Ethical Dilemmas

What would you do if you were checking out a purchase and the cashier accidentally gave you too much change? Would you happily walk away, feeling like you’ve scored a victory, or would you return the excess money?

We often encounter ethical dilemmas, and unfortunately, not everyone adheres to moral principles. Many people overlook the consequences of their actions, prioritizing their own interests above those of others.

Consider the cashier example again. If you leave the store with the extra money, thinking, “They should do their job better,” or, “It’s fine; the company can absorb the loss,” you might not consider the potential repercussions for the employee. What if the cashier has to make up the difference at the end of their shift? Worse yet, what if they lose their job over it?

Let’s explore a classic moral dilemma: Imagine you are in charge of a train heading towards people on the tracks. If you switch the train’s path, it will only kill one person instead. It’s not an easy choice, is it? Most people might instinctively choose to save many lives. But what if that one person is someone you know—your mother, spouse, or child? Would your answer remain the same?

Each year, one in seven large corporations engages in unethical practices, prioritizing their personal gain over those impacted by their actions. We've seen this in the banking industry, where employees opened millions of unauthorized accounts, or in automotive companies which misled consumers about emissions. The repercussions of such actions extend beyond financial loss; they reflect a profound ethical deficiency.

So why do some companies engage in such counterintuitive behaviour regarding ethics? Is it ego? A desire to avoid appearing weak? Pressure from shareholders to meet or exceed quarterly expectations? Despite increasing regulations to prevent unethical decisions, these practices persist daily.

The lack of ethics affects not just executives but all levels of an organization. Employees may cut corners in the rush to earn money, leading to mistakes that necessitate redoing work. Others might believe that acting ethically won’t help them get ahead, leading to decreased productivity.

Unethical behaviour can also create tension among employees. When some disregard the rules to gain advantage, it breeds a workplace culture of distrust. Employees fear being exploited for someone else's gain, which is detrimental to the organization since successful businesses rely on collaboration.

Moreover, if a manager displays unethical behaviour, they risk losing the respect of their team. It’s challenging to run a successful business without respected leaders. Unfortunately, many organizations witness managers abusing their power, creating a toxic environment. Few regulations exist to counter workplace abuse unless it pertains to race, gender, or nationality, and even then, it varies by country.

The quickest way to lose employee trust is through dishonesty. Research shows that one in five employees report that their manager has lied to them in the past year. The severity of these lies can vary; some may consider "white lies" acceptable for protecting someone’s feelings. However, dishonesty inevitably comes to light, and employees will lose trust when they sense a lack of transparency.

When unethical behaviour becomes public, a business suffers a significant loss of reputation and trust that is challenging to restore. Companies become associated with negative actions, lingering in the minds of consumers, particularly in an age where corporate social responsibility is paramount.

According to economist Alexander Wagner, the motivation behind ethical behaviour is what he calls "protected values." When these values are deeply ingrained in a person, they can resist the temptation to engage in unethical actions, choosing to act according to their moral principles instead.

Wagner conducted an experiment where participants were told they would receive $5 for each time a coin landed on heads in a private setting. Though the odds of flipping heads four times consecutively are low, 40% of participants claimed they had achieved it, exceeding the probability. Interestingly, 60% did not report such a result even though no one was monitoring them, demonstrating a commitment to their ethical values.

While some companies engage in unethical practices, many adhere to ethical standards due to their protected values, setting them apart in organizational culture.

When managers lead ethically, employees are likely to follow suit, aligning their decisions with moral principles. This alignment fosters higher productivity, improved morale, and a sense of pride in their workplace. When employees operate on the foundations of honesty and integrity, the entire organization benefits. Employees in companies that uphold high ethical standards are more likely to excel in their roles and remain loyal to the organization.

Ethical business practices not only enhance employee morale and loyalty but also directly impact both short-term and long-term profitability. A company’s public reputation plays a vital role in attracting investors. If a business is perceived as unethical, investors will be less likely to buy shares, knowing that reputation could tarnish their interests.

I hope this discussion has sparked deeper reflection on the ethical decisions within your organization and their ramifications on employees, customers, and your overall reputation. I’d love to hear your thoughts on business ethics, along with any examples of positive or negative ethical practices you’ve encountered in the workplace.