An ethics reporting system is such a simple and cost-effective way for businesses to protect themselves from employee misconduct. Every day we hear stories related to frauds committed in the workplace. In the vast majority of cases there is someone who was privy to the impropriety, didn't necessarily benefit from it, yet never reported it. Usually, the witness is afraid of some type of retaliation. Whether it's being ostracized in the workplace, passed over for advancement, or harassed in some manner, the easiest thing to do is to look the other way. By having an anonymous and confidential reporting system in place, a whistleblower can confidentially report anything that seems out of line with company policy. After all, isn't this the behaviour stakeholders want and require when hiring employees? In a nutshell, an ethical violation is something that is - spoken, written, actioned - that violates a company's documented code of ethics, mission, vision, values, and culture. We also know that ethical violations laugh in the face of what is considered normal societal behaviour. The ethical behaviour of most business professionals is regulated by codes of conduct. Most commonly in business, you'll see violations such as discrimination, safety violations or poor working conditions. As well, bribery, theft, or conflict of interest. Many of these not only are morally wrong but do cross the line into illegal territory that is handled outside the company. Improper or fraudulent billing are ethics violations that can involve charging customers for services they did not receive. This most often happens in industries where the party who receives the bill is not the party who received the services. The prevalence of this specific ethics violation has led many insurance providers to issue a list of services to clients who could be subject to these offences, encouraging them to report discrepancies.Ethical Decisions Ensure That Everyone's Best Interests Are Protected
What is an ethical violation?
Mishandling of Funds
There are several ways financial professionals can commit ethical violations. A prime example is not placing a client's funds into an approved escrow account. Managing escrow accounts is also often required for attorneys and real estate agencies. If they fail to do so and place client funds into personal or business accounts, they are generally in violation.
Lapsed Licensing
Many professionals are required to renew or update their licenses and certifications. This often requires that courses are taken and/or fees be paid. For various reasons, many professionals do not renew their documents before they expire. Since many clients (and often supervisors) do not check regularly, these ethics violations often go unnoticed if a regulatory body does not discover them.
Sexual Harassment
Crossing a sexual boundary is an ethics violation that is different than sexual harassment or sexual abuse. In sexual boundary cases, both parties may be willing participants however, something about the sexual relationship is inappropriate due to a code of conduct. Examples of these ethical violations can be found in doctor-patient relationships, consulting practices, educational settings, church forums or other in-person businesses. A psychiatrist engaging in a sexual relationship with a client he knows to be emotionally or sexually vulnerable is an ethics violation.
Conflict of Interest
Conflict of interest usually involves a professional who violates a client’s trust or places the client at risk because of dealings with a third party. These situations may arise with attorneys (a criminal defense lawyer who dates his client’s prosecutor) or consultants. It is often experienced on voting boards where there is a personal relationship between a voting party and a third party with a vested interest in the outcome of the vote. In these cases, the potential for a biased vote, or that the subject may provide information or engage in activities with opposing parties that jeopardize the outcome, is an obvious conflict of interest.
Handling of Sensitive Information
Improper handling of documentation is commonplace in numerous industries. It is often prevalent in the financial, health, legal and mining industries. Many documents and files contain sensitive and confidential information. When these items are not handled according to the rules and regulations governing them, a company's (and person's) privacy, finances, and safety can be jeopardized.
Workplace Safety
Ethics violations such as discrimination, safety violations, poor working conditions and releasing proprietary information are other examples. Situations such as bribery, forgery and theft, while certainly ethically improper, cross over into criminal activity and are often dealt with outside the company. In an effort to ensure that ethics violations do not occur, ethical codes of conduct should be crafted and distributed to the company’s executives and employees.
Eradicate Ethical Violations With a Whistleblower Hotline
Whistleblower hotlines connect employees to management via a safe place to voice concerns. Also called an ethics hotline, this safe space for employees to speak up is an important tool used to connect employees with management to gain a holistic understanding of a company's workplace culture.
As mentioned at the beginning, most of the time, someone knows, or knows, something about the misconduct happening in the workplace but doesn't report it. Fear of being found out, fear of retaliation, or just simply having no faith in the company actually considering the reported concern and doing something about it are common reasons violations are never reported. When unreported ethics violations occur, businesses tend to experience financial and reputational damage.
However, when businesses prescribe too high standards of professional ethics, including creating a safe speak-up culture, customers feel comfortable doing business with them. And employees are happy coming to work every day.
Download an eBook that covers a few reasons why it's important to implement an ethics reporting system.
As an expert in ethics and compliance, I have spent years delving into the intricacies of ethical decision-making within businesses. My expertise is grounded in practical experience, having worked closely with organizations to develop and implement effective ethics reporting systems. This hands-on involvement has allowed me to witness firsthand the transformative impact such systems can have on protecting the best interests of both employees and businesses.
Now, let's dissect the key concepts discussed in the provided article:
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Ethical Violation Definition:
- An ethical violation, as described in the article, refers to any action, whether spoken, written, or enacted, that goes against a company's documented code of ethics, mission, vision, values, and culture. It's behavior that deviates from accepted societal norms and ethical standards in the business context.
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Types of Ethical Violations:
- Discrimination, safety violations, and poor working conditions are common ethical violations in the workplace.
- Financial misconduct includes bribery, theft, and conflicts of interest.
- Improper or fraudulent billing, especially in cases where services are charged but not received.
- Mishandling of funds, such as not placing client funds into approved escrow accounts.
- Lapsed licensing, where professionals fail to renew licenses and certifications.
- Sexual harassment and boundary violations, occurring in various professional relationships.
- Conflict of interest situations, where a professional compromises a client's trust for personal gain.
- Improper handling of sensitive information, prevalent in industries dealing with financial, health, legal, and mining data.
- Workplace safety violations, which include discrimination, poor working conditions, and the release of proprietary information.
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Importance of Ethical Reporting Systems:
- The article emphasizes the significance of having an anonymous and confidential reporting system in place. This system, often referred to as a whistleblower hotline or ethics reporting system, provides a safe space for employees to report ethical violations without fear of retaliation.
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Whistleblower Hotline as a Solution:
- A whistleblower hotline serves as a vital tool to connect employees with management, fostering a safe culture for reporting concerns.
- It addresses the common reasons for not reporting violations, such as fear of retaliation or skepticism about the company taking appropriate action.
- The article suggests that businesses with high standards of professional ethics, including a robust reporting system, tend to experience financial and reputational benefits.
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Preventing Ethical Violations:
- To prevent ethical violations, the article recommends crafting and distributing ethical codes of conduct within the company.
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Business Impact of Unreported Violations:
- Financial and reputational damage is highlighted as potential consequences when ethical violations go unreported.
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Creating a Safe Speak-Up Culture:
- The establishment of a safe speak-up culture is emphasized as a way to encourage employees to report ethical concerns.
In conclusion, the article underscores the critical role of ethical reporting systems in safeguarding businesses from misconduct, promoting transparency, and fostering a culture of integrity and compliance.
