Have you ever witnessed unethical behavior or practices in the workplace? Perhaps you have been guilty of the odd transgression yourself? If you feel a twinge of guilt after accidently pocketing that pencil from the office stationery cupboard, or taking an extra cookie from the cookie jar, don’t give yourself too much of a hard time. What goes on upstairs in the corporate boardroom will put things into perspective and probably make your toes curl.
Let’s take a look at the dirty tricks played by tax accountants and bankers to gain financial advantage. Let’s take a peek at brand bullying, price-fixing, and creative accountancy, all common practices in the corporate world, in this episode of The Infographics Show – Unethical but Common Business Practices.
In 2015, the Washington Ethics Resource Center stated that within the past year, almost half of us witnessed some form of ethical misconduct in the workplace. Some of the most common unethical behaviors include misuse of time, lying to employees, employee theft, and violating internet policies.
That last one is a big problem for corporations who coined the term Cyberslackers to brand us workers who surf the internet during office hours. Corporations have yet to find a practical way to tackle the multi-billion dollar problem of workers who would rather be surfing the internet, checking their social media accounts or watching The Infographics show on youtube, when they should be either crunching numbers or working the phone.
But don’t panic. While the workforce on the lower rungs of the corporate ladder is updating their status on Facebook, bigger matters are afoot in the head office. In no particular order, here are 10 of the most unethical practices in big business.
Falsifying product information
Companies often band around the phrases “scientifically proven” and “guaranteed results.” And yes, false advertising is alive and well, and on your television screen. From breakfast cereals that claim to make you more intelligent, to yogurts that keep you slim. While crossing the line between truth and lies often hauls in huge profits, it can, on occasion, hit the company in the preverbial gonads. Beganin Caraethers was one of many consumers who brought a legal case against drinks company Red Bull, whose company slogan “It gives you Wings,” he found misleading. Caraethers had drank Red Bull for over 10 years and had not developed “wings” nor shown any signs of enhanced mental capabilities at all. Red Bull settled the class action case for $13 million in 2014, and Careathers and company flew happily away into the sunset.
Making a product appear superior by discrediting rival products, otherwise known as brand bullying or advertising wars, is a common tactic that brushes the boundaries of ethical practice. One company simply bullies another out of the marketplace. Or maybe two companies go head to head and toe to toe battling it out for market share. Creative advertising is fun and fiercely competitive, but when brand marketers begin mocking their rival brands, we’re drifting into unethical waters.
Pepsi and Coke have a long checkered history in the brand warfare trenches, as do phone manufacturers, Apple and Samsung. Lawsuits are uncommon with this type of practice. That’s due to corporate fear of waving the white flag and admitting that they’re the target of brand bullying. If the advertising world is like a playground, filing a lawsuit is like telling the teacher you’ve had your shorts pulled down. Best thing to do is regroup and fight back with a superior branding strategy.
This is the illegal agreement between industry competitors to “fix” the price of a product at an inflated level. This industry standard unethical practice occurs frequently and is designed to protect market share. Nowhere is price-fixing more unethical than in the pharmaceutical industry. The deliberate pricing of drugs beyond the grasp of those most needing them – the poor and dying – is common business practice. American president Donald Trump this year accused the pharmaceutical companies of “getting away with murder,” and according to a recent article, his proposed budget will combat overpriced prescription drugs. And that’s the kind of war on drugs we want to see.
Medical professionals refusing to provide emergency treatment
This refers to the questionably ethical decisions made by doctors who refuse to treat non-insured patients in emergency life/death situations. This is unethical, unprofessional, and reportedly occurs in hospitals all over the United States. Doctors, after training, must take the Hippocratic Oath, and although they can and do refuse emergency patients for many reasons, potential non-insurance coverage shouldn’t ethically be one of them. In most places in the world, health emergency care is delivered before insurance status is determined.
Fat cat Bonus payments
The Inflated bonuses paid to the bankers and brokers who directly or indirectly brought the Western financial markets to their knees in 2008 is clearly unethical. An October 2008 article in London’s Independent newspaper reported that bankers hadn’t lost a penny of their multi-million-dollar bonus packages despite the greedy bankers causing the worst financial crash in 80 years. That same year, city workers took home 23 billion dollars, as banks failed, countries fell, and families were driven out of their homes to go live in dumpsters.
Almost every company cooks their books to some degree. But when you have mega corporations who are trading billions of dollars of shares every day, as Oil and Gas comapnyn Enron did in 2001, many investors stand to lose a fortune. Enron, who simply lied to its shareholders about company performance, was hiding debt and not disclosing its actual earnings.
The walls came a’tumbling down in 2002 when it became apparent, in one of America’s largest corporate scandals, that the company had debt it couldn’t meet, and looked set for disaster. To make matters much more unethical, the top Enron executives (who knew just where the company was heading) sold off their stock while the price was still sky high, leaving shareholders high and dry, and employees jobless, once the true financial picture was realized.
While perfectly legal, tax avoidance is the use of financial tactics, not intended or anticipated by governments, as a vehicle for tax advantage. The use of overseas tax havens, while not technically tax evasion, is certainly operating outside the spirit of the law. Companies such as Starbucks, Amazon, and Google have been singled out for this method of tax avoidance. But they aren’t the only ones.
In 2011, Action Aid reported that 25% of the UK’s FTSE companies avoided taxation by locating their subsidiaries in tax havens. This increased to 98% when using the US definition of tax haven, and the UK magazine Private Eye reported that the top ten FTSE companies pay no corporation tax at all. Other tax avoidance schemes include the setting up of a charitable organization to funnel business earnings through. Or some rich businessmen simply enjoy living on a yacht as a tax nomad.
This is where one fixed price is set for a product or service across the world. So a cup of coffee is the same price in London as it is in say, Bangkok. Seems like a cute corporate policy at first, but that’s before you factor in that the hourly rate for staff in London is eight times higher than the rate in Bangkok. Also factor in that the rental cost is as much as 100 times more in London, meaning that such pricing strategy is either a brilliant financial move or an unethical abuse of exchange rates, as well as labor and real estate costs, depending on how you see it.
Lobbying for Law change
Those corporations who have amassed wealth through product branding, tax avoidance, price standardization, and creative accountancy, position themselves closely to politicians, through campaign funding and direct donations. This allows them to influence or change laws to suit their advantage. One of the worst offenders, according to a Forbes 2011 article, was General Electric, who spent over $39 million on lobbying in 2010 alone, without paying any tax that same year. In fact, they received tax rebates totaling over $4.7 billion over the three years studied, which may or may not have been attributed to their lobbying efforts.
This is good old fashioned theft or misappropriation of funds placed in one’s trust or belonging to one’s employer. This is perhaps the most common of the unethical practices seen in the everyday business world. The world’s most famous embezzler was Bernie Madoff, an American stockbroker who executed the largest Ponzi scheme in history, defrauding thousands of investors of tens of billions of dollars over a 17 year period. Ponzi schemes use money from new incoming investors to pay off existing members in the scheme, while the extra money is simply pocketed by the administrator. Madoff had amassed $65 billion dollars before he was sentenced to 150 years in prison for running the biggest fraudulent scheme in US history.
So, these are the ten most unethical common business practices. What are your thoughts on the subject? Is it fair that big business acts this unethically? Have you ever been unethical in the workplace yourself? Let us know in the comments! Also, be sure to check out our other video called Most Dangerous Jobs! Thanks for watching, and, as always, don’t forget to like, share, and subscribe. See you next time!