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Are you looking for the effects of unethical behavior on business? We’ll be looking at some of them in this guide.
So, let’s find out more.
“Leadership that allows for mediocrity to first exist and then remain, rather than demand the highest level of conduct within a department, can create a climate ripe for misconduct.” – leb.fbi.gov
Importance of Ethical Behavior on Businesses
Companies have probably never felt so compelled to be customer-focused than ever before. Customers are more demanding, smart, and know how to get what they want. In the highly competitive and challenging business environment, companies have no choice but to comply. The challenges do not end with becoming oriented toward customer needs alone. Customers should be able to trust that companies and their representatives are honest and ethical. With the appropriate tools, like interactive decision trees, it should be easy for customer service to deliver the right information to their customers.
Trust is among the strongest pillars of any business relationship now. Customers prefer doing business with companies that have a reputation for being honest and transparent in their dealings. Research has shown that the effects of unethical behavior on a business are many and detrimental to a company. One incident that contradicts a customer’s belief in the company is often enough to destroy their trust. With the advent of tools like ChatGPT, it is possible for unethical employees or competitors to “feed” the large language models with misinformation adding to the trust issue.
Effects of Unethical Behaviour on Business
“Trust takes years to build, seconds to break, and forever to repair.”- SearchQuotes.com
Despite the truth of the quote and the labor and investment required to gain customers, the harsh reality is that almost every company will have some ‘malefactors’ who are not ashamed to indulge in dishonesty. They completely ignore the effects of unethical behavior on their company business. Unethical behavior could be a range of things. For example, using company property for personal gain, dishonesty in financial dealings, accepting and giving bribes, and insider trading.
Some companies do not hesitate to offer huge ‘incentives’ to land lucrative contracts, government deals, and other such transactions that optimize their profits – irrespective of the damage they may cause to others. As they grow stronger from building the ‘associations,’ these companies care less and less for their employees and customers. Their only aim is to gain profits through whatever means possible.
Unethical Behavior in Business is Visible
With time, the effects of unethical behavior on a business begin to show. As a result, the line between right and wrong begins to blur. People who conduct themselves with high standards feel helpless and annoyed with the dishonest behavior of their co-workers or leaders. This frustration is compounded further since companies do not take action due to a lack of legal implications or extreme financial damage. Honest employees sometimes end up looking for alternative employment. However, if they do not find another suitable opportunity, they end up with high stress and health-related problems. This in turn affects their overall productivity in the company.
While unethical behavior and practices may succeed, they are quick to identify. Persons and companies guilty of such practices are scrutinized and shamed publicly. Companies lose their license to conduct business, and their reputation may remain damaged forever. Even if a company is not discovered immediately, customers and employees begin to perceive the unethical behavior. The result is to stop doing business with the company and leave their employment respectively. Customers inform others about the poor practices of the company. Now, this influences other people to stay away from such a company – further damaging the chances of the company.
Decline In Customer Loyalty
Among the worst effects of unethical behavior on a business is the inability to forge or maintain a long-term relationship with its customers. In addition, it becomes vulnerable to long and expensive litigations. The fact is that even one such instance can make the company vulnerable to further accusations. This could be false or made by people and competitors seeking to harm the company’s reputation. While customers may have access to a lot of information from the internet and other market intelligence, they rely heavily on the company and its representatives for accurate information and structured guidance on several aspects.
Therefore, as the business environment becomes more competitive, companies must decide to act ethically. Otherwise, they will have to face the damaging effects of unethical behavior on their business and representatives. It would be immature and imprudent of the company to believe that customers are naïve and would not eventually find out about the company’s malpractices.
Another effect of unethical behavior on business is that customers would completely shun the company’s products and start a campaign inciting others to follow. A drop in sales means a dip in profits and a fall in the company’s share prices. It eventually drives investors and other stakeholders away from the company since no one wants to put their hard-earned money into a failing company. The internal team in a company can have an environment of confusion, distrust, stress, and conflict since each person doubts the intentions of the other. Such a poor work environment would lead to a drop in productivity, lowered morale, and employee attrition, resulting in a downfall.
Company Workers Fail To Report Unethical Coworkers
One of the reasons why unethical behavior rises and survives is because people within the company are afraid and hesitant to ‘tell on’ their co-workers. They are unsure of whom to speak to. If a culture seems to tolerate unethical behavior, the fear of reprimand or being an ‘outcast’ causes people to remain silent. In order to counter the effects of unethical behavior, the company must have strict rules and regulations in place. Employees must be aware of them, and there should be a no-tolerance policy for anyone flouting the norms. Most companies have such guidelines in document form, given to each person that joins the company. They read and sign the document to acknowledge their understanding of the consequences if they default.
Too Much Pressure on Customer Service Staff
Within the realm of customer service, the effects of unethical behavior on business can be profound as they are more noticeable. The representatives are usually the first point of contact for customers since they are the ones that customers interact with most often. The pressure on the customer service staff is extremely high. They should provide services, build relationships, have product knowledge, good analytical problem-solving and communication skills, and more.
Their jobs are incentive-based, which can be added stress. They are evaluated on a day-to-day basis. They could easily forget the effects of unethical behavior on a business to gain more benefits. Therefore, they only seek their personal gain and end up misleading customers. Over time, customers begin to realize these transgressions, which could spell serious trouble and even doom the company. The errant employees lose their jobs and find it difficult to gain employment elsewhere.
The Company Does Not Punish Unethical Employees
There is no upside to unethical behavior. It means the company is doing so intentionally or has been extremely lax in planning its business and lacks customer focus. A company must set realistic goals for itself and its employees. Otherwise, unattainable targets would lead employees to find ‘shortcuts’ and lucrative means to reach them. A company and its leaders must set the bar high. Each person within the company should understand their responsibility towards the customers and behave ethically. The effects of unethical behavior and the consequences of indulging in such behavior should be spelled out. There is no excuse or reason for cheating or behaving unethically with customers and businesses. Companies and their employees that continue to do so should face the repercussions.
