5 Red Flags of an Unethical Workplace: Q&A

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According to the newly released Global Business Ethics Survey, close to 50% of US workers witnessed unethical and/or illegal conduct on the job in 2020. In addition, retaliation against employees who reported wrongdoing rose steeply, up to 61% in 2020. G. Richard Shell, Chair of Wharton Business School’s Legal Studies and Business Ethics Department is author of the bestselling new book The Conscience Code: Lead with Your Values. Advance Your Career. Below, Shell offers insight into the trend of unethical workplace behavior and advice on how to prevent it.

What are some red flags of an unethical workplace?

The most immediate signals are the dominant emotions you experience when you are at work.  If you frequently feel angry at what you perceive to be unequal treatment of employees, that is a sign. For example, are racist or sexist “jokes” tolerated or even encouraged?  Anxiety at being personally attacked is also an emotion to look for.  Are you stressed by the bullying behavior of a boss or a peer?  Also monitor feelings of depression that can follow the perception that your organization has a lack of concern for employee wellbeing and professional development and shame associated with an environment that seems to be OK with cutting corners and doing sloppy work. All these emotions are signs that you are probably working in a toxic, unethical office.  


The question then is whether you are simply in a bad business unit of a good organization or are part of an organization that has a toxic culture. Beyond emotional signals, you may want to examine the level of transparency and trust in the way people communicate.  Are there a lot of closed-door, “secret” meetings between people?  Are meetings a place to openly share ideas and perspectives—or gatherings in which a few people dominate, input is not welcome, and 99% of the attendees are afraid to voice their opinions?  

Finally look at the incentives like goals, quotas and bonuses.  Do they encourage cheating and cutting corners?  For example, are people publicly shamed for failing to meet a goal or quota?  If so, they are likely to find unethical ways to protect themselves—like filing false paperwork or padding their workhours.  Once this behavior spreads, the office has become a corrupt place to work.

Why do you think so much unethical behavior is occurring in organizations today?

There have always been unethical people and bad behavior in organizations.  Every era has its own corporate scandals and high-profile fraudsters.  But today’s workplace has amplified our awareness of misconduct for two reasons.  First, many people, especially young people, are more sensitized to issues of social justice, bias, and discrimination that have formerly been swept under the rug.  It is a good thing that issues of sexual harassment, racial bias, and bullying behavior are now being seen as the toxic behaviors they have always been.  Second, the explosion of social media as the preferred channels of communication (as opposed to tradition print and broadcast media) have offered a direct line between the public and victims of misconduct.  There a fewer filters keeping this information from reaching us.  So we see more of it – and hopefully empower more people to rally against it.

Can you briefly explain the OODA Loop?

The OODA Loop is a framework for taking action within an organization to advance a value (end discrimination in hiring or promotion) or push back against a violation of an ethical norm (your boss wants you to falsify a sales report so she will meet a quota).  The letters stand for:
               O = Observe that a value is being violated or needs to be emphasized.
               O = Own the problem and take responsibility for it as a personal matter.
               D = Decide what your options are for taking action and think through which one will give you the best chance of advancing the issue.
            A = Act on your decision.
               Loop = See what happens, adjust, and take next steps.  Repeat OODA!

You identified three “Enablers” that spawn wrongdoing. What are they and how can we avoid them? 

a. Pressure. A boss or peer feels the pressure to cheat or cut corners. This usually occurs because they are responding to incentives to prioritize short-term gains over longer-term risks and costs.  These pressures could come from home (they face the problem of paying for a child’s college education and need to find extra money somehow) or work (they want a promotion and are willing to do whatever it takes to win it). In general, pressures come from: peers, bosses, incentives, people’s mistaken belief that their role requires them to do unethical things, and larger social structures such as racism, sexism, and corrupt institutions.
b. Opportunity. A situation arises in which it appears to the boss or peer that they can get away with bad behavior.
c.  A face-saving rationalization. They find a way to explain their behavior as being “OK” so they do not have to face the fact that they are behaving unethically.  Common rationalizations are phrases like “everybody does it,” “just this once,” nobody will notice,” and “it’s not really my fault that I need to do this because the firm gave me an impossible goal.”


Avoiding these factors is hard because you cannot predict when they will arise.  But you can anticipate that they will arise and be prepared to act effectively if you:
a. Always prioritize your core values over short-term incentives.  Tell yourself, “I am a person conscience, not just an employee.  In this situation, what should a person of conscience do?”
b.  See every situation as an opportunity to behave well and push back when others want to seize it to behave badly.
c.  Talk back to rationalizations. “Everybody does not do it – because I do not.”  “’Just this once’ is the first step on a slippery slope.” “Assume what happens will be broadcast on Facebook.  So everyone will notice!” “I have free will. I can chose not to behave badly and then I can work to change the incentives so they result in ethical behavior.”

How can young leaders proactively address wrongdoing in the workplace?

First and foremost, work together rather than alone.  Always leverage “The Power of Two.”  When you have at least one ally, your increase your power, confidence, strategic thinking, and social networks. Having a coalition of like-minded people makes it much more likely you will be a force for good in your organization.

G. Richard Shell is the Thomas Gerrity Professor at the Wharton School. His book is titled The Conscience Code: Lead with Your Values. Advance Your Career (HarperCollins Leadership 2021).

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