An old joke says that at some point we all need to decide between eating well and sleeping well. Whether you subscribe to that belief or not, solid professional ethics can help us do both.

No matter whether you work alone or in a large group, ethics violations' potential for legal and public relations nightmares can be extreme. In addition, the financial costs of ethics violations alone to you and your business can be staggering. Let's look at a few of the most common ethics problems-hostile work environment and discrimination actions-and their typical costs.


There is simply no excuse for discriminatory action, and if you see it in any of your employees or colleagues, point it out immediately and be clear that it will not be tolerated.  To do otherwise is to personally inherit ethical, and sometimes, legal culpability for those discriminatory acts, regardless of whether you were personally their cause. The legal risks are, of course, far greater if you are the business owner or are in a managerial position. There are still risks, though, even if you are merely a colleague or coworker who sees discriminatory activities and take no appropriate steps to intervene. In addition, remember that the type and degree of risk does not depend on whether the discrimination is racial, ethnic, religious, age-related, gender-related or of any other type. Discrimination is discrimination and it must not be either perpetrated or tolerated.


Hostile work environments are equally unacceptable. However, the standards for what constitutes such an environment are still evolving. Suffice it to say that you need to discourage not only bullying or overt hostility in the workplace-whether in the office or on the worksite-but also actions or remarks which could be taken as offensive by others. Remember, the measure of what constitutes a hostile work environment isn't always whether or not you intended a picture/joke/e-mail/comment/action to be offensive. Case law generally supports that offensiveness is in the eyes, ears and guts of the beholder.


As an essential ingredient of protecting yourself and your company: never assume that an "off color" remark or questionable action will be okay with others, even if you think you know them pretty well. Remember, not everyone is comfortable speaking up when they are offended or otherwise distressed. There are plenty of examples of hostile workplace actions where the person making the claim never stated that they felt hurt by the behavior over which they have brought their legal action. Remember also that the same cautions can apply to work-related social functions outside of the office. The courts' frequent assumption, reasonably enough, is that work relationships don't evaporate simply because one isn't physically at the job at the moment. This is especially relevant to unwanted romantic or sexual advances. The rule is simple-just don't do it!

Hostile work environment and discrimination actions are two of the fastest growing causes of litigation in the work environment and you need to be at least somewhat knowledgeable about them. In addition, if you are not up-to-date on EEOC mandates for handling concerns and complaints in these areas, you must get at least the basic information, if not more, immediately. There is far too much at stake not to.


An often-cited figure is that the average settlement cost in the United States is $250,000 for both hostile workplace and discrimination actions. However, this figure often triples when attorney fees and litigation costs are added. Though I have heard some question the $250,000 figure, roughly as many experts seem to consider it an underestimate as an overestimate.


How about the prevalence of other ethics problems for which your coworkers or employees might be responsible? In KPMG's 2003 fraud survey, 75 percent of surveyed companies reported that they had experienced instances of fraud during the previous year. Of those, employee fraud was the most prevalent (60 percent). However, financial reporting and medical/insurance fraud were the most costly. The most rapidly increasing types of fraud in their sample were theft of assets and expense account abuse.


Remember that, in addition, the rate of construction equipment theft, including heavy equipment, has ballooned in the last several years and you need to be especially careful to develop effective anti-theft systems. It doesn't take too much employee theft to add up to some serious financial setbacks. Along with this, the rate of fraudulent insurance claims for lost or stolen equipment is also on the rise. Here again, if you become aware of it, you must act on it. It doesn't matter how much you may like, value, or otherwise trust the perpetrator, not acting makes you a party to the illegal acts.


Frequently, after a problem is discovered, minor changes are made and organizations return to wishful thinking that those minor changes will be sufficient to greatly reduce the risk of ethics and legal problems. Even more frequently, compliance programs are refined and improved, but ethics programs aren't even reviewed, let alone improved. The risks created by this type of approach are extensive and will be present regardless of the type and size of business or office in which you work.


Many Construction Business Owner readers work in small offices where the time and budget for ethics training is limited. However, it is important to remember that ethics violations are frequently so costly that even small investments in training can still be expected to pay for themselves many times over. Not only will that investment pay off through a reduced risk of potentially extremely costly ethics and legal violations but you will be able to sleep better at night knowing that you are doing the right thing!

Construction Business Owner, June 2006
Christopher Bauer, PhD, of Bauer Ethics Seminars helps companies save significant time and money by preventing ethics problems instead of cleaning up after them. His latest book, "Better Ethics NOW: How To Avoid The Ethics Disaster You Never Saw Coming," has been a "Top Seller" on Information on Dr. Bauer's programs as well as free subscriptions to his Weekly Ethics Thought can be found at  He can be reached at 615.385.3523 or 800.884.1569.