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Top risks and costs of unethical behavior in business conduct

One does not have to look very far in today’s world to see numerous examples of an absolute erosion of ethics and basic core values and guiding principles of what is right and what is wrong in how business is being conducted.

A quick scan of the business environment reveals that unethical business conduct has risen to the point where trust in our businesses and institutions, as well as the very systems that make our society work, are in a position of significant risk. One could make the case that at no time during the last 20 or 30 years have business ethics been of such paramount importance to the well-being of our business and government entities and our way of life in this country.

Just think about how the business world has been shocked and rocked by major corporate scandals involving unethical behavior. Some of the real “poster” companies of ethics violations include Enron, Tyco International, WorldCom, HealthSouth, BP Oil and Union Carbide. Each of these would no doubt make the top 10 list of biggest corporate scandals.

The risks and costs associated with these examples of unethical behavior are astronomical in dollars, but also extremely high in other nonquantified costs and risks.

The 10 most significant risks and costs from unethical behavior:

(1) Increased risk of doing business and the possibility of bankruptcy and severely damaged company brand and image.

(2) Decreased productivity.

(3) Increased misconduct and conflict internally.

(4) Decreased performance levels of employees.

(5) Increased employee turnover and more challenging employee recruitment.

(6) Decreased success of retention and recruitment of employees.

(7) Increased absenteeism and “presenteeism” (the tendency to stay at work beyond the time needed for effective performance on the job).

(8) Decreased probability of reporting misconduct and unethical behavior of others.

(9) Increased dysfunctional behaviors such as not paying attention to details, scapegoating, withholding information, under delivering and overpromising, not giving credit to others, lowering goals, misrepresenting results, etc.

(10) Decreased value of the company.

The time to avoid these most significant risks and costs of unethical behavior is before it occurs, not after.

And one way to do that is for each organization and each individual to commit to fostering an environment where ethics are recognized and honored, rewarded and demonstrated in everything each of us does each day.

Glenn Ebersole, Professional Engineer, is strategic vice president, business development\marketing at Hollenbach Construction Inc., an award winning professional construction management, design/build and general contractor organization in Boyertown.

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