Unethical and Illegal Behaviors in the Workplace - Work Institute (2024)

Unethical Behavior, Illegal Behavior, and Financial Impropriety in the Workplace Remain a Problem

Americans today are rarely surprised upon hearing of any incident of unethical, fraudulent, or illegal behavior in the workplace. Instead, we just accept it as normal and routine if you will. Instead of being proactive in eliminating those threats, we sit about waiting for the next unethical, fraudulent, criminal act to hit the news.

Before getting too deep, what even is ethical behavior in the workplace?

Most people are not surprised by the next incident of workplace violence whether it is an obvious act of shooting, sexual harassment, abuse, or the more subtle incidents of unethical billing, violating safety practices, or tolerating harmful behavior.

Unethical behavior in the workforce is not restricted to overt acts. It includes workers acting out and aggressively confronting supervisors, supervisees, and colleagues, and it includes more subtle behaviors that compromise people, productivity, and organizations.

• Sexual harassment and sexual harassment allegations have been tolerated in multiple companies, including 21^st Century Fox, NPR, the US Congress, Bank of America, and Fox News.
• A credit-reporting company, with previous knowledge about system flaws, allowed the personal information on 145 million people (about half the US population) to be hacked. This company was fined $700,000,000.
• A steel company falsified information on items sold to airline and auto companies.
• International automakers were forced to recall 1.6 million vehicles, reporting they allowed unqualified inspectors to conduct final inspections on vehicles.
• A top-10 US bank charged up to 570,000 consumers for auto insurance they did not need. The same bank revealed it created up to 3.5 million accounts without customer permission.
• A cell phone company slowed phones to compensate for decaying batteries.
• A hospital management and ownership company provided kickbacks to physician groups for patient referrals.
• OSHA issued fines for safety violations that employees were aware of but either failed to report or ignored in their reporting.

Workplace (and school) shootings, sexual abuse, and bullying can all be avoided if information is shared and acted upon. Still, too often, we respond with “All the signs were there.” Now, if organizational members see all the signs, why the reluctance to report and intervene?

An organizations tolerance of misbehavior (impulsive emotional reactions, poor decision-making, gossip and rumors, exaggerated speculation, bad supervisory behavior, inappropriate remarks, and compromises to relationships) remains a core reason why productive employees quit, why employers pay fines (and are forced to reserve funds), and why personal and organizational reputations are lost. Compromising and inappropriate behaviors additionally places a company at risk for willful negligence, negligent hiring, and negligent retention.

Are you aware of any harmful, unethical, illegal, or financial impropriety in your organization?

Employers need to ask this question to current and former employees. Anytime an organization conducts Stay Interviews, Exit Interviews, Pulse Studies, and or Engagement Studies is the time to ask about legal and financial behavior. Our Exit Interview data reveal that 6% of former employees report awareness of unethical, illegal, or fraudulent behavior in the organization. One out of every eighteen former employees reported they knew about such behavior.

But what about current employees? What do they know?

Some employers may never know if there are more actual incidents of workplace misconduct than in prior years or if notable social movements like #metoo, #neveragain, #Icantbreathe, etc. led workers to report incidents at a greater rate than in prior years. What is known, is that many productive and marketable employees no longer need to tolerate unacceptable behavior because they can choose to go elsewhere as market conditions remain strong and job opportunities continue to increase.

Employers need to act on reports of misbehavior or read about it in the headlines

Organizations need to provide employees with ongoing avenues to report misconduct. And I do not mean passive and rarely utilized 1-800 lines. Companies must proactively and routinely solicit and document awareness and absence of harmful, illegal, unethical, and noncompliant behavior. When organizations create ways for all employees to bring forward concerns about questionable behaviors and act on employee feedback to minimize harm, they create a positive work environment. Workplace violations rise and continue to occur when organizations tolerate misconduct.

Ongoing Exit Interviews and Stay Interviews incorporate behavior risk analysis and are both foundational to an organization’s human and financial vulnerability analysis. It is vital to proactively promote ethical behavior before the organization is potentially destroyed by tomorrow’s headlines.