Ethical Dilemma in Business
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8 Most Common Ethical Issues and How Can Businesses Prevent Them?

Trying to decide what defines right and wrong in terms of business practice can be tricky. While certain obvious guidelines exist, they can be clouded by grey areas of uncertainty. However, if ethical issues in business are not addressed, it can impact the integrity and reputation of your company.

Furthermore, an ethical dilemma in the workplace can cost a lot. But, how do you identify the common ethical issues currently faced by businesses, and what can you do about them? This article covers everything you need to know as a business owner, so keep reading.

What is an Ethical Dilemma in Business?

Ethical issues in business depend on their individual operating and decision-making styles. In addition, how firms resolve issues can determine how morally responsible, they are. This is why it is essential to understand contemporary ethical issues. Further, you must also effectively set policies to prevent them,

As people become more aware of social movements and accountability due to the internet, the importance of ethics has increased significantly. Thus, establishing a business ethics code for your company should be a priority if you are a startup or a smaller enterprise. 

You should also keep in mind that building a reputation takes time. Moreover, unwarranted lawsuits over ethics issues can cause even more significant problems.

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Regardless of the scale, ethical dilemmas can lead to bankruptcy in some cases. Therefore, it is crucial to protect your business from potential ethical issues in business to avoid risks, scandals, and financial problems.

8 Most Common Ethical Issues in the Workplace in 2022

If you are an entrepreneur, you should begin by familiarising yourself with the business’ most common ethical issues in 2022. These include:

  • lack of diversity and discrimination
  • harassment
  • favoritism or nepotism
  • health and safety
  • environmental responsibility
  • data privacy
  • social media
  • accounting espionage

For the most part, local laws and statutes set guidelines for defining proper behavior in the workplace. Having said that, sometimes employers and employees act irresponsibly and break the rules. However, by effectively understanding these issues and how to deter them, you can prevent potential business challenges. 

Discrimination and Lack of Diversity

The sudden rise in racial discrimination cases across the world poses a problem in the workplace too. According to the Equal Employment Opportunity Commission, discrimination exists in terms of disability, gender, age, race, religion, and origin among several factors. 

One of the most significant ethical dilemma examples is that the lack of diversity and equal treatment is illegal in most countries. Still, the race and gender pay gap suggest these laws are often overlooked. Another type of growing discrimination is toward caregivers who have to take care of family members.

On average, 61% of employees in America reported seeing or experiencing discrimination. To be more productive and avoid ethical and legal dilemmas at work, it is essential to offer equal opportunities for everyone and foster an inclusive, diverse workforce free of toxic values. 

How can your business avoid or resolve discrimination? 

As a business owner, you should invest in educating and encouraging a positive work culture that could fight discrimination. Furthermore, make sure everyone understands the disciplinary consequences of misbehaving.

Consciously hiring people of different backgrounds, nationalities, and characteristics ensures you have a diverse workforce. This further encourages representation and helps prevent discrimination. Your business could set an excellent example for equal opportunities within your industry – with more perspectives and opinions.

When implementing business rules, consider factors like age, race, religion, and culture. For example, limitations involving how to dress at work could be discriminatory on religious or racial grounds. As a business owner, try to be more aware and flexible towards employee needs


Harassment is a serious ethics violation but remains a common encounter all around us, not just in the workplace. Often related to discrimination or abuse, harassment can be both verbal and physical. This includes sexual abuse, bullying, and teasing. Sometimes a customer can also be the source of harassment.

However, sexual harassment remains a grave ethical issue in business. Research revealed that 54% of women had experienced sexual harassment, and 23% involved superiors within their business structure. Men are also victims of sexual abuse, which poses a severe challenge in creating a safe work environment. 

Not addressing harassment in any of its forms can lead to long-term psychological impacts on victims. Consequently, this fosters a toxic work culture, reduced earnings, and lower employee diversity and retention rates.

How can your business avoid or resolve harassment? 

The first step in addressing this serious ethical dilemma at work is to clarify your business has a zero-tolerance policy toward all forms of harassment. By making ethical practice part of training, you can ensure all employees know the rules and the consequences of breaking them.

Preventative measures can also include prohibiting drug abuse, limiting alcohol at the workplace, and consistently enforcing that rules be upheld. But, unfortunately, if you let people bend the rules around your business ethics, it can become a regular practice. This is why superiors and senior management are often the sources of harassment. 

It is vital to keep regular checks on everyone’s behavior equally throughout your business hierarchy. This will foster a healthy, safe working environment without the fear of reporting cases. In addition, it is vital that business stakeholders, including employees and clients, know they can speak to someone if they are harassed. 

If harassment occurs, it is essential to support the victims fully, even if their claims are alleged and not yet proven. Furthermore, such cases can become sensitive matters, so be careful with how you respond and investigate. If need be, consult local authorities and take disciplinary measures as required. 

Favoritism or Nepotism 

Sometimes, business owners decide to employ someone they know or are related to due to the personal connection. While, for the most part, this doesn’t become a problem as long as rules are being followed, some employees can see this as nepotism or favoritism. 

Favoritism can also stem from senior managers treating certain employees better than others for no professional reason. These types of ethical issues in business can discourage other employees, consequently reducing productivity. Furthermore, job satisfaction can decrease as people feel like they have to work more or harder than others for rewards. 

This is why hiring and human resources are a vital part of business structures. It’s essential to carefully consider all applicants based on skill to eliminate nepotism and favoritism amongst employees. 

How can your business avoid or resolve favoritism and nepotism? 

Besides vigorous hiring policies and rules, there isn’t much that can be done to eliminate this ethical dilemma. As a business owner, you must practice equal opportunities based on skill and experience rather than personal connections. Furthermore, if you employ people you know, ensure to treat and promote everyone equally.

In addition, make sure the ratio of personal connections is always lower than other employees. If this occurs, business decisions may get impacted by conflicting opinions and views. 

Always consult human resources management to hire a diverse workforce effectively.

Health and Safety 

According to the International Labour Organization, more than 2.3 million people die annually from workplace accidents or diseases related to their occupation. The lack of fall protection, regulations around weight and resistance, safety equipment, and uncontrolled hazards are all leading contributors to health and safety problems.

Often, important requirements such as electricity and wiring procedures are also ignored. For example, leaving electric conductors in damp areas can pose the risk of severe accidents and even death. Furthermore, injuries from slipping, falling, and because of animals are commonly reported. 

Ethical issues in business also arise from mental health problems such as stress and headaches. Low job satisfaction, a weak reward system, and long hours can also result in unhealthy lifestyle choices, including alcohol abuse. To encourage a healthy environment and optimum performance, it is of utmost importance to prioritize the health and safety of your employees. 

How can your business avoid or resolve health and safety concerns? 

Before beginning operations, thoroughly research the health and safety guidelines set by your state or local administration. To prevent accidents, ensure these standards are being met consistently. Also to encourage awareness of adequate health and safety practices, employee training is vital.

Business owners should strive to create a work environment where individuals can grow and thrive. By adding incentives for hard work and recognizing effort, you can boost morale and efficiency. Create more opportunities and a safe space for your workers. This also improves employee retention. 

To understand what your employees need, frequently hold meetings or strike up a chat with them. You can also encourage them to come to seniors within your business if they have concerns. In addition, you can promote a healthier workspace by replacing snacks with healthier alternatives or hosting group sports activities. 

It is always important to remember that mental health is essential to health and safety. The work environment can significantly impact employee mental health, so it is essential to create environments that promote good mental well-being and allow employees to express problems and issues with their thoughts towards their workplace.

Open communication and tools in place to promote wellbeing should always be taken. Companies such as Koa Health offer an excellent range of tools to help workplaces encourage a healthier environment. Follow this link to find out more:

Environmental Responsibility 

Corporate social responsibility is on the rise, particularly towards the environment. Individuals are becoming increasingly cautious about their contribution to the world’s carbon footprint. Therefore, businesses should consider how their actions contribute to the problems faced by their surroundings.

As a business, it should be essential to look after your employees, community, and the environment. Some industries such as oil and farming have a more significant impact. However, even smaller businesses contribute to pollution, affecting water and air quality. Furthermore, the depletion of natural resources and reservations have posed severe ethical issues in business.

Most countries have imposed laws to reduce their carbon footprint. But, unfortunately, even then, some businesses choose to overlook these and implement practices that damage the environment. 

How can your business encourage environmental responsibility? You can start with issuing softcopies of invoices with a professional look with the help of Free Invoice Maker.

To begin addressing ethical issues in business, such as environmental responsibility, the first step is to evaluate management systems. Next, your management should help assess where the company can improve to become more responsible toward the environment.

Then, by setting green goals and implementing how this can be carried out, you can begin making the transition. Smaller steps will allow you to start implementing these changes soon without costing too much. To manage these changes, your team should consistently monitor and report on the progress. 

Making the switch to solar panels can reduce bills while simultaneously reducing your contribution to environmental damage. Furthermore, try reducing paper use by using digital alternatives such as email and social media instead. If we all do our part and start making conscious choices, our planet will also thrive and be healthy. 

Data Privacy and Technology Abuse 

Using your company’s internet connection to browse the web may seem harmless. The fact is most companies monitor their internet connections and track their workers browsing activity. Typically, this is indicated on your employment contract and can impact performance reviews. 

This is legal as it indicates misuse of the business’ technology and resources. Furthermore, it shows that working hours are being exploited, costing the business time and money. Sometimes companies misuse sensitive data acquired from employees and customers. If this information falls into the wrong hands, it could lead to detrimental ethical issues in business. 

We’ve often heard of data breaches and hacking. Unfortunately, even established companies have been subject to such attacks, with customer and employee information getting leaked online. Without proper security measures and restrictions on access, data and technology could result in legal, financial, and reputational damage. 

How can your business avoid or resolve data privacy concerns? 

As an employer, ensure you highlight all surveillance and usage restrictions on employment contracts. Encourage open communication about monitoring company communications and browsing history. It could be considered unethical access if you fail to do so; it could be regarded as unethical access, leading to lawsuits and financial damage. 

Employees should always read through their contracts thoroughly for what monitoring the company carries out. For example, some businesses track all worker activity on devices like phones and laptops given to the worker. 

Your IT department or specialist should be able to implement a cybersecurity plan to prevent data breaches. For example, if you store personal information, constantly monitor access to ensure confidential data doesn’t reach the wrong hands. In addition, always carry out background checks before hiring people as theft for monetary purposes or better jobs is common. 

Employee Social Media 

Social media is usually personal and reflects out-of-office activities. But sometimes how your employees behave on public social platforms can reflect poorly on the business. In addition, ethical issues in business often result in difficulties in deciding what action can be taken regarding social media conduct. 

Legally, companies have the right to take disciplinary action for social media etiquette. If employee behavior costs the business financial or reputation loss, firing them would be justified. However, this can lead to unwanted miscommunication and conflict. So, how do you avoid social media dilemmas? 

How can your business avoid or resolve social media concerns? 

To prevent social media conflicts, the best solution is to set guidelines and policies in advance. For example, highlight what is and isn’t appropriate behavior for employees on their social media. Also, explain to them how they represent the business and how their actions affect it.

Furthermore, training and regular digital reminders of being appropriate and conducting yourself online should be encouraged. This will not only result in better social media practices but also increase accountability.

Accounting Espionage 

A “classic” business ethics example, manipulating or unethical accounting practices can result in severe legal implications. Sometimes, senior management is at fault, for spending company money, accepting bribes, or even manipulating employees. Alternatively, if you are a public company, your accountants may adapt records to pocket money for themselves.

Unethical or espionage accounting aims to deceive the government and taxpayers, taking advantage of lowered deductions and paying smaller dividends. If caught, your actions would put your business and several innocent people under fire, even if they were not involved. 

How can your business avoid or resolve accounting espionage? 

Keeping a firm, personal check on all financial reports is the only way to eliminate this ethical issue in business. However, hiring professional accountants and auditors is also a great option, as they ensure all your accounts match legal frameworks.

Alternatively, you can make the switch to digital accounting software that reduces the risk of manipulated data. For example, by setting restrictions on what data employees can access and edit, you can take control and keep a check on the finances of your business yourself. Digital software would also be helpful if faced with a lawsuit, as it keeps track of all changes made to it. 

Bonus: Tips to Create a Healthy Business Environment

A healthy working environment is perhaps one of the utmost critical aspects of establishing a successful business. But how can you create an environment where the employees are productive, happy, supported, and accepted?

We have already discussed the ethical dilemmas that come in the way of a good business and their probable solutions. For example, if you protect employees from discrimination and keep a check on finances, you can avoid various issues at the workplace.

Moreover, now let’s look at a few tips to provide equal treatment and good work conditions to employees.

Establish Trust

The most crucial qualities recognized in the job are honesty, trust, and fairness. However, how do you develop confidence and transparency? 

You can start by performing the following:

  • Keep your commitments – don’t overpromise and underdeliver
  • Avoid phrases like “I’ll try” or “I’ll do my best.” and make explicit pledges
  • Follow-up with each team member.
  • Communicate difficulties to team members and discuss ways to resolve any issues.
  • Owning up to mistakes, demonstrating compassion, making reparations, and emphasizing actions are all ways to develop trust. 
  • Start meetings by discussing workers’ personal or professional life for the first five minutes

Communication is Key

Communication is undoubtedly the most crucial aspect of every productive and healthy workplace. However, you must first ask the right questions before opening the doors of communication.

Therefore, during interviews, performance reviews, or informal interactions, keep these standards in mind.

  • Individuals won’t tell you everything until they feel a connection with you
  • Start with simple questions
  • People communicate using stories
  • Be Empathetic — pay attention to emotional cues in problem-solving
  • Never assume anything

After you’ve mastered effective questioning, you may concentrate on other aspects of professional communication. For instance, if you wish to keep your staff updated, why not put out a newsletter?

Moreover, you may also adopt an inclusive approach so that employees know they can approach you at any time. This could include an open door policy at the workplace.

Flexibility at the Workplace

If you want to make your workplace more flexible, develop a strategy, and test it. Next, prioritize communication, and recognize that not every personnel is flexible. Thus, managers should have the training to handle unflexible staff.

Providing the Right Perks and Incentives

In the office, how can you encourage and delight employees?

  • Bonuses and other cash incentives are commonly used to recognize excellent performance.
  • Non-financial perks such as informal days at work, half days, corporate events, and social engagements outside of work can positively affect the workplace.
  • Workplace facilities, such as a gym, restaurants, or daycare facilities, are great motivators. They attract workers to come to work and maintain focus on their tasks.
  • Acknowledging somebody publicly for an excellent job may make a significant impact. Moreover, positive reinforcement is critical. Thus, employee recognition programs may go a fair distance toward inspiring staff.

Making the Workplace Fun

Creating a fun workplace can also help uplift the company’s environment. Thus, you can utilize the following methods to do so.

  • Allowing others to enjoy themselves
  • Ask team members, “What is the nicest thing that has occurred to you since we last met?” This will change how the organization’s meetings occur
  • Leaving the past behind
  • Allowing team members to customize their workstations
  • Having a happy hour on Fridays
  • Playing game

Practice and Learn 

At some point, all entrepreneurs face unexpected ethical dilemmas in business. Through the implementation of well-researched company policies and preparation, you can easily address ethical issues of any sort. Keep in mind that strategizing and actively correcting such types of ethical problems is the key to long-term change.

Use these tactics to learn from previous mistakes and set a positive example for your workspace. As business owners, it is important to take responsibility for your ethical violations and face the consequence. You can use them as an excuse to try harder and build a more ethical, healthier work environment.

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