How Managers Can Spot Ethical Issues in the Workplace

Ethical issues in the workplace can harm organisations, from minor breaches to major scandals. To prevent and address these issues, organisations need to know how to spot concerns, establish reporting mechanisms, and investigate issues to promote transparency and accountability.

Ethical issues in the workplace can be damaging to organisations in a number of ways. These issues can range from minor breaches of ethical conduct to major scandals with the potential to ruin an organisation’s reputation and lead to legal and financial consequences. Ethical lapses can occur at all levels of an organisation, from entry-level employees to senior executives, and can have far-reaching effects on the organisation and its stakeholders.

Some common ethical issues in the workplace include harassment, discrimination, conflicts of interest, dishonesty, and financial misconduct. When these issues are not addressed, they can create a toxic work environment, damage team morale, and lead to employee turnover.

Moreover, the financial consequences of unethical behaviour can be costly ranging anywhere from fines to lawsuits, and major loss of revenue. Unethical behaviour will also damage the organisation’s reputation when exposed to the public, which can take years to repair and lead to even more revenue loss.

Organisations need to take proactive steps to prevent ethical issues from arising in the workplace. This includes creating a code of ethics, providing ethics training, encouraging open communication, and establishing a reporting mechanism for ethical concerns.

Executives and management should also prepare to investigate and address ethical concerns that are reported from the bottom up. Doing this creates a culture of ethics, effectively fostering trust, respect, and accountability, ultimately leading to better outcomes for the organisation and stakeholders.

The importance of sustaining an ethical workplace

Work environments structured, organised and managed to operate ethically at all levels help to improve morale and business integrity. Helping to ensure your team members feel valued and are highly motivated works in tandem with promoting integrity and will ultimately drive success.

Of course, it’s important to remember that ethical best practices are always evolving to change with current times. The stereotypical and outdated norms of yesteryear, especially if going back decades, are highly inappropriate and destructive if grafted onto a modern workplace setting.

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Each individual business’ “why” is constantly evolving, which lends cadence to employees and brands shifting towards a more personable, relatable, and transparent approach.

Naturally, along with this focus comes the shift towards organisations being conscious and aware of how they come across to others. It’s not about “saving face” or “appealing to the masses” but rather maintaining their employees’ well-being and subsequent operations.

Thus, companies with a strong ethical approach are more capable of presenting themselves as client-focused. As a result, many investors, potential employees and clients will be looking for companies with publicised commitments to good ethics and strong values.

In short, to sustain a genuinely ethical workplace, you must walk the talk, so to speak.

Understand common ethical issues

While having good intentions and meaning well is essential, taking action and knowing which issues to rectify speaks volumes more to your business and team morale. Here, utilising available data insights is imperative: helping management make informed decisions with a full understanding of the scope and nature of the improvements required.

It’s also important not to narrow one’s knowledge of ethical compliance, as you otherwise may overlook critical issues beginning to stir beneath the surface.

Here are some of the most common ethical issues seen plaguing workplace settings:

  • Inequality related to race, gender identity, and sexual orientation;
  • Lack of integrity in operations; such as overpromising deliverables to close a sales deal;
  • Insufficient health and/or safety compliance standards;
  • Lack of standards for accuracy when it comes to accounting;
  • Violation of privacy standards or concerns related to overstepping/micromanagement (this can include draconian monitoring of employees, not setting or respecting boundaries, or denying confidentiality/anonymity when ethical concerns are raised);
  • Fraud-related violations, including those brought on by the ongoing pandemic;
  • Lack of moral accountability (or, more often, only employees held accountable and not employers), resulting in concerns of retaliation or being deemed a “problem” by management.

Common red flags in individuals

We all have bad days or times when we must disconnect and breathe. We’re human. However, ongoing red flags of unethical behaviour in individuals within an organisation appear more sustained. These include the following and more:

  • A minimal or total absence of communication resulting in employee disengagement (independent roles requiring more focus notwithstanding, unless the employee isn’t as responsive as they need to be);
  • Isolation and/or unwillingness to interact with others;
  • Setting unrealistic expectations and not accepting responsibility/directing blame when they drop the ball;
  • Avoidance/unwillingness to work with team members belonging to specific ethnic groups, gender identities, and/or sexual orientations;
  • Guilt-tripping, threats, minimising, finger-pointing, and/or an unwillingness to listen;
  • Demonstrated devaluation of the efforts/contributions of others;
  • “Figure it out” attitude: expectations that others must be satisfied with what’s offered, even if it doesn’t address their concerns or needs (not limited to only support/direction);
  • Dictating pathways for others and/or excessive gatekeeping, including when it comes to predetermining whether specific resources, insights, or options are valuable to them;
  • Shaming or blaming victims of ethical abuse and/or not acknowledging/addressing the roles played by others (this often protects/empowers abusers and demoralises victims);
  • Refusal to comply with operational standards or governing regulations.

Things managers should watch for

Employee behaviour

Managers should observe the behaviour of employees, including their interactions with colleagues, customers, and suppliers. They should look out for behaviours that could be considered unethical, such as lying, stealing, or harassment;

Company policies

Managers should ensure that company policies and procedures are up-to-date, enforceable, and consistent with ethical principles. They should review policies to ensure they are not promoting unethical behaviour;

Customer complaints

Managers should listen to customer complaints and feedback to identify ethical issues. They should investigate any complaints and take action to address them;

Whistleblower reports

Managers should encourage employees to report unethical behaviour. They should have a process in place to investigate and address these reports;

Industry regulations

Managers should keep up-to-date with industry regulations and standards. They should ensure the company complies with all ethical and legal requirements;

Values and culture

Managers should create a work culture of ethics and values in the workplace. They should communicate ethical values to employees and lead by example.

Implementing reporting tools

To gather critical information to aid in identifying problem areas and resolving ethical issues within an organisation, managers must first implement the right tools for the job.

These should enable truly anonymous reporting, which will result in the accumulation of trustworthy data, as complainants won’t feel put at risk for chiming in. Setting up an ethics hotline is one example, though other solutions are also worth considering.

What is an ethics hotline?

Sometimes called a whistleblower hotline, this phone-based system is a safe and anonymous tool for employees to come forward comfortably and report their concerns. If an employee suspects a team member, higher-up, or group within the company has violated ethical standards, is exhibiting illicit behaviour or otherwise, they can serve as a whistleblower and report on what they have witnessed.

The anonymous approach helps employees submit crucial insights to management without fear of reprisal, maintaining staff integrity while ensuring that your operations remain as efficient, welcoming, and compliant as possible.

A robust hotline system will be available 24/7/365 so employees can report at their convenience. When dealing with sensitive information, many prefer to create a verbal report when they are off the clock, in the comfort of their own home.

What about compliance hotlines?

A compliance hotline is essentially the same thing as an ethics hotline. Again, it’s a reporting tool for clear violations of compliance agreements. This can be combined with a case management system to address pressing concerns submitted anonymously, helping to promote an ethical culture.

Each hotline, or a combination of the two, can be tailored to your organisation’s needs. Whether you outsource to third-party auditing or have a strong administrative human resource team in-house is up to you. However, at the core, maintaining anonymity should be of utmost priority.

Web intake reporting

Another handy tool is web intake reporting. It serves the same function as a dedicated phone hotline, except the complainant can submit a report online. This is sometimes the preferred choice for concerned employees who fear for their job security and comfort at work, as it can be more stressful and nerve-wracking to dial a hotline in many situations.

Web intake reporting can also be helpful if you have high traffic across one or more hotlines and need a digital alternative to reduce call volume. In addition, if the software supports it, this solution can auto-escalate cases based on priority and urgency.

Oftentimes organisations will benefit from implementing more than one reporting tool. When employees are privy to sensitive information, they may be unable to speak over the phone and prefer to submit an intake form. Conversely, another employee may want to call the hotline to ensure a human receives their report.

Having more than one solution helps make reporting more accessible for employees and further encourages speaking up.

Working towards an ethical future

Positioning your organisation as a part of the solution requires the implementation of new resources from the top down. Below are just a few examples of how senior management can work to support the transformation toward an ethical future.

Develop a Code of Ethics

Managers should develop a code of ethics outlining the values and principles guiding the organisation’s behaviour. All employees should be aware of the policy as it will serve as a decision-making framework for management.

Lead by Example

Managers should lead by example and set the tone for ethical behaviour in the workplace. They should model ethical behaviour and hold themselves and others accountable for their actions.

Provide Training

Managers should provide ethics training for all employees, including new hires. This training should cover the organisation’s code of ethics, specific scenarios, and examples of ethical dilemmas employees may encounter. Training is more than just a one-stop shop and should continue as your organisation grows and learns best practices together.

Create Policies and Procedures

Managers should create policies and procedures to promote ethical behaviour and ensure compliance with ethical standards. These policies must be reviewed regularly to remain relevant and practical.

Encourage Reporting

Managers should encourage employees to report any ethical violations or concerns. They should provide a safe and anonymous reporting mechanism and protect employees who report concerns from retaliation. There should never be a stigma attached to reporting, and those who violate this practice should be held accountable.

Reward Ethical Behaviour

Managers should recognise and reward employees who demonstrate ethical behaviour. Promotions, bonuses, or other incentives all work well to encourage good behaviour in the workplace. Lead by public example so others are encouraged to follow suit.

Monitor and Evaluate

Managers should monitor and evaluate the effectiveness of their efforts to promote ethical behaviour in the workplace. They should regularly review the organisation’s code of ethics, policies, and procedures and make adjustments as necessary.

We all desire to be good to one another and to enjoy working together. Through togetherness, organisations can thrive. Therefore, your team deserves to be fully supported and set up for success. An organisation dedicated to bettering employees’ everyday lives at all levels within the organisation will use whistleblower hotlines, digital reporting tools, and other measures designed to encourage a speak-up culture.

In Summary

Understanding ethical issues in the workplace starts with recognising human behaviour. Organisations must take proactive steps to prevent ethical problems from arising in the workplace. No ethical issues will present as black and white; it is crucial to look beneath the surface of a point to find the root of the problem.

Fraud, code of conduct violations, harassment and other presentations of misconduct can quickly fly under the radar. As an employer, you must know the signs and teach employees. Train your employees to comply with your code of ethics. Then, provide them with the necessary tools to report their concerns, big and small.

Start with a robust code of ethics and integrate the essential reporting tools. Train all employees and constantly watch for red flags in behaviour. Encourage speaking up, and reward those who do. Follow these steps to walk toward a more ethical future together.

About the Author

Shannon Walker founded and is President of WhistleBlower Security, an ethics reporting and case management provider. She has a Masters in Communications (Public Relations) from Pepperdine University and B.A. (Communications) from Simon Fraser University.

Team 6Q

Team 6Q