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What Are Ethical Issues in Business?

When referring to ethical issues in business, the meaning essentially comes down to what$$s seen as morally right or wrong within an organization and in the eyes of the public, not limited to customers and shareholders. These issues can take the form of company actions, employee activities and business decisions, among others. At the core, they demonstrate character, trustworthiness and integrity $($or lack of$).$

Ethics and Compliance Statistics

Just how prevalent are ethics issues in business? The Ethics & Compliance Initiative released its $2021$ Global Business Ethics Survey Report. Some of the most striking statistics included the following:

$49\%$ of U$.$S$.$ workers note observing conduct that goes against their company$$s standards of ethics

$$ The most prevalent forms of misconduct in the U$.$S$.$ include favoritism, management lying to employees, conflicts of interest, improper hiring practices, abusive behavior and health violations

$86\%$ of U$.$S$.$ workers report misconduct within their organization

$30\%$ of U$.$S$.$ employees say they feel pressured to compromise their company$$s standards of ethics

$85\%$ of employees working for companies with a culture emphasizing strong ethics note favorable outcomes

$$ However, the global median of companies with strong work cultures is just $14\%$

Abuse of Leadership

An example of ethical issues in business is abuse of leadership. This occurs when individuals who hold positions of power in an organization misuse their authority, whether with staff members or in relation to their administrative functions.

In addition to harassment, this could present in the punishment of employees who fail to meet unreasonable goals the manager has set. Alternatively, the manager may take credit for the work of a lower$-$level employee.

Beyond a leader$$s interactions with employees, abuse of power can take the form of falsifying reports, including sales, expense or payroll reports. Additionally, it could involve accepting gifts from clients or vendors when the organization has a policy against such action.

Deterring Power Trips

Be sure your company handbook clearly defines acceptable and unacceptable behavior in the workplace. Outline consequences for abuses of power. Additionally, provide leadership training so administrators can learn how to manage themselves and their team appropriately. Finally, intervene when necessary to quash destructive behavior.

Compliance

Compliance ethical issues in business are often tied to companies straying from the rules and laws of conducting business. Businesses are required to comply with all environmental, federal and state regulations. If they don$$t$,$ they can jeopardize the health and livelihood of those within and outside of their company.

Some businesses knowingly disregard these regulations to improve profits. An ethical issue in business example regarding compliance is a company that illegally dumps its waste. The company knows it$$s wrong but does it anyway because it reduces the cost of finding safe alternatives.

Guarding Against Compliance Issues

To avoid compliance problems in business, enact the following practices:

$$ Always follow governmental and company bylaws.

$$ Promote a culture that puts the long$-$term health of the company ahead of short$-$term greed and self$-$interest.

$$ Maintain awareness and adherence to any regulation or statute changes that can impact your business$$s operations.

$$ Stay focused on how actions affect others.

$$ Always act ethically and in the company$$s best interest.

Accounting

Another ethical issue in entrepreneurship and business can deal with accounting. Numbers don$$t lie. But when accountants and companies act unethically, they do$.$

Deceiving shareholders and others with a stake in your company$$s finances is a serious offense by both ethical and judicial standards.

Penalties can be levied in fines, imprisonment and can often lead to a company$$s closure. As an example, in the accounting realm, one of the most infamous business ethics issues in the news was the Enron scandal in $2001,$ in which company executives used questionable accounting practices to conceal financial troubles and give the appearance of higher profits.

Data Privacy

In a digital world, data privacy is at the forefront of ethical issues today in business. Your business and customer information is largely stored on computers, other smart devices or the cloud, and a shoddy IT governance policy can be just as damaging to privacy as a security hack.

Guarding Against Data Privacy Ethical Problems in Business

Maintaining data privacy is paramount. Consider using the following methods to avoid ethical issues in your business:

$$ Enact clear guidelines regarding how data is handled, stored and purged.

$$ Identify who manages and$/$or accesses data and ensure they understand how it should be managed$$ have them sign a contract affirming this.

$$ Establish and en