Unethical Behavior in the Workplace: 10 Examples and How To Handle Them

As HR leaders, upholding ethics in the workplace is more than just a guideline — it’s a core responsibility. But studies show that only 40% of employees who witness unethical behavior actually report it. Why? Fear of retaliation and job security are significant factors, but they’re only part of the story.

Ethical standards often vary across cultures and industries. This makes "right and wrong" a complicated conversation. But no matter how morality is defined, one thing is clear: unethical behavior doesn’t just harm individuals. It affects entire organizations and, in many cases, society as a whole.

In today’s world, where customers and employees are both drawn to brands that align with their values, and workplace scandals dominate headlines, organizations can’t afford to ignore this issue. We need to develop strategies to prevent and address unethical behavior.

But what exactly is unethical behavior? What does it look like in real life? What drives it — and more importantly, how can we stop it?

Let’s explore how modern technology can help create more ethical workplaces, and provide actionable insights to develop a culture of integrity in your organization.

What Is Unethical Behavior?

Unethical behavior refers to any action that violates moral principles, professional standards, or organizational policies, resulting in harm or unfair advantage. This behavior undermines the effectiveness, reputation, values, or goals of an organization (or society at large) for unjust reasons.

However, what is deemed unethical can vary based on context, workplace norms, and cultural values. What one organization considers a breach of ethics may not even register as a concern in another.

Also, unethical behavior isn’t always intentional. Because individuals operate from unique belief systems and perspectives on morality, they may inadvertently act unethically while believing their actions are justified. This is one reason why it’s so important to develop clear ethical guidelines within your organization to reduce ambiguity.

Ethics vs. Morals

While ethics and morals both deal with the concepts of right and wrong, they differ in context and application.

• Morality: At its core, morality has to do with one person’s beliefs about right and wrong. Morality is deeply personal, grounded in individual beliefs, experiences, and preferences. Since it is broadly subjective, morality is not necessarily determined by the behavior’s impact on others.
• Ethics: Ethics is more practical, focused on maintaining fairness, safety, and accountability in collective settings. It’s one community’s rules of conduct, and often operates in a formal or professional context. Ethics emphasizes the consequences of behavior on others, organizations, or society.

This distinction is especially important in diverse workplaces, where people from different cultural and religious backgrounds may have different moral viewpoints. Ethics provides a shared framework for navigating these differences. It prioritizes actions that positively impact the organization and its stakeholders.

Let’s look at an example:

• Morality: For instance, one person might view lying as inherently wrong and avoid it (even in personal contexts like a private journal) because it conflicts with their internal sense of integrity. They see lying as inherently wrong because it violates their personal values. However, most would agree that lying in a private journal isn’t unethical in any professional context, since no one will be realistically affected by the behavior.
• Ethics: In a professional setting, lying about product safety in a report would be considered unethical. Many would also see it as immoral, but the focus isn’t just on honesty as a virtue. It’s about the broader consequences of unethical behavior that can endanger people, damage trust, and violate professional standards for unjust reasons.

Ethics isn’t just about following a list of rules or policies. It’s about making conscious, practical choices that reflect shared values and contribute to a better workplace and world. In this way, ethics acts as the bridge between individual beliefs and collective responsibility, helping organizations navigate complex, diverse environments while staying aligned with their goals.

What Causes Unethical Behavior?

Part of combatting unethical behavior in your organization is understanding what causes it. While some unethical behavior is too difficult to completely quantify, here are some common examples:

Unclear Policies

Unethical behavior sometimes stems from confusion. Employees may not fully understand the organization’s rules or norms, or may be unaware of what constitutes acceptable behavior. Also, a lack of clarity around the company’s core values can make it difficult for employees to align their actions with expectations. Without clearly defined policies, even well-meaning individuals may cross ethical boundaries without realizing.

Pressure

High-pressure environments can be a breeding ground for unethical practices. When outcomes are heavily tied to rewards, employees under significant stress to meet targets or key performance indicators (KPIs) may feel compelled to bend or break ethical standards.

This pressure often originates from:

• Leadership Misalignment: When leaders prioritize profits over values or fail to model ethical behavior.
• Misaligned KPIs: Goals that emphasize performance metrics without considering ethical implications.
• Toxic Culture: Highly competitive or cutthroat work environments that celebrate success at all costs.

When employees are pushed too hard, they may begin to view unethical behavior as a necessary means to an end.

Poor Leadership

Leadership sets the tone for an organization’s culture, a critical factor in ethical behavior. Unfortunately, poor leadership often leads to ethical lapses at every level of a company.

The long list of publicized ethical scandals over the past few decades highlights a concerning trend: unethical practices often originate at the top. Leaders who are abusive, uneducated about ethical standards, or lack emotional intelligence can create a trickle-down effect that normalizes bad behavior.

Even with systems in place to mitigate risks, organizations are made up of people — and people take cues from their leaders. If leadership doesn’t prioritize ethics, employees probably won’t do so either.

Disengagement

Employee disengagement is one of the most significant contributors to unethical behavior. When workers feel undervalued or disconnected from their roles, it’s easy for apathy to set in.

Disengaged employees often perceive their work as meaningless. When their connection to the organization’s values fades, ethical behavior can feel just as irrelevant.

Research consistently points to a key factor in engagement: employees feeling valued. When people don’t feel appreciated, their commitment to upholding company values erodes over time, creating an environment where unethical behavior can flourish.

10 Examples of Unethical Behavior

Now, let’s look at some specific examples of unethical behavior in the workplace, why they happen, how they affect the organization, and what you can do about them.

1. Sexual Harassment

Sexual harassment encompasses any unwelcome behavior of a sexual nature, such as comments, jokes, or actions, that create a hostile work environment. This unethical behavior can have lasting emotional, mental, and professional repercussions for victims. Some examples include:

• Unwanted Comments on Appearance: A manager frequently comments on an employee’s attire, saying things like, “You look amazing in that dress.”
• Sexual Jokes and Physical Contact: A coworker regularly makes graphic jokes and touches others inappropriately, then claims it was accidental.
• Sending Explicit Content: An employee sends a sexually explicit message to a colleague, suggesting they could send more if interested.

Causes

• Power Imbalances: Abuse of authority can make victims feel powerless to speak up.
• Cultural Acceptance: In some workplaces, inappropriate behavior is normalized.
• Lack of Education: Employees may not understand what constitutes harassment or its impact.

Effects

In work environments where sexual harassment occurs, victims tend to feel humiliated, powerless, and ashamed. This leads to anger and fear while undermining trust in the organization.

Victims face an Increased risk of depression, anxiety, and PTSD. They may experience difficulty sleeping and concentrating — or even physical symptoms like headaches, fatigue, stomach problems, and even panic attacks.

On a practical level, this often leads to reduced productivity, absenteeism, or leaving the job entirely.

Solutions

HR departments can take several steps to prevent and address sexual harassment.

• Clear Policies: Develop and communicate zero-tolerance policies that define unacceptable behavior.
• Education and Training: Conduct regular workshops to educate employees and leaders on recognizing and preventing harassment.
• Incident Reporting Systems: Implement a confidential reporting system where victims and witnesses feel safe coming forward.
• Technology Solutions: Use HR platforms to track and resolve complaints and document repeat issues and offenders.

2. Fraud

Fraud involves intentionally deceiving others for personal or financial gain. Fraud harms both the organization and its stakeholders while eroding trust within the workplace.

Examples

• Embezzlement: Diverting company funds into personal accounts.
• Insider Trading: Sharing confidential company information to profit from the stock market.
• Time Theft: Recording hours not worked to inflate paychecks or cover for another employee.

Causes

• Pressure To Meet Targets: High performance demands encourage cutting corners.
• Rationalization: Individuals justify fraud as harmless or necessary.
• Greed: Personal financial gain often motivates fraudulent acts.
• Lack of Ethical Training: Some employees may not understand the impact of minor fraud on the organization and may see it as “part of the job.”

Effects

Fraud erodes trust. It damages relationships within teams and with external stakeholders. Fraudulent activities also cost companies millions annually. In fact, payroll fraud alone poses a median loss of $50,000 for organizations worldwide. Organizations involved in fraud may also face lawsuits, regulatory fines, and reputational damage.

Solutions

Preventing fraud requires a proactive, technology-driven approach:

• Robust HR and Payroll Systems: Use software with audit trails and approval workflows to improve transparency in transactions.
• Background Checks: Screen employees thoroughly during hiring (looking for previous fraudulent activity and risks of fraud) to mitigate risks.
• Ethics Training: Foster a culture of integrity through regular workshops and clear guidelines.

3. Intentional Sabotage

Sabotage refers to deliberate actions taken to harm an organization, often driven by anger or resentment. This behavior can cause significant financial and reputational damage.

Examples

• Damaging Equipment: Deliberately breaking machinery to disrupt operations.
• Deleting Crucial Data: A disgruntled employee erases vital files before leaving the company.

Causes

• Resentment: Employees feeling wronged (by the organization or society at large) may seek revenge.
• Anger: Dissatisfaction with leadership or workplace culture may lead some to lash out in destructive ways.

Effects

Sabotage can cause widespread operational disruption, financial loss, and reputation damage. Sabotage can also take many forms, but one striking example that occurred in 1996 sums up the concept well:

Omega Engineering, a contractor for NASA and the US Navy, faced $10 million in losses after a dismissed employee, Timothy Lloyd, deployed a "logic bomb" that deleted several critical files.

Sabotage can range from minor acts to catastrophic events. An employee may simply leave behind a harmless symbolic gesture or go so far as to deploy malware and cripple entire systems. The scale and impact depend on the individual’s skills, access, and intent.

Solutions

To reduce the risk of sabotage, here are a few tips:

• Monitor Employee Sentiment: Conduct regular satisfaction surveys and stay/exit interviews to identify and address grievances.
• Disciplinary Procedures: Implement structured protocols for handling misconduct.
• Technology Safeguards: Secure systems with access controls to minimize the potential for harm, especially after an employee leaves.

4. Abusive Leadership

Abusive leadership goes beyond a boss who can be tough sometimes. It crosses the line from firm management to toxic behavior. Abuse from leadership inflicts emotional and professional harm on employees and ultimately undermines the organization.

Examples

• Bullying: Publicly humiliating, screaming at employees, or undermining their confidence is bullying.
• Manipulation: Setting employees up to fail or isolating them from colleagues is intentionally manipulative and has severely damaging effects on the organization.
• Micromanagement: More common is the overbearing leader that judges and criticizes every aspect of an employee’s work and often refuses to accept criticism themselves.

Causes

• Poor Emotional Intelligence: Lack of empathy or self-awareness in leaders.
• Need for Control: Narcissistic traits or a desire for dominance.
• Inadequate Training: Leaders unprepared to handle authority responsibly.

Effects

Abusive leadership fosters distrust, disengagement, and low morale. In turn, this causes high turnover, since employees tend to leave toxic environments en masse. When one employee has had enough, this tends to start a trend in the rest of the workforce, resulting in high attrition rates and higher recruiting costs to cover the losses. But even the employees who stay suffer from a culture dominated by fear and resentment, which inhibits creativity and productivity.

Solutions

Abusive leadership is terribly damaging, so it's crucial to prevent this kind of management. Here are some strategies to consider:

• Leadership Training: Develop empathy and emotional intelligence in leaders through structured programs.
• Hiring Processes: Evaluate candidates for emotional maturity during recruitment.
• Reporting Systems: Establish anonymous channels for employees to report abusive behavior. Address complaints fairly with leadership and employees, and don’t simply dismiss them.

5. Conflicts of Interest

A conflict of interest happens when personal gain or relationships interfere with professional responsibilities. This type of unethical behavior undermines trust, damages reputations, and can lead to poor decision-making.

Examples

• Nepotism: Hiring a relative despite their lack of qualifications.
• Competing Side Business: An employee operates a business that rivals their employer’s.
• Accepting Favors: A manager takes expensive gifts from a vendor, potentially swaying decisions.

Causes

• Personal Gain: Individuals prioritize their financial or social benefits over organizational goals.
• Favoritism: Loyalty to friends or family compromises impartiality.
• Lack of Ethical Guidelines: Employees may not understand what constitutes a conflict of interest.
• Morality: Some may feel morally obligated to hire a relative out of a personal duty to family, even if the relative lacks skills, creating an advantage for them and a disadvantage for colleagues.

Effects

Like fraud, certain conflicts of interest can erode trust in the organization because it leads to a perception of unfairness. It may also create resentment or other unethical behavior among employees. Conflicts of interest can also tarnish public perception of the organization and damage its reputation. Also, like fraud, breaches of ethics like this could result in regulatory scrutiny or lawsuits.

Solutions

• Clear Policies: Create a conflict-of-interest policy and integrate it into employee training.
• Create an Ethics Committee: Establish a dedicated team to review and resolve conflicts fairly.
• Transparent Reporting: Encourage employees to disclose potential conflicts and address them proactively.

6. Workforce Manipulation

Workforce manipulation refers to several unethical behaviors that advance personal agendas at the expense of colleagues or the organization. It is often perpetuated by managers, but may also involve employees.

Examples

• Favoritism: Promoting individuals based on personal alliances instead of merit.
• Rumors: Undermining coworkers by spreading false information.
• Undercutting: Sabotaging colleagues to gain favor or secure promotions.

Causes

• Selfish Ambition: Employees prioritize personal success over team objectives in order to gain favor with managers or executives.
• Cultural Issues: Organizations that reward individual achievement over collaboration may fuel this kind of manipulation.
• Power Imbalances: Abuse of authority can create opportunities for exploitation.

Effects

The biggest impact of workforce manipulation is low morale. When employees aren’t getting the promotions they deserve or are forced to work in highly competitive environments, burnout is almost inevitable. Teams feel undervalued and divided, which disrupts collaboration and harms productivity. Employees may be more likely to leave and tell others about their poor experience with the work culture. This can, in turn, harm the organization’s image and recruitment of top talent.

Solutions

Handling workforce manipulation can be tricky. Here are a few tips:

• Collaborative Culture: Shift focus to collective achievements with team-based rewards.
• Recruit Better Leaders: Develop better screening and vetting processes to hire more ethical leaders who will encourage healthy collaboration and won’t manipulate the workforce for selfish gain.
• Anonymous Reporting: Provide employees with secure channels to report unethical practices and manipulative instances.

7. Knowledge Hoarding

Knowledge hoarding involves deliberately withholding valuable information, hindering team progress and collaboration. While it may not seem severe at first glance, it can deeply affect the organization’s productivity and more.

Examples

• Withholding Information: Refusing to share key project details with colleagues.
• Not Documenting Knowledge: Avoiding documentation to make oneself indispensable.

Causes

• Job Security: Employees fear being replaced if they share knowledge.
• Competition: Rivalries within teams discourage transparency.
• Insecure Culture: A lack of trust between employees and leadership can cause employees to hoard knowledge for many reasons.

Effects

At best, knowledge hoarding stalls progress. When someone isn’t sharing the proper information, teams face delays, and organizations have to contend with unexpected data silos. This workflow interruption erodes morale and breeds resentment. What’s more, innovation may come to a complete standstill, since ideas are not being openly exchanged.

Solutions

Knowledge hoarding can be especially tough to identify. After all, how do you know what you don’t know? The best way to diagnose it is to conduct interviews with employees to discover knowledge gaps, silos, and instances of people intentionally withholding information.

Some other strategies include:

• Use Knowledge-Sharing Platforms: Implement systems that centralize information and promote transparency. Look for tools that offer extensive integration capabilities, so you can connect all your data in one place.
• Incentives: Reward employees who share valuable knowledge with their teams.
• Cultural Change: Foster trust and collaboration through team-building initiatives.

8. Misleading Communication

Misleading communication refers to dishonesty or exaggeration in professional interactions, which damages trust and relationships over time. This happens at several levels, both internal- and external-facing.

Examples

• Exaggerating Product Features: Marketers and salespeople may promise capabilities that a product simply doesn’t have.
• Unrealistic Promises: Executives and customer-facing employees may make commitments that the company can’t keep.
• Lying: Internally, lying can include an employee being dishonest about their time to a manager to avoid getting in trouble or a manager lying to an employee to maintain a sense of authority.

Causes

• Pressure: Employees often stretch the truth to meet quotas or targets.
• Misaligned Priorities: Organizations may reward short-term wins over long-term relationships.

Effects

Misleading communication can cause reputation damage by creating a sense of distrust with customers. As clients lose faith in the organization, word spreads and the brand’s credibility may be irreparably damaged. Even if the communication wasn’t intentionally deceptive, imprecision may have similar effects. It may also cause internal friction as teams struggle to meet unrealistic expectations set by false promises or simply fail to understand each other. Ultimately, lack of trust and poor cohesion are the biggest effects.

Solutions

People have been struggling to communicate for as long as we’ve been around — especially in corporate settings. Some proven solutions to this issue are:

• Communication Policies: Develop guidelines that define acceptable communication practices as well as tips for communicating on specific platforms.
• Training: Teach employees how to convey accurate information persuasively with relevant training and examples.
• Leadership Accountability: Ensure leaders model honest and transparent behavior and communication.

9. Property Misuse

Misusing company resources for personal gain is a subtle yet costly form of unethical behavior. It may be something as simple as printing a personal document on the company printer. Or, it may involve something more destructive or malicious.

Examples

• Theft: Taking office supplies for personal use (paper, pens, ink, folders, staplers, electrical supplies, etc.)
• Fraudulent Expenses: Submitting false claims for reimbursement (excessive travel expenses, exaggerating mileage, etc.)

Causes

• Lack of Oversight: Employees exploit gaps in accountability out of greed or a perceived entitlement to the resource.
• Resource Scarcity: Perceived inequities in resource distribution may cause people to misuse property to get their jobs done.

Effects

Theft and misuse drain company funds. In fact, in the UK retail Sector in 2019, it is estimated that employee theft cost businesses the equivalent of 1.642 million dollars. Even small amounts like a piece of paper or an up-charged business trip add up over time. Once an employee is found to misuse property, this may also affect the manager's trust and create micromanagement and resentment between several parties. This affects the organization as a whole as mistrust spreads throughout teams.

Solutions

Luckily, property misuse is relatively simple to address:

• Set Clear Policies: Outline acceptable uses of resources in employee handbooks and consequences of violating these guidelines.
• Accountability Systems: Use tools and systems to track resource allocation and hold employees accountable.
• Training: Incorporate these policies into onboarding and regular updates.

10. Withdrawal

Withdrawal involves disengaging from work, either mentally or physically, causing a slow erosion of productivity. Of course, some downtime is healthy, but chronic withdrawal is more severe. While an individual’s withdrawal is considered unethical, it often points to a deeper issue in your organization.

Examples

• Excessive Breaks: Taking longer than necessary for non-work-related activities.
• Internet Surfing: Spending hours online instead of working.

Causes

• Burnout: Employees feel overworked and undervalued.
• Lack of Engagement: Disconnection from organizational values or goals.

Effects

Withdrawal is a slow leak in your productivity. Disengaged employees cost organizations significant revenue by not operating at their best, and in some cases, stealing time. Withdrawal also has a severe cultural impact, lowering team morale and spreading negativity throughout the organization.

Solutions

Withdrawal is a type of disengagement. Here are some ways to help the issue:

• Implement Engagement Tools: Use platforms to regularly assess employee satisfaction and identify areas for improvement.
• Skill Development: Offer training and career growth opportunities to re-engage employees.
• Proactive Feedback: Conduct stay interviews to address concerns before disengagement becomes chronic.

How To Prevent Unethical Behavior in the Workplace

Preventing unethical behavior is less about enforcement and more about building a culture where ethical decision-making is second nature. Organizations can achieve this by embedding ethical values into every layer of the workplace, from policies to training and performance metrics.

Here are some actionable steps you can take:

Create Ethics Policies

An ethics policy lays the foundation for workplace behavior and defines your organization's values and expectations. While you can’t anticipate every scenario, codifying your core principles provides a shared framework for decision-making.

Make these policies accessible to employees during onboarding and integrate them into everyday work. Regular discussions about key points, particularly during training or team meetings, can reinforce their importance. By weaving ethics into your workplace culture, employees are more likely to internalize these principles and apply them consistently.

Implement Personalized Ethics Training

Ethics training is a crucial part of onboarding and employee development. However, ethics training also has a reputation for being generic or unrealistic. If training feels irrelevant or condescending, it probably won’t be taken seriously.

To make training modules effective, tailor your ethics education to the realities of your industry. Modern technology can help personalize ethics training for individual employees, improving knowledge retention and critical thinking. The goal is to not only educate employees but empower them to apply your values thoughtfully in real-world situations.

Reward and Recognize Employees

Cultivate a culture that rewards and recognizes ethical behavior. Regularly acknowledge employees who go above and beyond, whether through formal rewards or simple recognition. Highlighting ethical decision-making as part of these rewards can reinforce its importance within your organization. Public praise, thank-you notes, or small perks can be just as effective as money in showing appreciation and encouraging continued ethical behavior.

Rethink Your KPIs

Performance tracking can either encourage ethical behavior or inadvertently promote shortcuts, depending on how it’s designed. KPIs that focus solely on outcomes (e.g., sales numbers) send a message that results matter more than how they are achieved.

Instead, align your KPIs with company values and ethics. Incorporate metrics that assess teamwork, communication, adherence to ethical guidelines, and overall alignment with organizational goals. Transparent and balanced performance tracking fosters accountability without creating a culture of fear or competition. This encourages employees to behave ethically.

Use AI To Hold Ethical Conversations

Ethical dilemmas often fall outside standard guidelines. Employees may hesitate to bring these situations to managers, either due to time constraints or fear of judgment. Here, artificial intelligence (AI) can serve as a valuable tool for ethical decision-making.

While using AI to make moral decisions may seem like something out of a dystopian novel, modern AI platforms are simply a tool to augment our human abilities. Large language models (LLMs) are quite adept at summarizing content and allowing users to engage dynamically with large amounts of text.

By feeding an LLM platform your ethics policies, employee handbook, and company values, you can create a resource that employees can consult for guidance on complex ethical questions. It is like asking questions directly to a document and getting dynamic answers based on all the relevant details. While the ultimate decision remains with the human, AI can provide a framework for thinking and reinforce the company’s values in real time.

HCM Reporting Technology

Human Capital Management (HCM) software is the future of human resources. Platforms like Criterion HCM enable organizations to make data-driven decisions and proactively address potential ethical concerns before they impact the company.

With powerful reporting tools for payroll, HR data, and data from integrated platforms (ERPs, project management, etc.), you can gain a holistic view of employee performance, engagement, labor cost, and much more. This includes metrics that prioritize ethical behavior. With the right reporting tools, you can even link that information to key financial indicators to illustrate how ethical or unethical behavior affects the organization.

Final Thoughts

Technology offers powerful solutions to address unethical behavior in the workplace, but it’s important to remember that tools are only as effective as the people using them. Technology can’t replace human judgment — but it can enhance it. The right tools can support an environment where employees and leaders can make more informed decisions.

However, choosing the right technology is just the beginning. To truly foster an ethical workplace, you need a partner that not only understands your goals but actively supports them.

Criterion is that partner. Designed with HR leaders in mind, Criterion streamlines administrative tasks and helps you build processes that prioritize people while maintaining compliance.

Built on a unified system with an open API, Criterion integrates seamlessly with third-party software. This way, you can trust that your data is always synced across all your core systems such as project management, ERP, scheduling, and more. The result? Better reporting, more informed decision-making, and a workplace culture that puts ethics and people first.

Discover how Criterion’s HR, payroll, and talent engagement solutions can transform your organization. Book a Criterion demo today.