Ponzi Schemes

In light of Ponzi schemes and company scandals, the business industry has developed a reputation for its lack of ethics. In an industry where getting ahead and making money appear to take precedence over ethical decision making, it can seem difficult to understand the importance of ethical behavior in business. A lack of ethics leads to a wealth of problems for a business. Legal Issues and Ethics In the United States, federal and state governments establish rules and procedures for how a business should be run. Businesses that fail to follow federal and state guidelines often face large fines and other penalties. Larger companies sometimes decide that breaking laws and paying the fines involves lower costs than the financial gain made from breaking those laws. However, consistently breaking laws can lead to costly legal battles that outweigh the initial gain. Additionally, executives at companies who break laws and engage in unethical behavior that leads to harmful practices for employees and customers could find themselves facing criminal charges. Effects of a Lack of Ethics on a Business Environment by Stacy Zeiger; Reviewed by Michelle Seidel, B.Sc., LL.B., MBA; Updated March 11, 2019 In light of Ponzi schemes and company scandals, the business industry has developed a reputation for its lack of ethics. In an industry where getting ahead and making money appear to take precedence over ethical decision making, it can seem difficult to understand the importance of ethical behavior in business. A lack of ethics leads to a wealth of problems for a business. Legal Issues and Ethics In the United States, federal and state governments establish rules and procedures for how a business should be run. Businesses that fail to follow federal and state guidelines often face large fines and other penalties. Larger companies sometimes decide that breaking laws and paying the fines involves lower costs than the financial gain made from breaking those laws. However, consistently breaking laws can lead to costly legal battles that outweigh the initial gain. Additionally, executives at companies who break laws and engage in unethical behavior that leads to harmful practices for employees and customers could find themselves facing criminal charges. Impact on Employee Performance A lack of ethics has a negative effect on employee performance. In some cases, employees are so concerned with getting ahead and making money that they ignore procedures and protocol. This can lead to additional paperwork and careless errors that result in the task having to be completed again. Additionally, employees who feel acting ethically and following the rules will not get them ahead in the business sometimes feel a lack of motivation, which often leads to a decrease in performance. Employee Relations Are Affected When a manager or head of a business exhibits a lack of ethical behavior, he faces losing the respect of his employees. It is difficult to have a successful business without well-respected leaders. A lack of ethical behavior can also cause tension among employees, with some employees resenting those who do not play by the rules and still manage to get ahead. Unethical behavior in the workplace also has the potential to lead to a lack of trust among employees, which is detrimental to a business that relies on collaboration and a sense of community. Damage to Company Credibility If a lack of ethics in a business becomes public knowledge, that business loses credibility. While some businesses survive public knowledge of a lack of ethics through reimaging and advertising campaigns, many lose a key customer base. Even if a business recovers from news about its lack of ethics, it takes a lot of time and money to restore its image and consumer confidence. Customers that abandon a company because they are dismayed by poor ethical practices will find other products and services to meet their needs. Those customers are difficult to win back, even after ethical lapses are a thing of the past. Preventing Unethical Behavior Often a lack of ethics appears because of poor planning and faults elsewhere in the business. To prevent unethical behavior, set realistic goals for employees. If employees are expected to meet unreachable quotas and goals, they could engage in unethical behavior to attempt to reach those goals. Consistently monitor employee performance. Employees left unmonitored sometimes slack in their performance and take credit for completing tasks that were left uncompleted. Properly train all employees. Untrained employees often cut corners and make excuses for not completing work up to the standards the business requires. Effects Poor Corporate Ethics Can Cause Your Company Corporate ethics puzzle Ethical misconduct in any company can lead to very serious consequences which can cause the company time and money in trying to repair their business reputation and any legal issues that may arise depending on the severity of the situation. Integrity breakdown can dramatically cost a business millions of dollars and even prison time in some extremely serious cases. In order to really protect your company from an ethical misconduct scandal, you need to incorporate a management plan in order to stay on top of any unethical practices within the corporate environment. To do this you must first understand the effects that poor corporate ethics can cause to your company in order to setup barriers to help prevent something like this occurring. This expert guide will give you inside advice on the major effects that ethical misconduct can cause to your company. But first: What Causes Poor Corporate Ethics? There are many different factors that can cause unethical behaviour. The top factors include, but aren’t limited to:    Demanding workloads which create high stress at work and at home. Top executive poor management practices. If unethical behaviour goes without consequence or you choose to promote these activities, it can lead to continuous and more eratic behaviour. Money is a high contender as to why someone may choose to undertake unethical behaviour, especially at the executive level. Avoiding tax payments is one of the common misconducts that are carried out by corporations which eventually lands them into major trouble. Productivity Levels Decrease The main goal of any corporation is to drive through sales from customers to maintain a strong presence in the business world. Unfortunately, when a level of unethical behaviour starts to form, it can cause productivity levels to decrease which surround the person or corporation in question. When this happens, errors start to form in a once productive production line. This in turn can cause other employees to feel unmotivated resulting in a complete slowdown of the sale process that can lose you valuable time and money. Loss Of Respect In episodes where managers or leaders start to make unethical decisions, it can lead to employees losing a lot of respect for their bosses. When this occurs, it can be difficult for the leader to gain back the respect and trust that’s been lost. It also causes problems for them to run a successful business when their team feels as if they’re making poor corporate choices. Employees may also feel resentful towards their leaders. This is because, as a part of the company, they feel their reputation is also starting to fall apart along with the business’s reputation. Loss Of Public Credibility When unethical behaviour occurs in a corporate setting, there’s a high chance it will be publicized. This in turn can cause your company to lose its credibility, resulting in customers abandoning sales with you, bad-mouthing your business, and not holding respect for you anymore. To gain credibility back a corporation needs to create a well-planned rebranding and marketing campaign, along with hiring a public relations team to help improve their reputation. This can lead to millions of dollars in costs, especially if you’re a well know and worldwide organization. Legal Issues In severe cases of unethical misconduct, it can lead to severe legal issues that result in loss of time, large fines, and other penalties with possible jail time. The cost of legal battles can go on for months to years and can lead into the millions of dollars depending on the corporation’s particular situation and level of unethical behaviour. In addition to this, executive who break the law can lead employees to also follow in pursuit in facing criminal charges. How to Prevent Unethical Behaviour In Corporations In order to stop unethical behaviour in large corporations you need to consider a few things. These incude:        Setting realistic goals for employees to meet Create policies and practices which promote good ethical behaviour Select high quality people to add to your team that have a good reputation of work ethics in previous employment. Train people on good ethical behaviour by implementing training sessions on a yearly basis to maintain strong ethical behaviours. Maintaining strong ethical behaviour at a higher executive level to ensure employees maintain strong respect and good work ethics. Build a corporate culture that’s based on communication, openness, and transparency. Put controls in place such as progress audits to assess employees work efficiency and behaviour if complaints arise. business, technology and office concept – smiling female boss talking to business team Examples Of Poor Corporate Ethics      Executives approve an employee to cut corners to complete a job on time against set guidelines. An executive takes money from the company on the side to use in his own agenda on the side. Employee takes a sick day when they aren’t actually sick to spend the day shopping or at the beach. Executives or employees engage in an affair with a CEO or married co-worker that’s associated with the company without ending their current relationship first. Employees clock in late or leave half an hour early before the working day is through. Conclusion In any corporate environment, it’s important to maintain a high level of conduct and ethical behaviour to ensure the success of a company. By knowing the consequences of what unethical misconduct can do to your business, you can work on keeping a strong and positive presence within your corporation to limit this behaviour from happening. Have you made a plan to reduce the risk of a scandalous situation? Consequences of unethical business practices is horrible for any organization the sooner or later. Immoral behavior in the form of low-level “discontinuity”, which includes rude behavior, abusive speech, rough language and / or lack of respect for others, is now seen as reaching a crisis stage in our society. Consequences of unethical business practices Many have attributed this rise of infidelity and immoral behavior to the recent US presidential election and the ongoing behavior of Donald Trump. Others, however, believe that the trend began by relaxing the traditional etiquette rules of workplace etiquette, including casual clothing of the business. Today, on occasion, you can’t tell the difference between an employee and a customer coming from the beach. If this is the case, if you were to ask someone who was involved in an outstanding conversation and asked why they were behaving that way, they would probably say, “Well, everybody does that!” Employee relationships are affected When a business director or chief shows a lack of ethical behavior, he may lose the respect of his employees. Without a well-respected leader, successful business is difficult. Lack of ethical behavior can also cause tension among employees, some employees who are upset by the rules and still arrange to move forward. There is also the possibility of employees’ lack of trust in the workplace through unethical behavior, which is detrimental to a business that relies on collaboration and community feeling. Related: Ethical Behavior in Business – Advantages, Impact and Examples Loss of company credibility If the lack of ethics in a business becomes public knowledge, then that business will lose credibility. While some businesses have survived public knowledge of the lack of ethics through remixing and advertising, many have lost a core customer base. Even if a business recovers from the news about its lack of morality, it takes a lot of time and money to regain its image and customer confidence. Customers leave any company because they are frustrated by the ethical practice of finding other products and services to meet their needs. Even if these customers are a thing of the past, even after policy mistakes, it’s hard to come back to win them. There is evidence of other types of immoral behavior, including personal, professional and corporate behavior around us. Examples of unethical business practices From low-level infidelity to rape and personal harassment, false advertising in advertising, corporate fraud and bribery seem to have become more commonplace. Either we are just becoming more aware of it. Some employees just think of getting sick for a day off. Some people think nothing of paying someone under the table, especially if they get a “cheap” deal. On the other hand, there are some employers who refuse to pay any employee the total number of hours they work for. Professionals have also taken drugs for immoral practices by recommending them over and / or offering an additional specialized service that they also own. And don’t think that large corporations are always involved in ethical behavior. Just last week, we received the news of a manufacturer putting horse meat into its sausages and selling them as go-meat. What about a bottled water company that labeled its water something special when it was just tap water? What about corporations that have lied about their market penetration to attract investors? Have you ever encountered someone who started a delusional rumor about you? Or did you just apply for a free gift on the Internet to bill afterwards? These and many more are examples of immoral behavior. Ethical Breakdowns How to overcome unethical business practices Immorality has serious consequences for both individuals and organizations. You may lose your job and reputation, companies may lose their credibility, general morale and productivity may decline, or conduct may result in significant penalties and / or financial losses. Ethics is a very complex field, but whatever it is, moral behavior is about decision making. It is about making decisions based on moral values and the principles of right and wrong. The following guidelines will help you reach the ethical decisions that are best for everyone: Make your goals clear Set short and long-term goals in the same way. Do you want to see Write down your goal of being specific and measurable. Make sure the goals fit your organization’s overall mission and mandate. Consequences of unethical business practices is horrible for any organization the sooner or later. Legal issues and policies In the United States, businesses that fail to follow federal and state guidelines establishing rules and procedures on how federal and state governments should conduct business often face major penalties and other penalties. Big companies sometimes decide that breaking the laws and paying the fines involves lower costs than the financial gains resulting from breaking these laws. However, breaking the law consistently can lead to expensive legal battles that outweigh the initial gains. Further, executives of companies that break the law and engage in unethical practices that lead to harmful habits for employees and customers may find themselves facing criminal charges. Impact on employee performance Develop potential solutions Once you have the truth, mix up a variety of possible options and then evaluate each of them. Identify the challenges, risks, consequences and / or opportunities that come with each solution. Identify who will be the losers and where the win-winwin opportunity exists. Are there any unwanted or unwanted outcomes that your solution needs to consider? Stop and think Define and define the actual components of the problem due to specific challenges. Explore all the ingredients and clean them. Usually each issue has different components, brainstorming so you don’t miss one, otherwise you can go the wrong way. Consequences of unethical business practices is horrible for any organization the sooner or later. Organizational Impact Research how the company is affecting the problem. Be truthful considering all the factors such as financial concerns, public relations, employee satisfaction, morale, productivity and customer service. Be careful to consider the validity of your information. Apply a Policy Checklist Review your possible solutions against the policy checklist: Have you implemented the full disclosure and your proposal will be seen as credible? Does your solution show caregiving and avoiding conflicts of interest? Is your solution fair and purposeful? Does your solution comply with all applicable laws and professional standards? Is your solution centered on commitment to the public? Will your solution survive the powerful media test? Make your recommendation Present your ideas in advance of management and be prepared to respond to any ethical issues that may arise. You’ve done your homework, so you should be prepared. Modify if necessary. Whether you are solving a corporate business challenge and / or trying to solve a personal problem, the guidelines described above apply to all situations. The key is to learn to think about the principles of each decision you make, what to say to a person, to answer to personal criticism, or to make any kind of decision in your workplace. Even choosing your job well and timely versus being gullible and ignorant is basically a moral decision. Prevent immoral behavior Elsewhere in the business, bad planning and errors often lead to a lack of morality. To prevent unethical behavior, set realistic goals for employees. If employees are expected to reach accessible quotas and goals, they may engage in unethical behavior to try to reach those goals. Constantly monitor staff performance. Employees are sometimes discouraged from their performance and take credit for completing unfinished tasks. Train all staff properly. Trained employees often cut corners and show excuses for not completing business as required. Take away Lack of ethics has a negative impact on staff performance. In some cases, employees are so concerned with coming up and paying that they overlook the procedure and protocol. This can lead to additional paperwork and carelessness errors that will result in the work being completed again. Furthermore, employees who think morally and follow rules do not take them forward in their business field, sometimes lacking the motivation that often leads to performance degradation. Thankfully, society is starting to react and more attention is being paid to the extent of the problem and what to do about it. Accountability and transparency is the new buzzword. Corporations and cities are adding integrity officers, making sure everyone is aware of the code of conduct, training employees on ethics and cracking down on criminals. Yet, it is up to each of us to understand what moral behavior is, to think about it every time we make a decision, and to alert our leaders when it is happening. We, as a society, cannot allow immoral behavior to become normal. In light of the scandalous schemes and scandals of the company, the business industry has gained a reputation for its lack of ethics. In an industry where leading and making money are more important than moral decision making, the importance of ethical behavior in business can seem daunting. Lack of ethics poses many problems for a business. Hidden Costs of Organizational Dishonesty