Are You Guilty Of Unethical Business Practices?

By Dr Daleen Smal | Personal Development

Mar 24
Unethical Business Practices

Who would put hazardous lead paint on toys for kids? Or force employees to work overtime without pay? What about embezzle investment funds and lie about earnings? Perhaps persuading mothers to use infant formula instead of healthier breast milk?

This is not a thumb suck.

Mattel used hazardous lead paint on toys. Walmart used unethical labor tactics. Enron committed financial fraud and at the end collapsed. Nestle hired women dressed as nurses to sell infant food and some babies died of malnutrition.

These few companies are not the only culprits. Read about Apple, Toyota, Monsanto, and others. There are many more.   

Ethics is a huge topic. Many legal requirements surround it. But ethics go beyond what’s legal. It’s about doing the right thing irrespective of anyone watching. Individuals may behave in an unethical manner or the entire company may be corrupt.

Even though not always illegal, unethical actions may intently or mindlessly cause harm to people, animals, or the environment. Unfortunately, people are good at rationalizing unethical actions that serve their self-interest.

1. Misinformation and dishonesty

Unethical business practices

Misinformation and dishonesty take many forms. Here are just a few examples.

Someone may lie about the product he’s selling. A business may use false or misleading advertising. There could be a cover-up about dangerous working conditions. Or using illegal labor and paying sub-standard wages. A company may use false information in its financial statements.

Corporations may lie or hide safety issues about their product. Brokers may recommend stocks that they own to drive up prices. Doctors may prescribe the most expensive treatments instead of the most effective ones. Board members may have a conflict of interest.  

Individuals may also fall prey to dishonesty. Parents buy their children’s admission to elite universities. Some parents donate to schools so their children are selected for certain teams. The list doesn’t end here.

Summary:

  • Misinformation and dishonesty take many forms. 
  • Lying about products, safety issues, recommended stocks, treatment, conflict of interest are just a few examples.

2. Mistreatment Of Employees

Unethical business practices

Many examples exist about unethical conduct towards company workers. One may think of sweatshops and child labor. Others pay workers less than the minimum wage. There are many charges laid about sexual harassment and, unfortunately, many go unreported. Some companies allow discrimination in the workplace. Others have fired whistle-blowers for reporting illegal practices or safety violations.

Summary:

  • Many forms of mistreatment exist.
  • Covers issues from sweatshops, child labor, sexual harassment, discrimination, and many more. 

3. Financial Fraud

Unethical business practices

Price-fixing to keep prices at an inflated level is financial misconduct. Doctors performing unnecessary procedures to make more money are unethical. Some take actions to evade taxes or commit tax fraud. Others are ‘cooking the books’ to make the company look more profitable (to investors) or less profitable (to the tax man). These are all financial fraudulent behavior. Paying extraordinary high salaries and bonuses to top-officials, sometimes despite poor performance, is unethical.

Summary:

  • The list is too long to cover here. 
  • Price-fixing, tax fraud, 'cooking the books', extraordinary high salaries and bonuses to top officials are only a few examples. 

4. Ethics In The Online Business World

Unethical business practices

More people have a preference to work for ethical and trustworthy organizations. As many as 71% polled said they would take a pay cut to work for a company with the same values as them.

As online business owners, we must establish ethics as a pillar in our business. We have a responsibility to act in an ethical manner towards our employees and customers. But it goes beyond that. We are influencers in this world. Often we help others to start their own businesses. We have to choose to work only with customers who show ethical behavior themselves.

I would rather not help someone who doesn’t match my company’s moral or ethical compass. For WinTheWealthGame, we want to work with customers who have the right motives for starting and running a business. I’m also looking for this type of employee. It’s important to me and my brand not to do anything to harm people, animals or the environment.

Summary:

  • Ethics should be a pillar of business. 
  • As influencers we have a responsibility to act in an ethical manner towards employees and customers.

5. Unethical Marketing Practices 

Unethical business practices

Ethics regulates our behavior beyond government or legal control. Marketing ethics deals with the principles, values, and ideas by which we market.

It’s about our pricing practices. Questionable marketing practices include bait and switch, spam, and using subliminal messages. If your marketing is unethical, you could drive people away from your business.

But the problem is also how to decide what qualifies as unethical? Ethics is open to debate and falls under philosophy, not science. But the real test is how your consumers react to your marketing and what they believe about your business. They will vote with their feet by walking away from you and your brand.

 These five unethical marketing practices are often employed. Is your company guilty of any of these?

Misleading Advertising 

Misleading advertising is illegal. The Federal Trade Commission (FTC) regulates advertising. They want advertisers to make accurate statements and back their claims with scientific evidence. The dilemma for advertisers is that you want to show your product as attractive as possible. An advertiser will overstate certain features and soften others.

In the process, as an advertiser, you may blur the line somewhat. You cross the ethical line when you can’t prove your claims. For instance, Nutella advertised their sugar-laden hazelnut spread as a kid's nutritious breakfast. The company was sued and had to reimburse people.

Advertising your business income is also tricky. You may advertise you made a certain amount of dollars if you can prove that you actually made it. If not, then it’s misleading. So, whatever you put in your ads, make sure you have proof it’s the truth.

Emotional Exploitation 

It’s well-known that playing on people’s emotions is an effective way to advertise. People buy on emotion, not logic.

You cross the ethical line when you evoke rage or sadness in a tasteless way. Don’t be insulting because your audience is diverse and you must respect everybody. Avoid using stereotyping. Don’t make ads at the expense of others. Sensitive subjects like 911 and using non-PG ads don’t fit with your brand. Be careful of your word choices. What’s acceptable in one community may not be in another.

In a poll conducted by Harris Interactive, 35% of people will not buy a specific brand due to distasteful ads. They also found that 28% of Americans refuse to buy a certain brand due to the spokesperson. Make no mistake that distasteful ads and spokespersons will damage your brand. Luckily, we can all learn from bad choices when it comes to ads.

Your ads send a powerful message to the public beyond selling your product. Always make sure you’re sending the right one.

Insensitive Controversy 

Advertising is about attracting attention, making people stop, and clicking on your link. By being controversial you can be disruptive. You can present an unpopular opinion and stir up some conversation.

The danger is that you can make more enemies than fans. Some used tragic events like the Boston Marathon bombing, Tasmanian bush fires, or the killings in Aurora in their ads. For instance, it’s tasteless to build your Facebook fans using a trending #Aurora hashtag.

In the face of tragedy, nobody cares what your business has to say about it. The only ethical action is to offer condolences or help. Your intentions may not have been to offend but nobody cares about your intentions. Insensitive controversy will backfire on you, your business, and your brand.

Contacting People Without Their Consent 

Do not buy email addresses to grow your subscriber list. According to the CAN-SPAM act, you can’t email people without their consent. The FTC will allow you to send only one email. But that one email may irritate people and do your brand more harm than good.

You are far better off building your own list and treating your subscribers with respect. One way of showing your respect is not to spam people. The ethical way is to contact only those people who have given you permission.

Shady Link Building

People believe the more inbound links you have to your website the better you rank in Google. There are ethical ways in which you can build those links over time. You may, for instance, do a guest post with high-quality content and cite one of your main pieces of content.

Spamming other people’s comment sections or forums is not ethical behavior. It’s another thing if you’re genuinely helpful, even without leaving a link.

Summary:

  • Misleading advertising is illegal.
  • You cross the ethical line when you evoke rage or sadness in a tasteless way. 
  • In the face of tragedy, like 911, nobody cares what your business has to say about it. The only ethical action is to offer condolences or help
  • According to the CAN-SPAM act, you can’t email people without their consent. 
  • Spamming other people’s comment sections or forums is not ethical behavior. There are ethical ways in which you can build those links over time. 

Conclusion

We live in a competitive world and the temptation will be there to behave in an unethical manner to get the edge. It’s a conscious choice to remain ethical. Standards on ethics will only grow more intense in the future.

Look at your business practices and marketing strategies. Deliberately end anything that could be unethical. It takes only one incident to destroy your reputation and brand that you have spent years to build.

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