What You Need to Know About Unethical Behavior in the Workplace

Unethical behavior in the workplace is an issue that can significantly impact organizations and their employees. Often, unethical behaviors arise when employees face conflicting values and are left to choose between competing interests.

It is important for HR professionals and leadership teams to understand workplace ethics. This helps create a healthy and productive work environment. In this comprehensive guide, we discuss what unethical workplace behavior is, why it happens, how it affects employees, and ways to prevent it.

What is Unethical Behavior in the Workplace?

Unethical behavior in the workplace refers to any action or conduct that violates moral principles, professional standards, or company policies. Examples of unethical behavior include misconduct, which undermines trust, damages reputations, and can lead to severe consequences for both individuals and organizations.

For example. the Enron scandal in 2001 wiped out $74 billion in shareholder value and led to the dissolution of Arthur Andersen LLC. It also caused thousands of employees to lose their jobs.

In 2016, Wells Fargo’s unauthorized accounts scandal resulted in a 15% drop in stock price and cost investors around $3 billion.

Unethical behaviors in the workplace can range from minor infractions to severe misconduct. Unethical activity can have significant impacts on employees and the organization as a whole. It could, for instance, create a toxic company culture and decrease employee retention.

Common Types of Unethical Workplace Behavior

There are many forms of unethical behaviors in the workplace. Recognizing the differences between each can help prevent issues from escalating. Here are the most common.

Misusing Company Time and Resources

In any organization, time and resources are incredibly valuable assets that contribute to the bottom line and the overall success of the organization. However, employees who misuse these can cause inefficiencies, lost productivity, and financial strain.

Here are some instances of employees misusing company time and resources:

• Taking excessive personal time during work hours
• Using company resources for personal business
• Playing games excessively during work hours
• Browsing social media excessively during work hours
• Falsifying time records
• Claiming unworked overtime

Dishonesty and Deception

Workplaces with dishonest employees are at risk of having a toxic environment where collaboration and transparency suffer. It can also potentially damage the company’s relationships with business partners and consumers.

Here are some instances of dishonesty in the workplace:

• Lying to colleagues
• Providing false information in an effort to cover up mistakes
• Taking credit for other’s work
• Misrepresenting products or services to make sales

In the same line, theft and fraud are also considered dishonest and unethical practices. Fraudulent behaviors include:

• Stealing company property or supplies
• Embezzling funds or manipulating financial records
• Padding expense accounts
• Accepting bribes or kickbacks
• Check tampering

Abusive Behavior

Abuse can negatively impact a person’s well-being. It can also create a toxic environment where employees do not feel safe and supported. This can lead to higher turnover rates and a damaged company reputation.

Here are some instances of abusive behavior in the workplace:

• Bullying, intimidating, or humiliating colleagues
• Making offensive remarks or discriminatory comments
• Engaging in sexual harassment

Violation of Company Policies

Company policies are put in place to ensure smooth operations and fairness in the workplace. When it’s violated, it can disrupt the workflow and create an unproductive (or even dangerous) work environment.

Policy violations do not just affect the company itself. It can also lead to bigger issues, including possibly violating legal regulations.

Here are some instances of policy violations:

• Breaching confidentiality agreements
• Ignoring safety protocols
• Violating cybersecurity or company internet policies
• Failing to disclose conflicts of interest

Unethical Leadership Practices

Leaders play a crucial role in setting the tone for ethical behavior in the workplace. However, when they engage in unethical practices, they create a toxic environment that affects the entire department or organization.

Here are some instances of unethical leadership practices:

• Pressuring employees to engage in unethical behavior
• Encouraging employee theft
• Ignoring or covering up misconduct
• Setting unrealistic performance expectations
• Retaliating against whistleblowers

Causes and Contributing Factors

Understanding the root causes of unethical behavior is crucial for developing effective prevention and intervention strategies. Several factors contribute to the prevalence of unethical conduct in the workplace, including:

Organizational Culture

While this is not always the case, unethical behavior can arise in the workplace when success is measured solely by performance metrics without any regard for the company’s values. Employees in this kind of environment may feel pressured to cut corners or engage in dishonest practices just to meet the metrics.

Management Practices

Leadership styles and management practices significantly influence employee behavior. When leaders put unrealistic expectations and excessive pressure to meet targets, employees may feel frustrated. This can lead to ethical lapses.

Additionally, a lack of support from management and inadequate training can cause some employees to engage in questionable behaviors.

Peer Pressure

When one employee engages in unethical practices, they could influence another co-worker to do the same. This can cause a domino effect, with other workers following suit—either to gain acceptance from their peers or to avoid being perceived as a non-conformist.

Lack of Accountability

When employees do not face consequences for misconduct, it can embolden other workers to also engage in unethical behavior. This is because a lack of punishment signals that such behavior is permissible.

To resolve this encourage other employees to report suspicious activity in the workplace. Ideally, whistleblowers should be given protection to make sure they are safe from retaliation.

How Unethical Behaviors Impact Organizations

Unethical or illegal behavior in the workplace can have far-reaching effects on both the organization and its employees. For the business, it could cause significant financial loss, a damaged reputation, and legal liabilities.

Among employees, unethical behavior could lead to a decrease in employee morale and an increase in employee dissatisfaction and disengagement. It could also disrupt trust and foster suspicion among employees. Ultimately, unethical behaviors will prompt employees to seek work elsewhere.

How Can Employees Ensure Ethical Practices in the Workplace

Employees play a crucial role in upholding company values and ensuring ethical behavior in the workplace. Employees are responsible for reporting any unethical practices, allowing company leadership to take action and maintain ethical standards within the organization.

Here are some responsibilities typically expected of employees:

1. Reporting Suspected Misconduct: Employees should proactively report any unethical behavior they observe through established reporting systems.
2. Supporting Colleagues: Encourage and assist colleagues who speak up against unethical practices to foster a supportive and ethical workplace community.
3. Ensuring Confidentiality and Anonymity: Implement confidential reporting systems to safeguard the identities of whistleblowers. This encourages more individuals to come forward without fear of exposure or retaliation.
4. Providing Support Systems: Offer resources such as counseling and legal assistance to whistleblowers to demonstrate the organization’s dedication to their well-being and ethical standards.

How Can Leaders Ensure Ethical Practices in the Workplace

Leaders are responsible for setting a positive example of ethical behavior and implementing preventive measures in the workplace. Ethical leadership teams can foster trust in the workplace and create loyal employees.

Here are some ways leaders can encourage ethical practices in the workplace:

1. Setting a Positive Example: Leaders should demonstrate honesty, fairness, and transparency to encourage similar behavior throughout the organization.
2. Implementing Robust Governance Structures: Leaders should establish clear policies, procedures, and oversight mechanisms that promote ethical conduct and ensure accountability at all levels.
3. Promoting Transparency and Open Communication: When leaders encourage open dialogue about ethical concerns, they are effectively providing platforms for employees to voice their opinions. This will foster a culture of trust and mutual respect.
4. Internal Audits: Leaders should conduct regular audits to identify potential ethical breaches. This allows the organization to implement timely interventions and necessary improvements.

Preventing Unethical Workplace Behavior

While employees and leadership teams play a large part in maintaining ethical behavior in the workplace, it is equally important for organizations to take proactive measures to keep moral standards intact.

There are numerous prevention strategies organizations can implement to avoid unethical behavior. This includes:

Establish Clear Ethical Guidelines

Develop a detailed code of conduct that outlines which behaviors are acceptable and which violate ethical standards. For example, misusing company time or the company’s internet should be explicitly addressed in the guidelines.

Conduct Regular Ethics Training

Managers and leaders should attend ongoing training programs aimed at educating them about ethical principles and the consequences of unethical behavior.

Implement Anonymous Reporting Mechanisms

Ensure there are channels where employees can raise concerns anonymously. These channels empower staffers to report on possible violations of your company’s guidelines without fear of retaliation for whistleblowing.

Addressing Unethical Behavior in the Workplace

When an employee reports possible ethical violations, it is important for organizations to take action and address the concern. This can help prevent recurrence and foster a healthier work environment.

There are three main steps in addressing unethical or illegal behavior in the workplace.

Investigate Allegations Thoroughly and Impartially

When a complaint is lodged, make sure you take the time to conduct a thorough and unbiased investigation. Ensure all parties involved are heard and decisions are made based on factual evidence.

Apply Consistent Disciplinary Measures

After the investigation, implement uniform disciplinary actions. Doing so reinforces your organization’s commitment to ethical standards. It also deters future misconduct.

Implementing uniform disciplinary actions for unethical behavior reinforces the organization’s commitment to ethical standards and deters future misconduct.

Address Underlying Systemic Issues

Addressing the concern at the surface level will not be effective in the long term. However, identifying and rectifying the root causes of unethical behavior will help prevent recurrence. Some root causes include:

• Organizational Culture
• Self-Interest
• Lack of Awareness
• Lack of Ethics Training
• Fear of Speaking Up
• Scarce Resources or Opportunities

The Prevalence of Unethical Behavior in the Workplace

Based on the latest statistics and research, here are some key findings on the prevalence of unethical behaviors in the workplace environment.

• 65% of employees globally observed at least one violation of company policies in the past year. (ECI Global Business Ethics Survey, 2023)
• 14% of employees said they engaged in unethical behavior in the past year. (LRN Corporation, 2024)
• 72% of employees reported incidents of misconduct in the workplace. (GBE, 2023)
• 46% of employees who reported misconduct said they experienced retaliation. (GBE, 2023)
• 45% of employees who witness unethical behavior said they are more likely to be looking for a new job. (Gallup, 2024)