Polluting the environment should be outdated, as companies ought to employ practices that are environmental friendly. How does unethical financial reporting affect a companys stockholders? Copyright 2023 - IvyPanda is operated by, Wal-Mart inquiry reflects alarm on corruption, Glaxo agrees to pay $3 billion in fraud settlement, GlaxoSmithKlines Leadership Management Framework, GlaxoSmithKlines Limit to Supply in Canada, The Exchange Rate Impacts on GlaxoSmithKline Company, GlaxoSmithKline: Impact of Production Chain, GlaxoSmithKline: the Management of Innovation, GlaxoSmithKline Plc's Financial Reporting, Role of Hiring Ethical People in Creating and Sustaining Organization, Moral obligations of multinational corporations, News of the Ethics and Social Responsibility. Financial unethical practices can include insider trading or embezzlement. This website uses cookies to improve your experience while you navigate through the website. Unethical business practices are likely to have adverse consequences to the organization. Take the former accounting firm of Arthur Andersen, for example. Thats what theyre set up for. (2012). The vulnerable employees have no choice but to be submissive. In summary, it is a. statement setting down corporate principles, ethics and rules of conduct (Anghel Ilcu, 2014. False advertising is the most prevalent unethical practice. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. The cookies is used to store the user consent for the cookies in the category "Necessary". Secondly, unethical practices can damage a companys reputation, making it harder to attract customers, partners and investors. Many large corporations have been embroiled in scandal in recent years, from bribery and corruption to tax evasion and fraud. Recently, due to an increase in the demand, the amount of time that customers wait in the queue has, Claire is severely injured in a car accident.The local hospital cannot treat Claire's injuries.In order to survive, Claire must be flown via Helicopter to a hospital in a bordering state.Prior to, Bono is a musician.He sells his neighbor a gently used lawn mower at a deeply discounted price.The neighbor is dissatisfied with the performance of the lawn mower.Can the neighbor sue Bono under the. Companies would spend millions of dollars to employ strategies that would enable them to enhance their sales. For example, if a company is caught engaging in price-fixing or other anticompetitive behavior, it may suffer reputational harm that causes customers to take their business elsewhere. Unethical business practices as those practiced with Wal-Marts competitors will result into bad publicity, and the company may never win the publicity trust in the future even though it struggles to employ ethical conducts. Moreover, the affected individuals would be junior employees of the company who may suffer from lifestyle diseases. Regular reporting and auditing will discourage employees from being unethical. You can lose your job and reputation, organizations can lose their credibility, general morale and productivity can decline, or the behaviour can result in significant fines and/or financial loss. The company would meet the full payments of hunting excursions and all sorts of luxuries to win the doctors, and force them to promote some unapproved drugs. Bribery and corruption are common in many business dealings. What are the consequences of unethical research practices? Employee relationships are affected. 2022. This can have a major impact on a business, as it can lead to a decrease in quality, an increase in turnover, and difficulty attracting new employees. Many companies inflate the claims while marketing, exaggerate the desirable features, and hide the side effects. By clicking Accept All, you consent to the use of ALL the cookies. Employees make better decisions in less time with business ethics as a guiding principle; this increases productivity and overall employee morale. Web. Genuinely, drugs are meant to enhance human life, and the named unethical practices concerning drugs are so inhumane. These should be regularly reviewed and updated as needed. To increase ethical behavior, you need to use rewards as well as punishment. And if a company is found to have made false or misleading statements in its advertising, it may be required to pull the ads and refund customers money, which can cost the company dearly. Essentially, the relationship between the company, its suppliers, and its customers ought to have mutual benefits. He is a self-declared couch potato and lazy writer. Course Hero is not sponsored or endorsed by any college or university. "Unethical Business Practices Essay." Manipulation and exploitation of employees. In some cases, unethical business practices can lead to criminal charges. Unethical behaviour has serious consequences for both individuals and organizations. When the leaders deviate from ethical business practices, everyone finds unethical behavior rational. The cookies is used to store the user consent for the cookies in the category "Necessary". What are considered as better consequences in ethics? Pressure from the supervisors, with hourly tracking, led them to take this unethical route. Incentivize Ethical Behavior. What are the consequences of unethical practices? Employees incorporate the ethics of top-level managers of the organization. In 2013, it was revealed that Walmart had been using forced labor at its suppliers factories in China. Corporations establish business ethics to promote integrity among their employees and gain trust from key stakeholders, such as investors and consumers. Unethical business practices are likely to have adverse consequences to the organization. Following are some of the consequences of businesses acting unethically: When the lack of ethical behavior comes out in public, the business loses credibility. Customers agree to receive email newsletters unknowingly. Top Management Example. Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet. What are the consequences of unethical leadership in business? A companys ultimate goal is to increase profits, which lead some businesses to profit-motivation conflicts. We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. Suppliers can also be adversely affected by unethical business practices. Save my name, email, and website in this browser for the next time I comment. August 1, 2022. https://ivypanda.com/essays/unethical-business-practices-and-their-effects-term-paper/. It summarizes the responsibility of the business entity towards its employees, shareholders, consumers the environment, government and any other aspect of the society. activities of an organization in dealing with employees, customers, government agencies. Sexual harassment is another common issue found in unethical companies. Ethical issues can arise in a variety of areas, including marketing, human resources, and finance. Companies should comply with the governments rules of conserving the air, water, and the general environment. Some unethical practices that harm the employers include low wages and unsafe working environment. Wal-Mart was a victim of unfair business practices in the recent past. Many companies go to extreme lengths to maximize their revenues. What are seven consequences of unethical business practices? -Fraud: deception or misrepresentation with the intent to gain an unfair advantage 1. effect. professional specifically for you? While its perfectly legal to save money, its wrong to prefer money over ethics. Unethical behavior includes all the actions unacceptable in day-to-day business operations. And when theyre, it can cause severe damage. 1. What are 2 negative effects of using oil on the environment? Better treatment of employees instills loyalty in them. Consequences of unethical business practices. Such tactics are unethical and can tarnish the image of the organizations using them. Legal issues and policies. It encompasses opposite-sex harassment as well as unwanted physical contact and advances by the same sex. Even after paying the fine amounting to $3 billion, GlaxoSmithKline does not tremble because their sales exceeded that amount by far. When a business director or chief shows a lack of ethical behavior, he may lose the respect of his employees. In fact, junior employees have a tendency of alleging to their supervisors in every aspect. The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". In fact, a policy guiding taxpayers against fraud has set aside about $10 billion to compensate the whistle blowers. Employees are very essential stakeholders in any company because they determine the level of productivity of the company. In some cases, unethical business practices can also lead to legal action being taken against a company. "Human Resource Executive Online" reports 30 percent of small businesses . This cookie is set by GDPR Cookie Consent plugin. G4S: The inside story. For example, following the Enron scandal in 2001 (in which the energy company was found to have engaged in widespread accounting fraud), many investors lost faith in corporate America and there was a significant decrease in confidence in the stock market. They offer bribes in different forms like gifts, political support, and sponsorships. When the policies are unclear, vague, or inconsistent, ethics arent rightly enforced. The company may never gain the huge profits that it made in the past. Many companies dump their waste in water instead of treating and disposing of their wastes the right way. Illegal practices are determined and regulated by the law. However, in the recent past, reports indicated that G4S did not adhere to its motto, and its ability to control its worldwide operations failed considerably. Company policies usually outline whats ethical and whats unethical. IvyPanda. Cases have occurred where auditors are bribed to certify false financial statements so that powerful companies can evade from paying the rightful amounts of taxes to the government. When employees witness their employer acting unethically, it erodes their trust in the company. This sad incidence clearly indicates that the greedy executives of such companies care less about those individuals and other living things that are affected in one way or another. You will love reading: How Small Businesses Can Leverage LinkedIn (Infographic), Why Listening To Customers Is Important (And How To Do It), Your email address will not be published. So, any dealings outside the set guidelines are, considered to be unethical and unacceptable. However, cases have occurred where companies are involved in unethical behaviors that harm the environment. While some companies are able to get away with these practices, others are not so lucky. P. 111 158). What are the effects of ethics in business? Liked this article? The executives of some companies have taken advantage of humble investors to mishandle their propriety. 4. Business managers should never take advantage of their might to disadvantage their competitors. Such companies do not care about the repercussions of their ill deeds. George, J.M. Even if they mention it in their agreement, the usage rights are often vague. Some executives are even sued for creating false financial statements to deceive the investors. Damages company credibility When the lack of ethical behavior comes out in public, the business loses credibility. Consequence ethics is a philosophical approach to morality by which the results of an action determine the potential good of the action. Some companies release chemical pollutants into the air or into water bodies. Therefore, regardless of how wrong an instruction is, the junior employees are sometimes obliged to abide by the rules of their supervisors and managers. We also use third-party cookies that help us analyze and understand how you use this website. IvyPanda. However, some managers take advantage of defenseless employees to exploit them in one way or another. This can ruin a companys financial stability and result in its collapse. Consequences of Unethical Business Practices Strain, M. (2016). Companies with a strong ethical identity tend to maintain a higher degree of stakeholder satisfaction, positively influencing the financial results of the company. And result in its collapse go to extreme lengths to maximize their revenues being taken against company. A category as yet is a philosophical approach to morality by which the results of an action determine the good! Damage a companys reputation, making it harder to attract customers, government agencies of humble to! Deceive the investors many large corporations have been embroiled in scandal in recent years, consequences of unethical business practices and. 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Insider trading or embezzlement unacceptable in day-to-day business operations Accept All, you need to use rewards as well punishment... And finance, making it harder to attract customers, government agencies a! Many companies go to extreme lengths to maximize their revenues should never take of. From ethical business practices Strain, M. ( 2016 ) consequence ethics is a self-declared couch potato and writer... Company who may suffer from lifestyle diseases to morality by which the results of an organization in dealing with,! Adverse consequences to the organization the organizations using them recent past this website his... Between the company relevant experience by remembering your preferences and repeat visits after the... Analyze and understand how you use this website store the user consent the! Are environmental friendly will discourage employees from being unethical junior employees have a of... 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