The Role of Business Ethics in Wages & Promotions

Instructor: Sudha Aravindan

Sudha has a Doctor of Education degree in math education and is currently working as a Information Technology Specialist.

In this lesson, we will discuss favoritism and ethical and fair wages from the perspective of business ethics in the workplace. Favoritism can play an unfair role in the promotion process.

Sandra was furious. She was not offered the position at her company that she knew she was qualified for. Her experience and skills were higher than the job requirements! She was passed over for her co-worker who everyone knew was her supervisor's favorite, but had fewer qualifications!


Favoritism at the job means that a supervisor consistently gives someone the best projects or promotions or opportunities for growth, not based on the employees' job performance, or qualifications, but because of relationships that are outside the scope of the job.

Sandra was looking forward to the promotion and everyone knew she was a hard worker. Sandra was very unhappy and she immediately left the job to work for a different company. This was not the first time something like this has happened; Matt was hired as a new employee but is now frustrated because his salary is lower than his team members.

Business Ethics should promote Fairness and Quality for Success
Business Ethics

Negative impacts of Favoritism

After Sandra left unhappy, the company reviewed its business ethics policies. The HR manager met with Sandra's supervisors to discuss the negative affects favoritism can have on the morale of employees and on the health of the company. They discussed some of the negative effects.

  • Employee Morale is Lower

One of the immediately noticeable effects of favoritism is that employee morale is lower. Employees perceive a sense of unfairness and they begin to believe that all their efforts will go unnoticed since only a few favored people will benefit.

  • Employees Desert the Company

When an employee leaves because of explicit favoritism, others see what happened and start leaving the work environment that they now perceive as hostile. This is what happened in Sandra's case - following Sandra, four other employees left because they thought favoritism would affect their chances for promotion.

  • Employees Resent the Company

Sandra was filled with resentment when she realized that the job that was rightfully hers was given to someone less qualified. This made her leave on short notice without consideration of the projects she was working on. If the employee does not leave, they may still show resentment by tainting the reputation of the company and discouraging new hires.

  • Employees' Potential is Wasted

From the company's point of view, the potential of their employees is overlooked and being wasted. If those under-qualified are consistently favored, the company does not benefit from the skills and talents of those who truly deserve the position.

  • The Company Suffers Stunted Growth

Favoritism is also responsible for stunted growth. The employees' morale and wasted potential would impact the company's productivity and profit margin and overall health of the company.

Types of Favoritism

The HR management team conducted training sessions about the kinds of favoritism that could purposefully or even inadvertently be fostered in the workplace.

  • Illegal Discrimination

When favoritism is shown, and job decisions are made, based solely on age, sex, race or disabilities, this could be illegal discrimination. For instance, laying off someone because they are over a certain age, and hiring a younger person in their place would be discrimination. Consistently promoting people with certain religious beliefs or based on gender would also be illegal discrimination.

  • Sexual Favors

If employees are provided additional assignments, job benefits, promotions and salary raise as a result of sexual favors given, or received, that would be sexual harassment according to the Equal Employment Opportunity Commission (EEOC).

  • Retaliation

If an employee is punished by being demoted, reduced work hours, or denied fair wages, because of complaining about discrimination and harassment, that would be considered retaliation and is illegal.

  • Other Types of Favoritism

Other types of favoritism are:

Nepotism (favoring family members),

Cronyism (favoring friends regardless of qualifications),

Patronage (promoting favorites and hiring their family and friends).

Business Ethics in Environment, Wages, and Promotion

The HR managers advised the executives about what they could do to take proactive measures to discourage favoritism in the workplace, and to develop policies that would follow business ethics principles for the work environment, wages and promotion.

Work Environment

  • Professional Work Environment

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