Effects Poor Corporate Ethics Can Cause Your Company

Corporate ethics puzzle

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

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.


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?


Author’s Bio:
Aaron Gray is the co-founder of Studio 56 and is a passionate digital marketing expert who has worked with some of the largest digital marketing agencies in Australia. He has been working in the digital marketing field for ten years. Aaron loves to travel the world to not only enhance his cultural experiences but learn and enhance his skills in the digital marketing industry. He is dedicated to helping others reach their online marketing goals.

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