Unethical workplace behaviour can vary from minor transgressions to illegal activity, but is essentially actions that harm the legitimate interests of the organisation, its workforce, customers and wider society. Examples include (but are not limited to):

• Theft
• Fraud
• Deception
• Bullying and harassment
• Sabotage

Such behaviour could result in absenteeism, tardiness, rule-breaking, disengagement, defensive outbursts, and could lead to an increased attrition rate among those affected. Other examples of unethical behaviour may be the advancement of financial gain, such as price-fixing, putting profit above safety, withholding vital information or misrepresenting facts.

A growing number of companies recognise that ethical practice and corporate social responsibility policies boost employee commitment and motivation, customer loyalty and brand reputation, with positive knock-on effects for recruitment, retention and employee relations.

Ethical climate refers to the social norms and values that outline what ‘the right behaviour’ is and how ethics should guide behaviour. Norms can be reflected and reinforced by formal processes (for example, disciplinary processes and reward) and informal processes (such as leadership behaviour). Climate is linked to job satisfaction and employee wellbeing, but can change rapidly.

“A climate can be locally created by what leaders do, what circumstances apply, and what environments afford. A culture can evolve only out of mutual experience and shared learning.” 

Edgar Schein

Ethical context

All organisations have an opportunity to influence their ethical climate and to encourage the workforce to act and behave in an ethical manner. Organisational climate, and perceptions of ethical leadership have been found to positively impact ethical behaviour by employees. Honestly identifying the type of ethical climate that exists in your organisation allows steps to improve it. There are three key types of ethical climate to be aware of:

• Egoistic/instrumental: Acting in self-interest is the norm; people protect their own interests, including putting company profit above other considerations and the consequences of actions. This climate is associated with unethical choices and dysfunctional behaviour.
• Benevolent: Acting in the interest of others, the workforce is actively concerned about the customers’ and public’s interest and negatively connected with unethical choices.
• Principled: Sticking to rules and regulations is the norm and there is a reduction in unethical choices and dysfunctional behaviour.

• The organisation’s business model is fostering unethical behaviour; for example, harvesting consumer or user data to sell to advertisers.
• Shortcuts are taken that may detrimentally affect stakeholders or the wider community (a sign of an egoistic climate).
• The level of trust within and outside of the organisation from staff and customer surveys is low (this may identify a perception of egoistic climate as opposed to the benevolent or principled perception that an organisation may assume exists).
• Dealing with competitors in an overly ruthless or underhand manner may be a clear sign of an egoistic climate.
• No effort is undertaken by leaders to foster active participation in strategy development, business activities and innovation.
• There is high staff turnover. Insights in exit interviews flagging coercive management, disputes over pay or other issues are indicators of an egoistic climate.
• The types of grievances raised may provide an indication of the type of ethical climate prevalent in the organisation.
• Infrequent or low participation on platforms for raising concerns, such as staff surveys and representative groups, could mean a lack of employee confidence that there would not be reprisals for feedback.
• Financial transactions (such as paying suppliers late) can be an indicator of financial stress and may suggest an egoistic climate.
• What is the level of understanding of differences across international territories and cultures and do the organisation’s values translate internationally? If considered to be low, it would jeopardise a principled climate.
• Are policies and processes fit for purpose? Sticking to rules and using checks and approval processes would be indicative of a principled climate (however, it’s worth checking that the appropriate balance is struck and that bottlenecks are not caused). 

What you can do

• To start, look at where the balance lies in the organisation between different and competing stakeholder interests.
• Explore (and agree) the accepted organisational norms within the workforce and the ethical considerations of their work, including behaviours. Agree how these will be measured and monitored. 
• Consider how leadership, management and HR practices shape the ethical climate. 
  Use internal communications to encourage high ethical standards and ensure that the values and/or code of ethics are not in contrast to the climate. 
• Cascade regular reminders in newsletters and business updates confirming  the ethical expectations, and also reaffirming the leadership support to uphold those values. 
• Ensure there is a triangulation of available evidence to support workforce-based recommendations and management. Regularly extrapolate important insights from all stakeholders and agree critical indicators. 
• Monitoring behaviour has been found to reduce unethical behaviour and draws attention to the individual’s moral standards and awareness. Balance this with engendering trust. 
• Commit to – and deliver – inclusion across the organisation to achieve either a benevolent or principled climate. 

Use the 'Organisational climate checklist' download below on how to address the ethical climate in your organisation.

The Irish Aviation Authority ordered Irish-based airlines to comply with flight time limitations for their pilots. Due to a management and scheduling error, one no-frills airline didn’t plan for this regulation until it was too late. Some 20–40 flights per day were cancelled over a three-month period in 2017, affecting 700,000 passengers. Pilots (who were encouraged to take month-long holidays between October and March to avoid the busiest times) were told to buy back or forego their holiday entitlement until the following year, amid claims the firm could do this without workforce agreement or consultation. Affected passengers were initially offered a £40 voucher as compensation (which does not conform with EU rules governing flight cancellations) but the airline was eventually forced to offer the minimum dictated by the regulators. This form of unilateral decision-making by senior leaders has led to passenger distrust, many pilots moving to different airlines, a massive dent to reputation, and the airline has had to at last recognise union representation. It has now taken steps to rebuild trust by reconstructing their employee value proposition.

A code of conduct may be supported by disciplinary procedures for failures to uphold the code. It is, therefore, typically more of a compliance requirement and likely to be more directive. A code of ethics, on the other hand, sets out the values and/or principles of an organisation (and may include aspirational aspects).

Both types of code are applications of normative ethics (the study of ethical action), which is concerned with the ‘oughts’ of ethical behaviour. A code of ethics may be used as a guide to inform decision-making and exemplify what ethical practice looks like; a code of conduct is more a tool for compliance and enforcement.

For this guide we refer to a code of ethics rather than a code of conduct.

The beliefs of the organisation expressed through values and/or a code of ethics must be credible and echoed by the board, leadership and management. This endorsement is vital to embedding ethics in the organisation and needs to be communicated regularly.

Ethical context

Tackling the causes of unethical behaviour should be a priority for businesses. A code should not be something that sits in a drawer or on the intranet; its existence will not guarantee ethical behaviour and choices. Its underpinning values and principles should not only be understood but shared by the workforce and adopted as the way to do business. The code should be clear on what customers, stakeholders and the workforce can expect from individuals and from each other. Codes must be actively enforced to promote ethical behaviour, and unethical behaviour must be tackled consistently across the organisation regardless of status of the individual. Checks and balances should identify all blind spots and any inaction.

A multinational energy company reported in its 2018 sustainability report that 50 employees had been dismissed for non-conformity with their code or for unethical behaviour. The organisation trains its workforce on how to apply the code in their daily work. In 2018 this training focused on raising awareness of workplace harassment, conflicts of interest and protecting confidential information.

• If your organisation operates internationally, there may be different ethical standards in different parts of the world (for example, regarding gifts and entertaining). Trying to impose a universal standard may result in disengagement with the principles by international based colleagues.
• There is a lack of awareness or understanding in the workforce of the ethical ramifications of an action, behaviour or decision.
• Boards and stakeholders struggle to assess whether any codes are effective.
• The workforce needs to be regularly asked if they have read and understood the code.

 
What you can do

• To be fit for purpose, the code should be easy to read and translate into practice by all stakeholder groups. Avoid jargon, legalese and vague statements.
• Watch out for the tone taken within the code and with communications about the code. Beware of being excessively strict on the workforce so they do not start hiding issues.
• It may seem obvious, but make clear whether the code is mandatory, including the ramifications of failure to adhere to the code.
• Where possible, metrics should be agreed between the board and leadership to measure the effectiveness of a code and to identify patterns that suggest action should be taken.
• Find a way to balance taking action and raising concerns with a ‘no-blame’ culture (bear in mind that this will differ between companies).
• The code should be a reference document, but should not be built to stand alone; it must be supported with auxiliary materials (for example, decision-making frameworks, policies and processes).
• Individuals who are promoted should be clear role models of the organisation’s code. 

See the flowchart below for advice on how to develop and consistently embed codes.

Organisations that treat their workforce with fairness, integrity and sensitivity are more likely to find that the workforce responds with increased commitment and productivity.

Ethical context

The workforce is more likely to act unethically when they perceive their organisation to be unfair; for example, if reward or resources aren’t shared fairly, or policies and procedures are inconsistent.

This is also the case where organisational politics leave employees with a feeling that you must ‘watch your back’ and that your success at work depends on more powerful ‘others’. The effort required to navigate the politics can create a strain and reduce motivation and commitment resulting in unethical behaviour and in people protecting their own interests above other ethical considerations. Fear and frustration can have similar negative effects.

Take the psychological contract (the mutually implicit expectations of the workforce and employers towards one another) as an example. If employees feel that promises are broken, removed or changed, they might experience deep feelings of unfairness, dissatisfaction and loss of trust. Outward signs of such feelings could manifest in seeing the red flags below.

• Rising numbers of grievances (both officially in writing and unofficially where mediation can help to resolve the situation). 
• Spikes in absenteeism (especially for employees where this might be deemed out of character), poor performance, incivility, attrition rates and extended sick leave.
• Surveys revealing that employees have rising distrust in leaders, experience unreasonable organisational politics, and feel that promotional opportunities only favour the few.
• Disparity of pay, favouring men.
• Unfair allocation of work within a team (causing stress for some and an easy life for others).
• Misuse of non-disclosure agreements (NDAs).

What you can do

• People deserve to be treated fairly and be heard on matters that affect them (in addition to their rights and protection under law). People professionals should not assert or distort the balance of power; they should strive towards equal, positive outcomes for the workforce (like wellbeing) and the business (like profit and loss). 
• Where possible, don’t let short-term business outcomes lead to decision-making that could be deemed unfair and be detrimental to the business in the long run. 
• Assess employee perceptions of politics and fairness through surveys and focus groups. Ensure they are transparent, and communicate what you are doing to make improvements based on the feedback. 
• Review policies and practices to ensure they are fair and unbiased. Consider the fairness lens for everyone in the workforce: if it could cause a detriment to an under-represented group, it is unfair. 
• Keep political behaviour (such as ambiguous decisions or promoting favoured employees) in check, challenging it when it becomes unhealthy. 
• Have clearly defined values and behavioural competencies, role-modelled by leaders. 
• Ensure development opportunities are extended as far as possible.
• Work with managers to ensure that work is allocated fairly within teams, with equal opportunity to be involved in stretching projects. 
• Build inclusive organisations that treat people fairly and respond to diverse voices. 
• Advocate consistency in performance management. It should be regular and offer feedback that motivates the workforce, helps them improve, and holds them to account.
• Review NDAs to ensure they don’t prohibit an employee from bringing a genuine unlawful act to be investigated. Allegations of discrimination or harassment should be investigated properly and fairly in line with your grievance policy.

In 2018 the New York Times reported that HR departments are ill-equipped to investigate discrimination complaints and, in some cases, have hidden abusive leadership behaviour. Women working at a leading retail sports outfitter’s US headquarters complained to HR about sexual harassment and demeaning treatment by male supervisors, who used vulgar and condescending behaviour towards them. The culture has been described as toxic and pre-disposed to promoting men over women, regardless of behaviour or complaints. One manager received promotion to an executive role despite having three grievances on file brought by three female direct reports. It took an anonymous survey to trigger an internal investigation and a major shake-up in the company’s top ranks.

Certain personality factors (which include an individual’s characteristic patterns of thought, emotions and behaviours), along with their psychological attributes, can lead to unethical behaviour. Therefore, understanding personality traits of individual staff, and building in measures to steer the likely courses of behaviour, will be important considerations in creating ethical practice.

• Competitive individuals are more likely to sabotage or misrepresent work. This trait is more pronounced when these individuals have information on the performance of others.  
• High levels of egocentrism are shown by self-focus and employees advancing their own interests with little concern for how their actions impact others.  
• Greed will be shown by someone making social comparisons which can motivate actions to increase their wealth, and by optimising results or outputs for their benefit.  
• Feelings of social exclusion can affect those with a need to be included in a group.  
• High levels of impulsivity indicate less willpower or self-control. For example, pyramid schemes demonstrate the human capacity to focus on immediate payoffs while discounting future detection and punishment.  
• High levels of moral relativism – where moral principles are context-specific or situationally determined; people with this trait can therefore feel that harm to others may be justified.  
• Those with high levels of happiness may be prone to passively follow pressures to engage in unethical behaviour to sustain their happiness or take the path of least resistance. This was exemplified by the associates that were highly remunerated to recruit clients for Bernie Madoff, who orchestrated an elaborate Ponzi scheme. Despite having some reservations, the associates did not take action.  
• Undesirable personality traits such as self-beneficial behaviour; shown by those who take an ‘ends justify the means’ approach and are prepared to violate social norms and commit fraud.  
• Be aware when personality is overly attributed as a cause for behaviour – for example, a late colleague being considered as tardy (person based) rather than faulting factors such as transport (action based).  
• Blame is used to rationalise unethical behaviour (also found when individuals negatively feel an external locus of control (the degree of autonomy in their work)).  
• Absence, lateness, staff exits, complaints, over-budget project delivery or failure to deliver/under-selling of products and services/sabotage or withdrawal can be signs of personality-related matters; these may be caused by low self-esteem, stress or negative emotions such as anger, guilt, lack of job satisfaction, or a sense of unfairness.  
• The extent to which the performance management process is dependent upon a prescribed set of behaviours – some personalities are more prone to behave in a particular way; there should be reflection of this and flexibility in the expectations of the workforce.  
• Temporary ethical blindness – a subconscious state in which a person is unable to see the ethical dimension of what they are doing (such as played out by the NASA engineers who voted for the Challenger shuttle to take off despite safety concerns); identified through auditing or reviewing decision-making after the fact.  
• Moral disengagement (self-justification that unethical behaviour is less immoral by minimising or ignoring the consequences and blaming victims) – this is indicated by passive states, cynicism or complacency, and identified through reviewing projects, errors, complaints. 

What you can do 

• Reputable personality profiling can be used in the creation of behavioural strategies, leadership development, team evolution and performance management to better understand strengths, preferences, career interests, development areas and job design.  
• Consider if personality is a feature of workplace conflicts, and whether it highlights a training need for the individuals, team and/or manager(s) involved.  
• Use manager and workforce training to raise awareness of the impact of personality and mood, and the increased risk of unethical behaviour of some personalities. This will need an environment in which challenges can be made and honest conversations can take place as well as the workforce feeling safe to share experiences or issues.  
• Provide unconscious bias training, facilitate regular group discussions to examine where bias appears in work and decision-making. Discuss contributory factors in case studies to raise awareness and reduce ethical blindness, looking beyond diversity and inclusion risks.  
• Develop empathy in the workforce, especially in managers and leaders.  
• Develop proactive use of customer feedback, including customer-led websites; co-ordinate team discussions about the impact of the work on customers and suppliers; facilitate opportunities to meet with each of the customer groups and share learnings with the remainder of the workforce.  
• Foster enthusiasm and a sense of agency (responsibility) to overcome a negative external locus of control belief (the degree to which people believe that they have control over the outcome of events, as opposed to external forces beyond their control). For example, people with a strong external locus of control will blame external factors, such as the teacher or exam, for their own inadequacies.  
• Reduce impulsiveness by developing decision-making frameworks, and implement a system to audit/moderate decisions made and the journey leading to those decisions.  

• Monotonous roles – there is a risk that people can conduct their roles on auto-pilot and consequently miss potential unethical issues. You might expect that with a low variety of tasks you would have more time to consider ethical choices and make ethical decisions, but researchers carried out an experiment giving participants either a low- or high-variety task followed by an activity where they had the opportunity to cheat. They found that those who carried out the low-variety task were more likely to cheat, suggesting that deliberative thinking leads to greater compliance with rules.  
• Highly pressurised roles that don’t allow for thinking time or reflection can incite shortcuts to meet a target, timeframe or objective. The pressure to compromise ethical principles to meet business needs can be overwhelming, especially in the absence of moral reminders (such as a code of conduct) to mitigate this risk.  
• Where individuals work in isolation/remotely, there could be a higher risk of decisions being made that are contrary to company values and ethos.  
• Roles where individuals are removed from the consequences of decisions – for example, a head office decision to impose a uniform on retail staff without consultation. Another example would be when drawing up confidentiality policies and agreements, not being transparent in spelling out workers’ rights in pursuit of protecting assets, data, clients, intellectual property, trade secrets and confidential information. 

What you can do 

• Where possible, design jobs that are meaningful, interesting and stretching, provide stimulation and learning opportunities, and ensure workload is manageable.  
• Understand the risk factors related to different types of job to inform where to target interventions on ethical behaviour – from ethical training to moral reminders and to provide whistleblowing ‘speaking-up’ channels.  
• Ensure each role has an element of deliberative thinking (weighing up options) to relieve monotony or prolonged periods of repetitive work. Break up the routine, support learning, plan to re-deploy and give training to re-skill and ease transition, encourage personal projects and stretching objectives.  
• Ensure that those who work in isolation or remotely have accessible ways to gain feedback on their decisions and seek advice on workplace issues. Ensure your communications and engagement strategy caters for and reaches your remote workforce.  
• Ensure wellbeing (the physical, emotional, social, spiritual, and intellectual needs of employees) is a priority by providing safe working practices, an inclusive working environment, effective people management, an element of autonomy to reach one’s own decision, and so on.  
• Protect work–life balance. Working under pressure can be stretching for us all from time to time but ensure this doesn’t become ‘the norm’ and lead to burnout and/or work-related stress.  
• Begin to adopt the mindset that every role should be open to flexible working.  

Routine and repetitive tasks can often be carried out more efficiently by an algorithm or computer programme. The ONS analysed the jobs of 20 million people in 2017 and found that 7.4% of these were highly likely to be replaced by a robot. While this is often framed as jobs being ‘at risk’, the CIPD’s research suggests AI and automation can have positive impacts on jobs, especially by removing low-skilled tasks. Job design and analysis should take automotive innovation into account and provide opportunities for the workforce to gain the essential skills development required of businesses in future.

A target is a set of measures broken down to help achieve an overall work goal. Reward is an important factor in the process of attracting, retaining, rewarding and engaging with the workforce. The most effective reward packages will be aligned with business needs, reflecting the organisation’s values, purpose and performance.  

Ethical context

Hard-to-reach and short-term goals can put undue pressure on employees, which can increase the risk of unethical behaviour. This risk is higher in competitive environments or when combined with performance-related pay. In these circumstances, employees become more likely to ignore ethical consequences, instead focusing on potential short-term benefits. Evidence from previous CIPD research and surveys report work intensity has increased over the past 20 years and the workforce think they are working harder now than ever before. There are now great pressures to meet targets (performance, sales), deadlines and customer demands. 

• Unachievable targets and goals can cause disengagement. Hard-to-reach and short-term goals can put undue pressure on the workforce, which can increase the risk of unethical and, in some cases, fraudulent behaviour (as in the case of Wells Fargo). 
• Increasing the bar each time a target or goal has been met – an employer could argue this is representative of market conditions; however, how this practice is perceived by the workforce matters, especially if targets disproportionately impact one group over another (for example, part-time workers compared with full-time workers). The pressure is greater when remuneration is involved or combined with performance-related pay. In these circumstances, the workforce becomes more likely to ignore ethical consequences, instead focusing on short-term benefits. 
• Use of SIPs (sales incentive plans) and deliberate misrepresentation of need – SIPs are extensively used throughout the private sector. However, they are also open to incentive-gaming, whereby the commission incentivises people to make sales that don’t necessarily benefit the party who bought the product. For example, mis-selling has seen some high-profile pharmaceutical companies encouraging doctors to prescribe opioids not linked to clinical need, or selling unwanted or unnecessary insurance policies. 
• The presence of the ‘say/do’ gap – for example, your EVP (employee value proposition) states people are your greatest asset, but you pay under market rate. Issues can arise if you are deliberately keeping base pay under market rate as an incentive to perform. This can backfire if it results in unintended consequences, such as the mis-selling of PPI scandal in the UK. 
• People are rewarded for the wrong behaviour – for example, an individual who consistently exceeds targets but displays unethical behaviour that is overlooked by management. 
• Rather than use standard disciplinary action to realign individuals who step out of line, settlement agreements are used to dismiss individuals instead. This sends a broader message to the rest of the workforce – misbehave and you’ll be paid off to leave. 
• The CEO pay ratio for yearly salary and bonus increases – are percentage increases for executives vastly inflated in comparison with percentage increases awarded to employees?
• A wide gender pay gap differential – if after an audit has been carried out there is a wide gap, this may reflect past biases in decision-making and recruiting unless objectively justified. 
• There is no recognition for values and competency role-modelling. 
• A ‘do whatever it takes’ attitude is present. 
• Lack of transparency for pay and reward structures can lead to pay speculation and feelings of unfair treatment. 

What you can do

• Ensure objectives/targets are realistic, and that monetary rewards are not only linked to short-term outcomes. Due consideration needs to be given to employee perceptions of the attainability of goals, especially when tied to financial rewards. While goals can be difficult, they need to be perceived as attainable (SMART goal-setting will help here).  
• Avoid pitting the workforce against each other by keeping promotions fair and transparent.  
• Look at the evidence around exceptional performance and development, and link that to pay.  
• Consider how bonuses are dispersed; a team bonus will encourage team performance, whereas individual bonuses could encourage Machiavellian behaviour, hiding information from others for self-interest or to hinder another’s progress.  
• Review your reward strategy and regularly benchmark salaries in the open market. Ensure pay structures and pay progression reflect achievement and the behaviours and attitudes that are valued by the business. Review outcomes first and outputs second. 
• Clearly define performance measures and management as well as the consequences when an individual steps out of line, no matter what title they may hold. 
• Ensure you have a clear, explicit and consistent policy in place for pay increases, how they are awarded, and what behaviour deserves such awards. 
• Corporate governance is needed to improve CEO pay transparency and ensure boards recognise their broader responsibility towards the workforce when decisions on executive pay and business investment are made. Equally this applies across the workforce for decisions on pay-setting and pay progression for salary/base pay as well as on bonus/variable pay and incentives. 
• Recognise excellence and upholding values via workforce-nominated awards. 
• Position variable earnings carefully – for instance, using cash bonuses to drive higher sales while also considering corporate governance standards – to include the expected behaviours required to achieve targets. 
• Have a remuneration committee for executive pay governance, and consider appointing an employee representative onto it to ensure equity, challenge ethical propriety and ensure that it is free from bias. This can also be applied to how bonuses are awarded across the organisation. 
• Managers should take account of the workforce contribution when making pay decisions as opposed to just the top team. HR should give sufficient support to managers for assessing performance and giving feedback. 
• Strategic reward should be based on long-term reward policies and practices to support and advance both the organisation’s objectives and employee aspirations.  

The demise of Carillion in January 2018 was largely due to mismanagement by its leaders, and yet the CEO who presided over the collapse was still paid a £660,000 salary until October 2018. 

An international bank incentivised the workforce to sign up new customers and paid handsome bonuses linked to targets and goals. Workers created 3.5 million fraudulent accounts as a result. 

Car giant manufacturers’ executive pay packages remain unchanged despite the emissions scandal. 

A world-leading security company boss received a record £4.8 million in pay and bonuses despite numerous scandals. The bungled under-recruitment of security guards for the London 2012 Olympics forced the army to step in. 

If you take responsibility for your own actions, you show accountability. However, this also means accepting accountability when things go wrong and admitting to your mistakes!  

Ethical context

Numerous corporate scandals over the last few years have diminished trust in business. The car giant manufacturer (who admitted to deliberately cheating on US diesel emissions tests for several years) and a leading UK sports retailer (accused of paying the workforce below the minimum wage and creating a culture of fear) show a lack of accountability in some organisations, and raise critical questions about the future of business, such as how ethical cultures can be created. According to the UK Companies Act 2006, among other matters, directors should "maintain a reputation for high standards of business conduct and be considerate of the interests of the workforce". 

Conversely, when looking for accountability from your workforce, businesses must have mechanisms in place to allow for mistakes without retribution (although it will depend on the size and impact of that mistake as to how it is handled appropriately, fairly and proportionately). It is well known that people learn from mistakes and managers should receive adequate training on how to deal with these situations.  

This is a unique role for people professionals to play in organisations, considering recent corporate scandals where there was a lack of accountability for unethical practice. It appears that organisational context influences individuals’ perceived ability to challenge, with those working in third-sector and large organisations feeling the most empowered. 

• There is insufficient supervision and free reign to act unethically without consequence (such as lack of a disciplinary process).  
• Employees fear losing their job if ‘I admit to this mistake’. This can lead to serious cover-ups which could have ramifications further down the line. Think of the Chernobyl nuclear disaster – inadequate safety regulations deliberately suppressed by senior shareholders and coercing the government into lying about the extent of the impact post-event.  
• There is careless, indecisive or negligent behaviour towards circumstances, colleagues, customers or stakeholders. ‘I just pursue my organisation’s aims when I’m at work’ is an ethical choice in itself, and a very dubious one – compare it with, ‘I was just following orders’ as a way of absolving responsibility.  
• There are reports of micromanagement, which can result in procrastination and lack of accountability due to the fear of making the wrong decision.  
• People professionals have limited power in organisations. Academics have questioned the extent to which people professionals are in a position to uphold ethical values within organisations, because of the boundaries of their role.  
• Negative comments about your organisation are posted on social media by a disgruntled ex-employee or customer which present a one-sided story.  
• Work is reshaped using digital and AI technology with little or no thought to re-deployment, upskilling and development of those employees affected by this initiative. 

What you can do

• Adopt an evidence-based approach to decision-making, reducing reliance on gut feeling and making decisions more reliable. Evidence-based practice involves critical thinking and judicious use of evidence from research and/or organisational data, alongside professional expertise and stakeholder concerns.  
• Create management structures that hold people accountable. Provide checks and balances where decisions are made in isolation and the opportunity for individuals to ‘speak up’ (see ‘whistleblowing/speaking up’) when they are concerned about a decision.  
• Consider how behaviour can be monitored effectively and constructively, without leading to micromanagement or eroding trust.  
• Everyone should have a chance to exercise powers of decision, planning and self-command, therefore responsibilities should be distributed rather than concentrated around one person.  
• Where individuals work in isolation or remotely, encourage collaborative decision-making so that risky decisions by one person can be challenged by another. Provide a code of conduct and access to advice on workplace issues prior to the decision.  
• Less hierarchical organisations make it more difficult to engage in unethical behaviours and increase accountability, since people have stronger relationships with their colleagues through working more closely together.  
• A cease-and-desist response to negative comments on social media may be an initial reaction, but good HR recommends an impartial approach and a genuine desire to investigate the issue.  
• Clearly mapping workforce-related risks when looking to implement automation and AI as part of a workforce planning exercise minimises the risk of having to place people ‘at risk’ and provides new opportunities for those affected.  

An extract from Enron’s Code of Ethics, 2000, said: "we want … a reputation for fairness and honesty…."  

Hedging structures employed by Enron between 1999 and 2001 have since been labelled fraudulent. The hedging transactions were extremely complex and shown to executives in hurried meetings with experts touting the brilliance of the theories. The company fell victim to the ‘groupthink’ mentality and acceptance of accounting structures that were not understood and endorsed by its accountants, Arthur Andersen. Questionable financial dealings and aggressive practice enabled growth of debt to fatal levels (reported on the balance sheet as $13 billion, the actual number was closer to $40 billion). The structures for debt arrangements became complex and debt deals were made to look like revenue. Many of these deals took place between 1997 and 2001, when Wall Street considered Enron to be one of the most profitable companies around. Subsidiary companies with conflicts of interest were permitted. A year after being the seventh largest company on the Fortune 500 list, Enron was known as the largest bankruptcy in US history, owing $67 billion to creditors. Shareholders lost $60 billion of value. 6,000 people lost their jobs, 22,000 workers were affected, and many lost their retirement savings. The directors were convicted of fraud in 2006.  

In this example the actions of leaders and decision-makers meant that social norms became corrupt. 

Using internal communications is one tool to encourage high ethical standards in the workforce and ensure that the values and/or code of ethics are not in contrast to the climate. Beyond establishing a code of ethics, embedding ethical practice within your organisation requires consistent communication, particularly from the board, leadership and management. Making the ethical expectations of an organisation clear to the workforce is vital, but an essential second step is to ensure understanding and awareness of ethical issues and hazards. The UK Institute of Business Ethics (IBE) has found that companies with a code of ethics financially outperform those without.  

Ethical context

Unethical conduct by the workforce poses a wide range of risks for the organisation, from compliance failings and reputational damage to a breakdown in the trust of customers and stakeholders. Having a code alone is not indicative of being more ethical. Organisations with an ethics programme benefit from the confidence instilled in stakeholders. The IBE also found that in organisations with an ethics programme, employees seem to have a better perception of corporate culture.  

As ambassadors of the organisation, the workforce needs to understand and connect to the importance of the ethics and values of the organisation and how they relate to their work. Companies are increasingly developing ethics resources and programmes to bring to life their values and expectations. A failure to train and communicate these values and the code of ethics could explain the gap between principle and practice, and could certainly be perceived as a difference between intention and operation. Communication is also key to developing trustworthiness to suppliers and customers. A reputation of honesty and ethics will contribute to an organisation’s success.

• There is a code of ethics that provides information but has no support from regularly repeated tangible activities; the mere existence of a code is not enough.  
• Communication and messages gloss over ethical failures; this will disengage the workforce and further damage the organisation’s reputation.  
• There is a sense that ‘everyone is doing it’; this can be counterproductive.  
• One-way ‘broadcast’ communication simply tells the workforce what to do (and what not to do).  
• There are single training events that are only open to new starters (and are never repeated or built upon).

What you can do

• Align the organisation’s mission, values and code of ethics, and communicate widely and regularly so you are seen to have established a position on ethical practice.  
• Be transparent about challenges (both internally and externally), and when unethical events occur do not hide behind the need for ‘confidentiality’. In a UK Governmental enquiry, criticism of hiding behind confidentiality was made by the committee members. While it will be necessary to keep the content and outcome of grievances or whistleblowing concerns confidential, there can still be reporting of the quantities and patterns.  
• Emphasise what the company stands to gain from ethical actions or decisions; this can be more effective than emphasising what the business stands to lose.  
• Communication should be two-way. The key to employee engagement in ethics is to avoid ‘telling’ the workforce the concepts/what not to do.  
• Training and communication of codes and the support behind them should not be one-off exercises; they should use a variety of formats. They should be communicated regularly to existing staff as well as new starters.  
• Suppliers may request a copy of the organisation’s code during tendering processes. Consider communicating the organisation’s values and/or code of ethics to all stakeholders as well as customers, business partners and suppliers.  
• Develop a communication strategy to plan and regularly communicate the legitimate aims of the organisation. Frame messages to emphasise what’s to gain from ethical standards, not just what is to lose from unethical behaviour. Target high-risk areas of business and situations, such as high-pressure and/or competitive environments. Use a range of methods from internal communications/newsletters, workforce meetings, workshops, office merchandising reminders, cartoons, booklets, posters and publish codes in an easily accessible location on the organisation’s website.  
• Connect employees to the impact of their work/decisions to ensure consensus in adopting/role-modelling ethical values and guiding decision-making. Facilitate connections with customers and the wider community. Socialise stories and positive, real-life examples that emulate the code. Use a range of scenarios to encourage debate and discussion so that the workforce can apply the code to their day-to-day work. 
• Ensure that efforts are made to translate values and their application to the workforce before measuring compliance and taking remedial action. 
• Use communication and training to increase ethical sensitivity and how to take a stand, through the exploration of case studies and scenarios that involve ethical dilemmas. Beware of ‘ethics fatigue’ from communicating too frequently, and use innovative ways to bring the code to life, such as new case studies.  
• Use a dashboard to relay information to the workforce on the measurements of embedding the organisation’s values and/or code of ethics.  
• Include an update on the code in the annual report to include any breaches and subsequent action taken, as well as what training has been undertaken. 
• Do not under-resource the communication and embedding of values and codes.  
• Provide the workforce with a resource to seek advice regarding ethical dilemmas.  

For ethics training and to provoke discussions, access the list of statements below. 

Use the decision-making flowchart and adapt it to your organisation’s needs. We recommend that decision-making guidance is issued to the entire workforce to give them confidence and structure in making ethically correct and reputation-protecting decisions.

The spotlight is on business ethics and more so on organisations than ever before. With astonishing political developments, escalating climate issues and economic fallout, there will be an increased focus on ethics and pressure on organisations to follow an ethical approach and consider the consequences of their outputs and operations.  

It is essential to ensure that policies applicable to the workforce are fair, equitable and non-discriminatory. CSR initiatives should include risk assessments of environmental implications (even if in an office environment, such as recycling and waste management/reduction) by an organisation’s activities and supply chain, eliminating forced and child labour, and anti-bribery policies. Legal and compliance requirements dictate that safe working conditions are provided, but ethical practice for people managers requires going further and ensuring that all of the workforce has representation and input into key activities and strategy. Proclaiming an organisational value of integrity is not enough without specific action, and it is necessary for organisations to deliver on their commitment to communities and to champion better work and working lives.  

Rather than acting as the ‘HR police’, people managers can be ambassadors of taking an ethical approach and creating long-term value. This will inevitably mean having to deal with challenging conversations and consistently holding the workforce, at all levels, accountable for their actions and behaviours. People managers must role-model ethical practice and aspire to become trusted advisors. They are best positioned to facilitate an alignment of personal and organisational values and enable the workforce to truly flourish.  

Ethical practice should be woven through the organisation’s people strategy, and demonstrated in its HR policies and practices relating to the employee lifecycle: recruitment, people management, development and exit.  

There should be no doubt that people professionals are expected to stand up for and protect the rights of employees and demonstrate a people-centred approach in their practice. The people profession is expected to make better use of insights from analytics in their evidence-based practice and decision-making. This call on people professionals includes reskilling the workforce, recruiting in a broader and more diverse way, and supporting mobility and flexible working. People professionals will need, more than ever before, to nurture networks of peers across sectors and territories to learn from each other and to keep up to date with developments in the world of work.  

In working according to ethical values and a code of ethics, people professionals can make a significant contribution to improving the lives of the workforce and the experiences they have at work, and to making work more meaningful.

Ethical context

The CIPD Profession Map, Ethical Behaviour

A review of unethical workplace behaviour  
Gifford, J., Green, M., Barends, E., Janssen, B. and Capezio, A. (2019) Rotten apples, bad barrels and sticky situations: an evidence review of unethical workplace behaviour. London: Chartered Institute of Personnel and Development.

CIPD podcasts

Ethical workplaces

Video

Marco Alverà: The surprising ingredient that makes business work better

CIPD Factsheet

Ethical practice and the role of HR

Survey

Institute of Business Ethics. Publications

Books

Global Business Ethics

The Business Guide to Effective Compliance and Ethics

Corporate Governance, Ethics and CS

Ethical Leadership

Workforce planning

CIPD Factsheet

CIPD Podcast

Employee voice

CIPD Factsheet

CIPD Report

Institute of Business Ethics. Free speaking-up app

Giving Voice to Values Program

This guide was originally written by Tina Russell and Ally Weeks.