Historical Ethical Dilemmas

The top five forms of unethical behavior in the workplace today are abusive or other
behavior that makes for a hostile work environment, lying to employees, conflicts of interest,
violating company policies relating to the use of the Internet while at work, and
discriminating against employees (Ethics Resource Center, 2014). In order of importance,
others among the top ten are violating safety or health regulations, lying to company
stakeholders like customers, vendors, and the public, retaliating against a person who has
reported misconduct, falsifying hours worked, and stealing from an employer. Besides these
ten significant forms of unethical behavior in the workplace, the Ethics Resource Center’s
national survey revealed at least fifteen others, suggesting that unethical behavior is
widespread in today’s workplace. Employee theft is especially interesting because it
implicates two-thirds of employees. For the most part, employees steal low-value items,
including highlighters, staplers, pens, notepads, USB memory sticks, copier paper, and toilet
paper, among others.
Leadership in organizations could help minimize these forms of ethical misconduct by
leading by example and modeling ethical conduct (Schwartz, 2017). While it is important to
have codes of ethics and conduct, it is even more important for employees to see their
managers lead by example. In terms of instilling ethical conduct, this approach is likely to
achieve much more than any organization could ever hope to achieve by instructing
employees on how to conduct the organization’s business. For example, a senior consultant
who instructs the junior consultants working under her to exaggerate the time logged on a
project in order to inflate the bill sent to the client cannot expert her juniors to do it any
differently.

Despite widespread unethical behavior in today’s workplace, modern businesses are
more ethical than their predecessors from a century or so ago. However, it is worth noting
that, for the most part, modern businesses have not become more ethical of their own
volition; they have mostly been compelled by external forces, key among them government
regulation (Ginsberg, 2017). Taking the US as an example, the country’s private enterprise
has largely evolved from exploitation to ethics. Starting from the late 1800s, during the
period better known as the Gilded Age or the era of rapid industrialization, the country
witnessed the rise of large companies like Carnegie Steel and Standard Oil. The owners of
these and other companies developed into an economic powerhouse that exercised an
oversized influence on government; big business interests seemed to corrupt democracy.
With private economic power and the corruption of government came inadequately regulated
factory jobs, an environment of exploitation, and, ultimately, poverty for the majority.
Instead of responding to the economic exploitation with violence, as was the case in
Germany and Russia around the same time, the US responded with a raft of far-reaching
reforms characterized by limited government intervention (Ginsberg, 2017). The reforms
included the enactment of the Clayton Antitrust Act, which led to the greater acceptance of
trade unions, and the Great Depression-era National Industrial Recovery Act (NIRA), which
demanded fair business practices. More recently, some of the 21 st century’s most devastating
cases of unethical business conduct, like Bernie Madoff’s Ponzi scheme, have led to greater
government regulation in the forms of the Sarbanes–Oxley Act of 2002 and the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010.

I would describe the 2007-2008 global financial crisis as a failure of “people” rather
than of “capital market processes.” This is because I agree with leading economists who
believe that the crisis was mainly caused by the greed of banking “oligarchs,” powerful
business elites who overreached in good times, taking on too many risks in the process
(Reavis, 2012). When American banks realized that they could make quick profits by selling
their home loans to investment banks, they became more aggressive in lending to potential
homeowners (Jauhri, 2018). On their part, the investment banks would bundle those loans
together and sell them in the market as Collateralized Debt Obligation (CDO). In their greed,
banks started lending to sub-prime borrowers; that is, borrowers who, based on their income
and credit histories, would ordinarily not have qualified for the loans. Soon, the risky
borrowers started defaulting, hence the onset of the crisis.
The financial crisis and the circumstances leading to it bring to the fore important
ethical theories, notably ethical egoism and utilitarianism. Utilitarianism demands that when
making decisions, we should have the greatest regard for what is in the best interest of the
majority (Schwartz, 2017). Thus, in the example of the financial crisis, in the interest of the
capital markets, it would have been prudent for banks to turn down risky borrowers.
However, the banks acted greedily and proceeded to give loans to sub-prime borrowers, fully
aware that they would quickly sell those loans to investment banks. In so doing, the banks
acted in accordance with ethical egoism, which instructs us to act in ways that maximize our
own interests with little or no regard for the wider public interest.

Diversity and discrimination are two important and related ethical factors that leaders
should pay attention to as they manage their workforces. They are related because
discrimination is a threat to diversity, while workforce diversity could indicate that an
organization is an equal opportunity employer who does not discriminate (Schwartz, 2017).
The factors are important for at least one reason. In the Ethics Resource Center’s national
study referred to earlier, alongside conflicts of interest and violation of company policies on
Internet use, respondents indicated discrimination against employees as the third most
important form of misconduct in the workplace.
Adidas provides an example of how mismanaging these two issues can have negative
effects on an organization. Recently, the company received much negative publicity when
eighty-three of its employees drawn from five of the company’s offices across the world
petitioned the company, through a signed letter, to investigate its global HR chief over her
handling of racial inequality in the company (Togoh, 2020). The eighty-three were drawn
from the US, Germany, Australia, and Panama. The petition followed days of internal
protests around the company’s cultures in the aftermath of the Black Lives Matter
demonstrations.
As an employer, rather than explain to my employees the importance of these factors,
I would demonstrate their importance and my commitment to them by actually taking
measures to increase diversity and end discrimination. For example, in the wake of the
protests and the petition, Adidas responded by promising that 30% of all new hires would be
LatinX and Black (Togoh, 2020). The company also spoke of its commitment to confronting
the systemic and cultural forces that sustain racism.

Corporate outreach and company-sponsored volunteer programs are a good idea for
organizations to implement because they represent one way for organizations to give back to
society. However, ethical and responsible leadership and management are essential to ensure
that the sponsored programs deliver real social benefits, not harm (Beninger & Beninger,
2020). For example, each year, sponsored by organizations in the global north, thousands of
volunteers travel to orphanages around the world. This is despite the fact that, around the
world, there is a move away from orphanages to community-based care because, worldwide,
80-90% of children in orphanages have at least one parent who is alive.
As an ethical leader, I would implement these programs only after and because I have
taken measures to satisfy myself that the programs will deliver real social benefits to their
beneficiaries. These measures would include thoroughly vetting participating employees to
ensure that they comply with human rights, ethical, and quality standards; having a strict
internal policy that governs the areas our employees may volunteer in; ensuring that our
employees have received adequate, appropriate training ahead of any volunteering; and
having means of evaluating the community impact of our volunteer programs (Beninger &
Beninger, 2020). Equally important, I will have satisfied myself that our volunteer programs
are consistent with the ethical theory of Kant’s means-ends principle, whereby we approach
each community respectfully and genuinely, not as objects to help us reach our organizational
goals.

Beninger, S., & Beninger, C. (2020, April 10). Towards Ethical Corporate Volunteering.
Retrieved from IE University: https://www.ie.edu/insights/articles/towards-ethical-
corporate-volunteering/
Ethics Resource Center. (2014). 2013 National Business Ethics Survey. Arlington: Ethics
Resource Center.
Ginsberg, D. (2017, April 21). Evolution of Business Ethics in the US: From Exploitation to
Ethics? California Management Review, p. Unpaginated. Retrieved from
https://cmr.berkeley.edu/2017/04/evolution-of-business-ethics/
Jauhri, S. (2018, September 5). Financial crisis explained: How greedy US banks crippled
world economy. Retrieved from Business Standard: https://www.business-
standard.com/article/markets/financial-crisis-explained-how-greedy-us-banks-
crippled-world-economy-118090500388_1.html
Reavis, C. (2012). The Global Financial Crisis of 2008: The Role of Greed, Fear, and
Oligarchs. Cambridge: MIT Sloan School of Management.
Schwartz, M. S. (2017). Business Ethics: An Ethical Decision-Making Approach. Malden:
John Wiley & Sons, Inc.
Togoh, I. (2020, June 17). Adidas’s Staff Disquiet Over Racism Boils Over With Calls To
Investigate HR Chief. Retrieved from Forbes:
https://www.forbes.com/sites/isabeltogoh/2020/06/17/adidas-employees-urge-
investigation-into-hr-chief-amid-concerns-about-response-to-racism-
complaints/?sh=130c1d1850d5