In the UK, there has been a rise in ethical concerns among employees across a variety of sectors. According to the Institute of Business Ethics, the top 3 most reported ethical concerns of 2020 are associated with: behaviour and culture, treatment of employee and diversity and discrimination.

Unethical behaviour is the display of morally unacceptable behaviour and encompasses a variety of acts such as bullying and harassment.

This often has negative financial consequences for businesses as it transcends to every part of the organisation both internally (e.g. employee performance, relationships among staff and organisational culture) and externally (e.g. customer perception and brand reputation).

The Causes of Unethical Behaviour

Arguably, the cause of unethical behaviour could be the result of various factors:

• Organisational culture – some would say unethical behaviour stems from unethical workplace cultures that were enabled or not addressed by management earlier on. 
• Individual differences – others would argue that it is more on individual differences and that people have stronger or weaker ethical principles than others. So its believed to be either a case of bad apples in good barrels or good apples in bad barrels.
• Contextual enablement – there are cases where employees may be given leeway to bend or act against their organisational code of conduct for the benefit of the organisation. 
• Situational responses – employees witnessing these unethical behaviours may turn a blind eye or stay silent due to fear of voicing criticism towards their organisation. 

In my opinion, it is more of an interaction between all of these factors and the strength in influence of each factor will be subjective to individual experiences. I believe that the environment influences or ‘sets the scene’ of how we behave but we also have a responsibility to make decisions based on our own experiences whether we will adhere to that environment or go somewhere else.

Occasionally, we may be put in uncomfortable situations and may respond according to whatever we feel is the right action or decision for that particular situation. This may be regardless of the environment and our own ethical principles, and more dependent on our mental state at the time. For example, being stress or emotionally vulnerable will significantly impact your decisions and actions.

It is these ‘symptoms’ that plants a seed that facilitates the growth of more displays of unethical behaviour by employees until it becomes normalised. This normalisation creates an unethical culture that impacts every aspect of the business.

It is important to remember that business is about building trust and doing business with people requires trust. When individuals show that they are unethical, it breaks down that trust in their business relationship causing it to collapse. 

This applies to the trust given to the company when customers purchase their product or service, as well as to the trust between an employee and employer.

There is a strong movement among many multinationals to develop stronger ethical values due to pressure from consumers who refuse to purchase their products or services without any underlying ethical principle. 

Hence, the development of morally-grounded concepts such as CSR (corporate social responsibility) which force companies to be more socio-environmentally considerate.

The Effects of Unethical Behaviour on HR Functions

So why is acting unethically bad for HR and why should you care?

Unethical behaviour has a long-term, negative impact on employee performance.

The consequences of unethical behaviour can manifest through the following: 

1. Damages reputation and credibility

A lethal effect is the damage to your organisation’s reputation from both the consumer and employee point of view. 

A bad reputation may deter individuals from seeking to work for your company or may stop purchasing your product/service due to lack of trust. 

From a B2B perspective, it may also discourage others from doing business with you resulting in social exclusion.

2. Low employee engagement

Unethical behaviour can lower employee productivity by interfering with their morale. 

Employees who witness unethical behaviour lose motivation to work and can result in absenteeism or worse, they may commit similar unethical behaviours perceiving this to be normal.

3. High employee turnover and loss of valuable talent 

Some companies wonder why they have so many employees leaving in a short amount of time. 

Unethical behaviour is a potential factor as exhibiting inappropriate behaviour creates a toxic work environment and culture that demoralises talented employees.

4. Drain on resources 

Having unethical individuals at work is a drain on company resources and is damaging to the company’s bottom line as they are getting paid for low quality and unproductive work. 

This also results in increased sick days and low creativity and innovation which is not only financially costly to the company but may also lose competitive advantage.

5. Disrupt employee relations

The display of unethical behaviour interferes with relationship building among the employees and with their employer. 

When individuals witness a demonstration of unethical conduct it often creates disdain towards that individual, preventing teams from having effective collaboration.

In some cases, it triggers the occurrence of office politics where employees are perhaps forced to choose a side.

If unethical behaviour is being displayed by a manager or an employee with authority, the outcome are two-fold it either starts a cascade of unethical behaviours exhibited by workers due to the failure to lead by example, or they lose the respect of their staff.

Key Takeaways

Unethical behaviour will impact every part of your business and result in overall business deterioration if not regulated. It will influence your sales, the management team, your business relationships and your company’s ability to attract and retain talented employees. 

Most importantly, if not resolved immediately, the accumulation of unethical acts will drain your company resources and hinder your chances of becoming more efficient and competitive.

• Concerns about ethical issues among employees in UK companies are on the rise.
• Unethical behaviour stems from many causes depending on the company, including the environment, the individual and contextual responses such as turning a blind eye or fear of speaking up.
• There are long-term financial damage to the business if unethical behaviour remains unchecked and allowed to grow.