5.7: Encouraging Ethics in the Workplace

When organizations are ethical and practice CSR, consumer and employee rights will be considered and handled with integrity and ethics. For employees, health and safety, privacy, wages, and benefits, along with the right not to be harassed or discriminated against, are all-important ethical considerations.

A 2018 survey found that 38% of employees consider “ethical standards” to be the first or second-most important workplace attribute. ^[1] People spend much of their lives at work. An ethical workplace is key because it allows employees to feel a sense of purpose and integrity on the job.

Create an Ethical Work Environment

For a business to be considered an ethical organization, it must demonstrate integrity, transparency, and accountability in all aspects of its operations. Creating an ethical business environment involves adherence to laws and regulations, strong corporate governance, and proactive efforts to ensure the well-being of employees, customers, and the community. For example, a few of the companies that do this well include those listed on the 2024 “100 Best Corporate Citizens” list, which, to name a few, include HP Inc., Johnson & Johnson, PepsiCo Inc., Ford Motor Company, and The Hershey Company.^[2]

Key factors in creating an ethical business environment include: ^[3]

• Strong leadership and ethical governance. Effective ethical practices start at the top. Establish a comprehensive code of ethics that clearly defines acceptable behaviour and guides decision-making in areas such as anti-corruption, diversity, privacy, and fairness. A dedicated board of directors should oversee accountability and steer ethical strategies. Transparency is crucial—regularly share financial, operational, and social responsibility information to build stakeholder trust. Leading Canadian companies like TELUS and RBC exemplify this by publishing Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) reports that showcase their ethical commitments.
• Compliance with laws and standards. Ensure compliance with applicable regulations, including the Competition Act, the Corruption of Foreign Public Officials Act (CFPOA), the Canadian Human Rights Act, and the Occupational Health and Safety Regulations. For businesses operating internationally, compliance with international standards like ISO 26000 (Social Responsibility) or the UN Global Compact further strengthens ethical credibility. For example, Bombardier’s governance policies and Code of Ethics help the company maintain high standards of corporate governance. ^[4]
• Ethical workplace practices. Safeguard employee rights and foster a workplace that values diversity and inclusion. Ensure a safe environment and encourage employees to report unethical conduct without fear of retaliation. Shopify, for example, champions inclusivity and diversity through programs like “Diversity and Belonging.” ^[5]
• Commitment to social responsibility. Support community development through volunteering, donations, and partnerships. Prioritize environmental sustainability by reducing carbon emissions, managing waste responsibly, and investing in eco-friendly initiatives. Loblaw’s efforts to combat food waste and reduce plastic use are strong examples of corporate sustainability.
• Proactive risk management. Provide ongoing training for employees on ethical decision-making and compliance requirements. Implement clear social media and data privacy policies. Conduct internal audits to ensure adherence to policies. Actively engage with stakeholders to understand and address their concerns.

By focusing on these elements, businesses can build a reputation as ethical organizations while ensuring long-term success and trust from stakeholders.

Sexual Harassment

Sexual harassment occurs when an employee makes “unwelcome sexual advances, requests for sexual favours, and other verbal or physical conduct of a sexual nature” to another employee. It’s also considered sexual harassment when “submission to or rejection of this conduct explicitly or implicitly affects an individual’s employment, unreasonably interferes with an individual’s work performance or creates an intimidating, hostile or offensive work environment.” In Canada, the legal framework for addressing sexual harassment includes protections under the Canadian Human Rights Act (CHRA), provincial human rights codes, and the Canada Labour Code for federally regulated workplaces.^[6][7]

Sexual harassment rocketed to the top of news reports and social media when, on October 5, 2017, The New York Times broke the story of Harvey Weinstein’s decades of harassment in Hollywood. In March of 2018, CBC News collated the allegations of sexual harassment against prominent Canadians. The list, including only those allegations reported by CBC, highlights the prevalence of this issue.

The Government of Canada reported that in 2020, one in four women and one in six men reported having experienced inappropriate sexualized behaviours at work in the previous year.^[8] Indigenous women and members of the LGBTQ+ community are disproportionately affected, with much higher likelihoods of experiencing sexual violence.^[9] Federally regulated sectors such as transportation, banking, and communication account for a significant proportion of harassment incidents. In 2022, 31% of reported sexual harassment occurrences were from the road transportation sector, 17% from air transportation, and 15% from banking.^[10]

To prevent sexual harassment—or at least minimize its likelihood—a company should adopt a formal anti-harassment policy describing prohibited conduct, asserting its objections to the behaviour, and detailing penalties for violating the policy. Employers also have an obligation to investigate harassment complaints. Failure to enforce anti-harassment policies can be very costly.

Workforce Diversity and Inclusive Workplaces

In addition to complying with equal employment opportunity laws, many companies make special efforts to create an inclusive workforce by recruiting employees who are underrepresented in the workforce according to sex, race, or some other characteristic. In helping to build more inclusive workforces, such initiatives contribute to competitive advantage for two reasons:

• People from diverse backgrounds bring new talents and fresh perspectives to an organization, typically enhancing creativity in the development of new products.
• By more accurately reflecting the demographics of the marketplace, a diverse workforce improves a company’s ability to serve an ethnically diverse population.

The Tylenol Crisis

On September 30, 1982, twelve-year-old Mary Kellerman of Chicago died after her parents gave her Extra-Strength Tylenol. That same morning, twenty-seven-year-old Adam Janus, also of Chicago, died after taking Tylenol for minor chest pain. That night, when family members came to console his parents, Adam’s brother and his wife took Tylenol from the same bottle and died within forty-eight hours. Over the next two weeks, four more people in Chicago died after taking Tylenol. The actual connection between Tylenol and the series of deaths wasn’t made until an off-duty fireman realized from news reports that every victim had taken Tylenol. As consumers panicked, the Johnson & Johnson (J&J) company pulled Tylenol off Chicago-area retail shelves. Researchers discovered Tylenol capsules containing large amounts of deadly cyanide. Because the poisoned bottles came from batches originating at different J&J plants, investigators determined that the tampering had occurred after the product had been shipped.^[11]

So, J&J wasn’t at fault. However, CEO James Burke was still faced with an extremely serious dilemma: Was it possible to respond to the tampering cases without destroying the reputation of a highly profitable brand?

Burke had two options:

1. He could recall only the lots of Extra-Strength Tylenol that were found to be tainted with cyanide. In 1991, Perrier executives recalled only tainted products when they discovered that cases of their bottled water had been poisoned with benzine. This option favoured J&J financially but possibly put more people at risk.
2. Burke could order a nationwide recall of all bottles of Extra-Strength Tylenol. This option would reverse the priority of the stakeholders, putting the safety of the public above stakeholders’ financial interests.

Burke opted to recall all 31 million bottles of Extra-Strength Tylenol on the market. The cost to J&J was $100 million, but public reaction was quite positive. Less than six weeks after the crisis began, Tylenol capsules were reintroduced in new tamper-resistant bottles, and by responding quickly and appropriately, J&J was eventually able to restore the Tylenol brand to its previous market position. When Burke was applauded for moral courage, he replied that he’d simply adhered to the long-standing J&J credo that put the interests of customers above those of other stakeholders. His only regret was that the perpetrator was never caught.^[12]

If you’re wondering what your thought process should be if you’re confronted with an ethical dilemma, you might wish to remember the mental steps listed here, which happen to be the steps that James Burke took in addressing the Tylenol crisis:

• Define the problem: How to respond to the tampering case without destroying the reputation of the Tylenol brand.
• Identify feasible options: (1) Recall only the lots of Tylenol that were found to be tainted, or (2) order a nationwide recall of all bottles of Extra-Strength Tylenol.
• Assess the effect of each option on stakeholders: Option 1 (recalling only the tainted lots of Tylenol) is cheaper but puts more people at risk. Option 2 (recalling all bottles of Extra-Strength Tylenol) puts the safety of the public above stakeholders’ financial interests.
• Establish criteria for determining the most appropriate action: Adhere to the J&J credo, which puts the interests of customers above those of other stakeholders.
• Select the best option based on the established criteria: In 1982, Option 2 was selected, and a nationwide recall of all bottles of Extra-Strength Tylenol was conducted.

The Individual Approach to Ethics

How can you make sure that you do the right thing in the business world? How should you respond to the kinds of challenges that you’ll be facing? Because your actions in the business world will be strongly influenced by your moral character, let’s begin by assessing your current moral condition. Which of the following best applies to you (select one)?

• I’m always ethical.
• I’m mostly ethical.
• I’m somewhat ethical.
• I’m seldom ethical.
• I’m never ethical.

Now that you’ve placed yourself in one of these categories, here are some general observations. Few people put themselves below the second category. Most of us are ethical most of the time, and most people assign themselves to category number two— “I’m mostly ethical.” Why don’t more people claim that they’re always ethical?

Apparently, most people realize that being ethical all the time takes a great deal of moral energy. If you placed yourself in category number two, ask yourself this question: How can I change my behaviour so that I can move up a notch? The answer to this question may be simple. Just ask yourself an easier question: How would I like to be treated in a given situation?^[13]

Unfortunately, practicing this philosophy might be easier in your personal life than in the business world. Ethical challenges arise in business because companies, especially large ones, have multiple stakeholders who sometimes make competing demands. Making decisions that affect multiple stakeholders isn’t easy even for seasoned managers, and for new entrants to the business world, the task can be extremely daunting. You can, however, get a head start in learning how to make ethical decisions by looking at two types of challenges that you’ll encounter in the business world: ethical dilemmas and ethical decisions.

Make Ethical Decisions

Ask yourself the following five questions as a test to help you improve your chances of making ethical decisions. If you answer yes to any of them, then you probably should not do it.

• Is the action illegal?
• Is it unfair to some stakeholders? (Also, if it were happening to you, then would it be unfair?)
• If I do it, will I feel bad about it?
• Will I be ashamed to tell my family, friends, coworkers, or boss?
• Will I be embarrassed if my action is written up in the newspaper?

Some ethical problems are fairly straightforward. Others, unfortunately, are more complicated, but it will help to think of our five-question test as a set of signals that will warn you that you’re facing a particularly tough decision— that you should think carefully about it and perhaps consult someone else. The situation is like approaching a traffic light. Red and green lights are easy; you know what they mean and exactly what to do. Yellow lights are trickier. Before you decide which pedal to hit, try posing the five questions. If you get a single yes, you’ll almost surely be better off hitting the brakes.^[14]

Refuse to Rationalize

Despite all the good arguments in favour of doing the right thing, why do many reasonable people act unethically (at least at times)? Why do good people make bad choices? According to one study, there are four common rationalizations (excuses) for justifying misconduct:^[15]

• My behaviour isn’t really illegal or immoral. Rationalizers try to convince themselves that an action is okay if it isn’t downright illegal or blatantly immoral. They tend to operate in a gray area where there’s no clear evidence that the action is wrong.
• My action is in everyone’s best interests. Some rationalizers tell themselves: “I know I lied to make the deal, but it’ll bring in a lot of business and pay a lot of bills.” They convince themselves that they’re expected to act in a certain way.
• No one will find out what I’ve done. Here, the self-questioning comes down to “If I didn’t get caught, did I really do it?” The answer is yes. There’s a simple way to avoid succumbing to this rationalization: always act as if you’re being watched.
• The company will condone my action and protect me. This justification rests on a fallacy.

If you find yourself having to rationalize a decision, it’s probably a bad one.

Media Attributions

“Tablet, Medication, Pills image” by jhenning, used under the Pixabay license.