The Ethical Imperative: Speaking Up in the Face of Unethical Corporate Practices

By Christian Rook

19.1.2024

Imagine the following scenario, you are sitting in your top-management meeting and you hear your boss utter an idea, a suggestions, an order that goes totally against your core values but also against anything the company at large stands for and proclaims in their values and ethical guidelines. What do you do?

If you are like many managers, you wil do absolutely nothing. Again. Like many times before. Why? There is too much on the line for you, right? You got this job just recently, you don’t want to jeopardize it already, right? There is a big year-end bonus coming up. One manger told me: “We need to do something, this decision is wrong and will not work. It might even crash the company.” When I asked him, why he id not stand up and say anything, he answered: “Me? No, I am not crazy, that is €5k off my year-end bonus, right there. I will not risk that. You know how he is.”

I like works councils and unions. You know why? Because these cannot be fired. They will always stand up and say it how it is (or how they se it, anyway). However, I have witnesses even those strong heads of works councils crumble under the sheer pressure of unethical leaders. Why? I have no clue. There is most likely also future interests at stake. If we do not do anything and close our eyes, this tornado will just pass by.

In the corporate world, ethical conduct is not just a moral obligation but a cornerstone for sustainable success. However, when a company veers towards unethical practices, especially driven by top management, it falls upon everyone within the organization, from junior employees to middle management, to voice their concerns. This article explores the ethical duty of various levels of a company's hierarchy to speak up against unethical practices orchestrated by top management.

Ethical Foundations in Corporate Governance

Corporate ethics is rooted in the principle of doing what is right, not just what is profitable. This foundation supports a company's longevity, stakeholder trust, and legal compliance. When top management adopts unethical strategies, it threatens these very pillars, potentially leading to catastrophic consequences including financial loss, legal liabilities, and reputational damage.

The Role of Employees in Upholding Ethics

Employees at all levels are often the first to notice shifts in ethical practices. Their proximity to daily operations puts them in a unique position to identify unethical behaviors. While it can be intimidating to challenge higher authority, employees have a moral responsibility to report unethical practices. This can be done through internal channels like whistleblowing systems, or, in extreme cases, external regulatory bodies. Their voice is crucial in initiating a check-and-balance mechanism within the company.

Middle Management: The Ethical Bridge

Middle management acts as a bridge between the workforce and top executives. They play a critical role in either endorsing or challenging the directives from above. Ethical middle managers are vital in either stopping unethical practices from trickling down or in escalating employee concerns to higher echelons. They must balance loyalty to the company with their ethical duty, often navigating complex organizational politics.

Top Management's Ethical Accountability

Leadership sets the tone for a company's ethical climate. When top management makes decisions that are ethically questionable, it is not only their duty to reassess these choices but also the responsibility of those around them to hold them accountable. Other members of top management, board members, and shareholders must exercise their power to challenge decisions that could harm the company's ethical standing.

The Challenges of Speaking Up

Speaking up against unethical practices is fraught with challenges. Fear of retaliation, job insecurity, and being ostracized are legitimate concerns for employees at all levels. Companies must foster an environment where ethical concerns can be raised without fear, protecting those who speak up from negative repercussions.

The Way Forward: Creating an Ethical Culture

To encourage speaking up, companies must:

1. Establish Clear Ethical Guidelines: Clearly articulated values and ethical codes provide a benchmark against which actions can be measured.

2. Implement Robust Whistleblowing Mechanisms: Effective channels for reporting unethical behavior are essential.

3. Foster a Culture of Transparency and Accountability: Encouraging open dialogue and holding all levels of management accountable for their actions promotes an ethical workplace.

4. Provide Ethics Training: Regular training on ethical conduct and decision-making can empower employees to identify and respond to unethical practices.

5. Support from the Top: Leadership must unequivocally support ethical practices and the voicing of concerns.

The ethical duty to speak up against unethical practices in a company transcends hierarchy. From junior employees to top executives, each member of a corporation holds the responsibility to safeguard the company's ethical integrity. By fostering a culture of transparency, accountability, and open communication, companies can not only avoid the pitfalls of unethical practices but also thrive in a business landscape where integrity is as valued as profitability.