Ethical Behavior in the Workplace: 3 Proven Ways Leaders Can Promote It

Ethical behavior in the workplace is the foundation of a healthy, trustworthy organization. It is not difficult to understand that ethical behavior should be promoted in the workplace, but all too often, people turn a blind eye towards unethical practices.

Employees may fail to report a case of unethical behavior out of fear of retaliation. Furthermore, what does and does not qualify as unethical behavior may not always be black and white.

“How to Define Ethical Behavior & Why it’s Important in the Workplace,” by Katherine Huddleston, shares the following definition: “Ethics in the workplace is defined as the moral code that guides the behavior of employees with respect to what is right and wrong, and to what is good and bad, in regard to conduct and decision making.”

The following will discuss the importance of ethical behavior in the workplace and how organizations can promote ethical practices.

What Happens When Ethical Behavior in the Workplace Breaks Down

In the article noted above, Huddleston points out that when allegations of unethical behavior become public, operational distractions, public relations disasters, financial liabilities, and even the collapse of an organization can occur. She also notes that social media can increase the risk of reputational damage to a company because allegations can spread rapidly from social media posts to news headlines.

To get a better idea as to what can happen when a scandal becomes public knowledge, let’s take a look at the fraudulent activity of Wells Fargo. Due to sales goals that were too high, employees resorted to opening bank accounts and applying for credit cards without customers’ authorization or knowledge. This led to lofty fines and lawsuits as well as the firing of 5,300 employees. In February 2020, Wells Fargo agreed to pay $3 billion to resolve criminal and civil investigations by the U.S. Department of Justice and the SEC into these sales practices.

On May 10, 2019, CNBC reported that Wells Fargo was still struggling to find a new CEO under the headline, “Wells Fargo’s CEO search hindered by limits on how much it can pay its next leader.” The bank did not name a permanent CEO, Charles Scharf, until September 2019. The organization is still experiencing the ramifications of their past unethical behavior to this day.

The Wells Fargo scandal is a cautionary tale as to what may happen if unethical behavior becomes prevalent and acceptable in the workplace.

Why Ethical Behavior in the Workplace Pays Off

Maintaining an ethical workplace does more for an organization than simply preventing scandals and destruction. “Managing Ethics in the Workplace,” published by Alvernia University states, “The Society for Human Resource Management (SHRM) notes that the stock price growth of the 100 firms with the most ethical cultures outperformed stock market and peer indices by almost 300 percent, based on the most widely used measure of ethical workplace culture.” That figure traces back to a 2012 Great Place to Work® analysis of Fortune’s “100 Best Companies to Work For,” which the SHRM Foundation highlighted in its 2013 report, Shaping an Ethical Workplace Culture.

In addition to adding value to an organization, the article points out that employees feel safe and valued when the workplace is highly ethical. Clearly, feeling safe and valued would increase employees’ loyalty to their organization.

3 Proven Ways to Promote Ethical Behavior in the Workplace

There are many steps that the leaders of an organization should take to promote ethical behavior in the workplace. Three of the most frequently recommended are outlined below.

1. Create a Code of Conduct and Introduce It to Every New Employee

Creating codes of conduct and introducing them to new employees is a frequently recommended practice for promoting proper behavior.

“Models of Ethical Behavior in Business,” by John Parker states, “The specific circumstances covered [in a code of conduct] often include such issues as arise in communicating with outside public on behalf of the organization, interactions with superiors, fellow employees and subordinates, use of property of the organization, accepting gifts in the capacity of a member or employee of the organization and the like.”

An example of a common problem that can be addressed in a code of conduct is the personal use of company property. Company-issued computers and phones should not be used for personal conversations, social media, or any other reason that does not involve work-related matters.

2. Lead by Example and Set the Tone at the Top

A second practice that promotes ethical behavior in the workplace is leading by example. If people at the top of an organization are involved in unethical practices, why would lower-level employees value strong ethics?

“Demonstrating Ethical Behavior,” by Audra Bianca stresses that modeling high integrity is an important part of gaining the respect of employees and customers. It is important to avoid tactics that unethical business owners may use.

The article states, “For example, if a competing business opens a few blocks away, it may be tempting to try to discredit the owner of the new business. Instead, choose proactive, ethical strategies to drum up more sales, such as increasing your advertising or issuing new coupons.”

Although discrediting a competitor may not be illegal, this practice lacks integrity and does not set an ethical tone from the top of the organization.

The article also explains that in addition to highlighting issues in a code of conduct, it is important to hold training and meetings to discuss ethical scenarios and how they should be handled.

3. Empower Employees to Report Misconduct Without Fear of Retaliation

A final commonly recommended way to promote ethical behavior in the workplace is to empower employees to report cases of workplace misconduct without fear of retaliation. “Model Ethical Conduct in the Workplace,” by Ralph Heibutzki, states that “Managers should train employees to report unethical behavior, and follow up promptly when complaints surface.”

One way to achieve this goal is to implement an ethics hotline and case management system that allows employees to anonymously report concerns. Taking this step demonstrates that organizational leaders truly strive for an ethical workplace and want misconduct to be brought to their attention.

The knowledge that there is a safe and easy way to report unethical behavior may also serve as a deterrent to an employee who would otherwise believe that he/she could get away with misconduct.

Finally, a case management system allows assigned individuals to discover trends in unethical behavior and to address the problem before it erupts into a scandal.

Conclusion: Make Ethical Behavior in the Workplace a Priority

In summary, strong ethics in the workplace promotes a healthy and thriving organization. When misconduct and scandals become public knowledge, organizations suffer serious consequences including public relations disasters and even bankruptcy.

Leaders must personally demonstrate high integrity to gain the respect of employees. Codes of conduct supplemented with training on how to address ethical scenarios or report misconduct are also crucial for stressing what behaviors will and will not be tolerated.

The tone at the top determines whether an organization truly promotes ethical behavior in the workplace.

Give your employees a safe way to speak up. Red Flag Reporting provides an independent, anonymous ethics hotline and case management system that helps organizations promote ethical behavior in the workplace and spot problems before they become scandals. Contact us today to learn how we can support your ethics and compliance program.

Frequently Asked Questions About Ethical Behavior in the Workplace

What is ethical behavior in the workplace?

Ethical behavior in the workplace means following a moral code that guides how employees conduct themselves and make decisions — doing what is honest, fair and right, even when no one is watching. Examples include treating coworkers with respect, using company property appropriately, avoiding conflicts of interest and reporting misconduct.

Why is ethical behavior in the workplace important?

When unethical conduct becomes public, organizations can face operational distractions, reputational damage, fines, lawsuits and even collapse. On the positive side, research cited by SHRM found that firms with the most ethical cultures significantly outperformed stock market indices, and employees in highly ethical workplaces tend to feel safer, more valued and more loyal.

How can leaders promote ethical behavior in the workplace?

Three of the most frequently recommended steps are creating a code of conduct and introducing it to every new employee, leading by example so that ethics are modeled from the top, and giving employees a safe, anonymous way to report misconduct without fear of retaliation. Regular training on ethical scenarios reinforces all three.

What should a code of conduct cover?

A code of conduct commonly addresses communicating with the public on behalf of the organization, interactions with supervisors, coworkers and subordinates, use of company property, accepting gifts and conflicts of interest. It should also explain how employees can report concerns and make clear that retaliation will not be tolerated.

How does an anonymous ethics hotline support ethical behavior in the workplace?

An anonymous ethics hotline gives employees a safe, confidential channel to raise concerns they might otherwise keep to themselves out of fear of retaliation. It signals that leadership wants to hear about problems, can deter would-be wrongdoers, and — when paired with a case management system — helps the organization’s designated personnel track reports and identify trends before they grow into a scandal.