How to define and develop your workplace ethics
Ethics influence every part of your business. Here’s why they matter, how to develop them and how to make sure your company excels at making ethical choices.
What are workplace ethics?
Workplace ethics are a set of moral guidelines that an organization lives by. Just as families share a moral code, and parents instill moral values with their children, a company’s ethics set the moral compass for relationships with customers, between colleagues and in relation to the wider community.
“Leaders are in a position of power, and if they start to make unethical decisions it can quickly lead to a toxic workplace culture.”
Ethics are relevant in every industry. Whatever line of business you’re in, ethics will come into play at some point – in big or small ways...
The business case for investing in ethics
Ethics matters in business because it is an important component of a company’s culture, its dealings with customers and suppliers, its brand and public image, and its relationship to its immediate community.
Implementing a formal ethics program has a huge positive impact, according to the US Ethics and Compliance Initiative. Research from their National Business Ethics Survey of US businesses found that companies with a program in place saw lower rates of misconduct, and a higher level of reporting when ethical violations did occur.
“A company’s ethics are defined and modeled by leadership, built and amplified through culture.”
In companies with a formal ethics program, 87% of employees who observed misconduct reported it, compared with 32% in businesses without a program.
It’s why businesses spend time thinking about their higher purpose and vision, clarifying their mission and core values. Without a defined ethical position, it’s very easy for a business to make decisions solely based on maximizing income and profit, and to lose sight of the longer-term qualities that will help it grow and endure.
For example US restaurant Chipotle acts ethically across its supply chain. They source meat from suppliers that don’t use artificial hormones or antibiotics in production, which shows a commitment to animals and to their customers. Chipotle also tries to prioritize local businesses, which supports the community.
Common ethical moments that can arise in the workplace
Here are some examples of ethical dilemmas or gray areas that can happen in a work setting.
- An interviewer asking a job applicant if she has children. This can be construed as a discriminatory question. It’s not necessarily unethical, but it crosses legal and compliance boundaries for fair and equitable hiring practices.
- A supervisor failing to provide the necessary personal protective equipment (PPE) – such as safety gloves, hard hats, ear plugs, safety goggles etc – which ensures that staff can perform their jobs safely.
- An employee lying about their position to a prospective vendor, or making orders or decisions they’re not in a position to make.
- Taking office supplies from work for personal use.
- Giving a subordinate preferential treatment because they’re friends.
- Making personal purchases with a company credit card.
- Calling in sick when really, the employee wanted to spend the day at the beach.
- Setting very high targets for a less-able employee, knowing they will fail and you will be in a position to dismiss them.
- Fudging the numbers on a presentation in order to make the business look more profitable to investors.
- An HR leader knowing that different criteria are used to determine promotions in different offices, but not taking action.
Leading by example
Leaders are in a position of power, and if they start to make unethical decisions it can quickly lead to a toxic workplace culture. A company’s ethics are defined and modeled by leadership, built and amplified through culture.
The more ethics are practiced, the stronger they will grow, which is why it’s a good idea to make them visible and explicit throughout your business. Having them clearly displayed and amplified will help to keep them front-of-mind with all your employees at every level.
You could be doing this at new hire orientation, team meetings, town halls, and every day with your customers. Leadership example is also a powerful way to communicate ethics – employees will learn the appropriate behaviors by seeing leadership modeling them.
The importance of leadership decision-making
In a hot-water situation, an employee might ask themselves ‘what is leadership expecting me to do in this moment?’ The kind of leadership behavior have they seen and noted elsewhere in the company will guide their decision.
Ethical norms vary from region to region. For example, in some cultures, accepting bribes is a normal part of doing business. If a company from a culture where this isn’t the norm, such as the US, does business there, leadership must decide what the company’s stance will be. The question may first be raised by someone in sales, but eventually an individual with decision-making power will need to determine whether taking or offering bribes is in line with the company’s values.
Another leadership-level ethical choice might be around a product recall. If a business producing children’s toys finds out there’s a quality issue with their product, they must weigh up the risk of a small number of dangerous products against the financial cost of doing a mass recall. A choice like this affects not only the business ethics and culture, but the wider community.
Finally, an important ethical arbiter is what happens when an employee brings an issue to light with leadership, through a formal process or otherwise. Does that person experience retaliation or retribution? Do they feel confident that the problem will be addressed, or is there a perception at they shouldn’t rock the boat?
Trust that leadership is ethical and clarity about their moral stance has been linked with better performance in employees, according to recent research. Likewise, research suggests that unethical leadership is often a catalyst to misconduct lower down the hierarchy.
The slippery slope
When it comes to illegal behavior in the workplace, there is a very clear line. Rules about physical harm, discrimination and harassment are often defined by law. For example in the United States, employers must comply with the safety laws enforced by the Occupational Safety and Health Administration and anti-discrimination laws enforced by the Equal Employment Opportunity Commission.
Rules around discrimination and harassment protect certain classes of people from unfair treatment on the basis of things like race, age, disability, gender or sexuality. When these rules are broken, it’s very clear how an organization should behave.
However, legal violations almost never come out of nowhere. There is typically a series of events leading up to the crossing of a legal line, where behaviors aren’t strictly illegal but are certainly unethical.
Bullying in the workplace
One prime example of this is bullying. Most people can relate to this, and almost everyone at least knows someone it has happened to. Bullying can happen between co-workers or it can be practiced by management against more junior staff. This might take the form of setting unrealistic targets that set a worker up to fail, or moving the goal-posts so that they don’t meet the objectives required for a promotion. Failing to provide training or not giving due credit for a co-worker’s contribution could also be used as a means to bully someone.
Another common ethical gray area is the use of company technology. It’s common and in some businesses normalized for staff to use company-owned laptops or computers for non-work activities. Data from Pew shows that 77% of Americans use Facebook during work hours, for example. But is there an ethical difference between a quick glance at Facebook and spending hours on the site instead of working? What about using LinkedIn, which is a social network geared to making professional connections?
There’s a fine line between what’s acceptable and what’s not – listening to the radio on a company machine while working might be fine, but watching films on your work machine may not be depending on the company stance. Making connections with potential clients on LinkedIn could benefit the business – making connections via social media or dating sites, not so much.
Measuring is vital
We’ve all encountered a situation where we’ve seen unethical behavior. But does it add up to a significant problem? And if so, how serious is it? The ethical culture of an organization can be very nuanced, and unless certain recognizable behaviors are being noticed and reported, it can be hard to gauge whether your company is in a healthy ethical place, or if it has started to head down a slippery slope.
A valuable tool for finding out is measurement of employee perceptions. You can do this by setting up a survey program that measures things like:
- A company’s commitment to ethical business decisions and conduct
- The company’s level of integrity when dealing with clients, vendors and suppliers
- How ethical managers are at the company
- The consistency of ethical standards across different business units
- How comfortable people are reporting unethical business practices
Workplace ethics action plan
If you’ve decided to invest in an ethics program, or you’re looking to revamp an existing one, here are some golden rules to follow:
- Measure first
Taking the temperature of your company’s ethics culture will give you a baseline and important insights about where to focus your efforts and what kind of perceptions you want to amplify or change.
- Identify leaders and clarify roles
As we’ve described, leaders have a key role to play in setting the ethical tone of an organization and keeping the culture strong around it. Getting explicit and enthusiastic support from leadership for any ethics program/policies is a must-do. Even better is being able to define a company’s ethical champion or guardian, someone in a leadership position who is willing to own the program and act on issues relating to it.
- Define your core values
What does ethical behavior look like in your company? What matters most? Is it compassion, transparency, fairness, all of the above? Set out your core values in writing, along with a brief explanation of what each one means for the individual. For example:
- Caring – we listen to people and act with empathy
- Can-do – we approach challenges with positivity and curiosity
If you’re unsure where to begin, try starting with the basics. National laws that protect employees can be used as a springboard to create workplace ethics, e.g.
- anti-discrimination policies
- anti-harassment policies
- policies for interactions with clients
- safety policies
- Create a safe reporting process
An ethics hotline or a similar reporting system allows employees to go outside the business hierarchy – which may be where the problem lies – and flag an issue anonymously to those who can help.
- Make it clear how anonymity is protected
Fear of retribution can prevent ethics reporting, and sadly, it’s often founded in reality. In the UK, 78% of staff who reported a concern said they had experienced retaliation, according to a government enquiry. When you launch your ethics hotline, make it clear what will happen next and how the employee blowing the whistle will be protected.
- Socialize your values
Give employees a way to bring the company’s ethics to life. As well as providing good role models in leadership, embed your ethical values in day to day working life through internal marketing and branding. You can also include them in performance reviews, by asking staff to recall a time when they lived the company values with a customer or on a project.
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Ellison, B.N. & Lampe, C. (2016). Pew Research Center. Internet and Technology. Social Media and the Workplace. Retrieved December 4th 2019 from
Ethics and Compliance Initiative. (n.d). State of Ethics in Large Companies, A Research Report from the National Business Ethics Survey. Retrieved December 4th 2019 from https://www.ethics.org/knowledge-center/state-of-ethics-in-large-companies/
Charles H. Schwepker Jr. (2019) Using Ethical Leadership to Improve Business-To-Business Salesperson Performance: The Mediating Roles of Trust in Manager and Ethical Ambiguity, Journal of Business-to-Business Marketing, 26:2, 141-158, DOI: 10.1080/1051712X.2019.1603358. Retrieved December 4th from
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Lipman, Victor. (2016) Forbes: New Global Survey Reveals The Most Ethical (And Unethical) Countries To Do Business In. Retrieved December 4th 2019 from https://www.forbes.com/sites/victorlipman/2016/06/09/the-most-ethical-and-unethical-countries-to-do-business-in/#68f287d57230
Sims, R.R. & Brinkman, J. Journal of Business Ethics (2002) 35: 327. https://doi.org/10.1023/A:1013826126058. Retrieved December 4th 2019 from
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