants, but ethical qualities are difficult to anticipate and measure. The embezzler, the expense-account padder, the bribe taker, and other unethical persons can slip through. Lacking a perfect screening system, businesses are not likely to eliminate this kind of unethical behavior entirely. More so, firms have to proceed carefully when screening applicants, taking care not to trample on individuals’ rights in the search for potentially unethical employees.

A manager or an employee who puts his or her own self- interest above all other considerations is called ethical egoist. Self-promotion, a focus on self-interest to the point of selfishness, and greed are traits commonly observed in an ethical egoist. The ethical egoist tends to ignore ethical principles accepted by others, believing that ethical rules are made for others.

Altruism – acting for the benefit of others when self-interest is sanctified – is seen to be sentimental or even irrational. “Looking out For The Number One” is the ethical egoist motto.

Competitive Pressure On Profits

When companies are squeezed by tough competition, they sometimes engage in unethical activities to protect their profits. This may be especially true in companies whose financial performance is already substandard. Research has shown that poor financial performers and companies with lower profits are more prone to commit illegal acts. However, a precarious financial position is only one reason for illegal and unethical business behavior, because profitable companies can also act contrary to ethical principles. In fact, it may be a single-minded drive for profits, regardless of the company’s financial position, that creates a climate for unethical activity.

Pre-fixing is a practice that often occurs when companies vigorously engage in a market with limited growth potential. Besides being illegal, pre-fixing is unethical behaviour towards customers, who pay higher prices than they would if free competition set the price. Companies fix prices to avoid fair competition and to protect their profits.

Other kinds of unethical behavior also occur under competitive pressure. Companies can coerce suppliers into lowering their prices through non-market pressures, thereby receiving less than a fair price. When company officials have a strict bottom-line mentality shaped almost exclusively by market competition, they may overlook the ethical claims of their stakeholders. Doing so has the unfortunate and needless effect of pitting business against society.

Business Goals versus Personal Values

Ethical conflicts in business sometimes occur when a company pursues goals or uses methods that are unacceptable to some of its employees. Whistle-blowing may be one outcome if the employee goes to the public with a complaint after failing to convince the company or correct the alleged abuse.

Another recourse for employees caught in these situations is a lawsuit. This option has become less of a financial and professional risk for employees in recent years as a result of various governmental protection acts.

Bernard TaiwoBernard Taiwo
Bernard Taiwo
I am Management strategist, Editor and Publisher.

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