Business Laws and Ethics · Business Ethics and Emotional Intelligence

Ethical Dilemmas and Ethics in the Workplace

Updated 10 October 2026 · Fact-checked

An ethical dilemma is a situation where you must choose between two or more actions, each having a moral cost, and no option is fully right. To solve it, identify the facts and stakeholders, test options against law, principles and values, decide, justify, and review. Organisations promote ethics through codes, training, leadership example and whistle-blowing channels.

Understand Ethical Dilemmas and Ethics in the Workplace

An ethical issue is a situation where an action may harm others or breach accepted standards of right conduct. An ethical dilemma is harder. You face a choice between options, and each one conflicts with some value, duty or interest. Honesty may clash with loyalty. Profit may clash with safety.

In a dilemma, the law may be silent or may allow the action. Something can be legal and still be unethical. So compliance alone does not settle the question. You also ask whether it is fair, honest and harmless to those affected.

Ethical issues in organisations arise from several sources:

Individual: personal greed, weak values, pressure to meet targets or personal financial stress.
Organisational: unrealistic targets, reward systems that favour results over methods, weak controls, a poor ethical culture and a lack of a code.
Leadership: leaders who bend rules, or who say one thing and do another.
External: competitive pressure, industry practices, customer or government demands, and differing cultural norms.

Typical workplace issues include conflict of interest, bribery and gifts, misuse of company assets, false reporting or window-dressing of accounts, misuse of confidential information, discrimination and harassment, and unsafe products or practices. A cost accountant meets many of these when preparing cost data, reports and certifications.

Ethics at work is promoted by a written code of conduct, ethics training, leaders who set the example, fair reward systems, clear reporting channels and a whistle-blower mechanism that protects the person who speaks up, and consistent action against violations. Individuals resolve dilemmas by using a structured approach rather than gut feeling.

Key rules to remember

Ethical dilemma test: Ethical dilemma = conflict of values or duties + no option without a moral cost; Use this to separate a dilemma from a simple breach of law or an ordinary business decision.
Sources of ethical issues: Individual + Organisational + Leadership + External; A handy grouping for any question asking why unethical behaviour arises.
Resolution sequence: Facts → Stakeholders → Options → Test → Decide → Review; A six-stage framework you can adapt to any case study.
Common tests of an option: Legal? Fair? Transparent? Would I be comfortable if it were made public?; Quick checks to screen options. Legality is necessary but not sufficient.
Promoting ethics at work: Code + Training + Leadership example + Reporting channel + Consistent enforcement; Use as the structure for answers on building an ethical workplace.

How to solve Ethical Dilemmas and Ethics in the Workplace questions

Use the same sequence for any case study or short note on an ethical dilemma. State each step briefly with reference to the facts given.

1Read the case and state the dilemma in one sentence: which values or duties conflict.
2List the facts and the stakeholders affected, such as the employer, shareholders, employees, customers, regulators and society.
3State whether any law, regulation or professional code applies, and whether it is breached.
4List the realistic options and the likely consequences of each for every stakeholder.
5Test each option against fairness, honesty, transparency and public disclosure.
6Choose the option that is lawful and does the least harm. Say why you rejected the others.
7Mention the right channel: raise it with the superior, ethics committee or whistle-blower mechanism, and document it.
8Close with a preventive point, such as a code, training or a control that stops a repeat.

Quickest way: Dilemma, Law, Stakeholders, Decision (DLSD)

When to use it: Use it for 2-mark MCQs and for short case-based parts when time is tight.

Name the dilemma in one line.
Check the law and code: if there is a clear breach, the answer is not to do it.
Name who is harmed or benefits.
Pick the lawful, transparent option that harms least, and say where you would report it.

Common mistakes in Ethical Dilemmas and Ethics in the Workplace

Treating legal as the same as ethical.
Students assume that if no law is broken, the action is fine.
Fix: State that law sets the minimum. Add a test for fairness, honesty and harm to stakeholders.
Giving a one-line verdict without reasoning.
Case studies feel like opinion questions, so students skip the method.
Fix: Show the steps: dilemma, stakeholders, options, decision and reason. Marks go to the reasoning.
Confusing an ethical issue with an ethical dilemma.
Both terms sound alike.
Fix: Remember that a dilemma needs a conflict between two or more choices, each with a moral cost. A clear wrong, such as theft, is only an issue.
Listing sources of ethical issues without grouping them.
Students write a random list from memory.
Fix: Group them as individual, organisational, leadership and external, with one example each.
Ignoring the reporting route in the answer.
Students focus on what to decide, not how to act on it.
Fix: Add internal escalation, documentation and whistle-blower protection to every case answer.
Choosing the answer that benefits the employer only.
Loyalty is mistaken for the main duty.
Fix: Consider all stakeholders. A professional's duty to the public interest and integrity can override instructions to mislead.

Worked examples

Example 1

You are a cost accountant at a manufacturing company. Your manager asks you to understate the cost of a product in a report to a customer, so that the company can win a cost-plus contract at a higher price. Identify the dilemma and explain how you would resolve it.

Show the solution

Dilemma: loyalty and obedience to the manager conflict with honesty and your professional duty not to misstate cost data.
Stakeholders: the customer, who would pay on false data; the company, which risks losing reputation and facing legal claims; the manager; you; and other employees.
Law and code: knowingly misstating cost data is a breach of integrity and professional conduct, and may be misleading or fraudulent in effect.
Options: (a) follow the instruction; (b) refuse and report the correct figures; (c) raise it with the manager and escalate if ignored.
Test: option (a) is dishonest and fails the public disclosure test. Options (b) and (c) are honest and transparent.
Decision: do not alter the data. Explain the concern to the manager, and if the instruction stands, escalate to senior management, the audit committee or the whistle-blower channel, and keep written records.
Prevention: the company should have a code of conduct, cost data review controls and ethics training.

Answer: Refuse to misstate the cost. Present the correct data, raise the issue with the manager, escalate through the proper channel if needed, and document everything.

Example 2

Explain the sources of ethical issues in an organisation and how an organisation can promote ethical behaviour at work.

Show the solution

Define an ethical issue as a situation where conduct may breach accepted standards of right behaviour and harm others.
Sources: individual factors such as greed and weak values; organisational factors such as unrealistic targets, weak controls and reward for results alone; leadership factors such as poor example; external factors such as competition and industry practice.
Promotion: adopt a written code of conduct and communicate it to all.
Train employees using realistic case studies.
Leaders should follow the code themselves and not reward unethical shortcuts.
Provide a confidential whistle-blower mechanism with protection against retaliation.
Enforce the code consistently and review it regularly.

Answer: Ethical issues arise from individual, organisational, leadership and external sources. An organisation promotes ethics through a code, training, leadership example, fair rewards, a protected reporting channel and consistent enforcement.

Exam tips

Write case answers in the order: dilemma, stakeholders, options, decision, reason. This layout earns step marks.
For MCQs, a dilemma always involves a conflict between choices. Pick the option that is honest, lawful and transparent.
When asked about sources, group them under four heads and give one example for each.
Link your answer to the code of conduct, corporate governance and whistle-blowing where it fits the facts.
Keep the answer tied to the case facts and name the people involved. Generic essays score lower.

Practice questions from Business Ethics and Emotional Intelligence

Ethical Dilemmas and Ethics in the Workplace in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Ethical Dilemmas and Ethics in the Workplace: frequently asked questions

What is an example of an ethical dilemma in business?

A manager asks you to overstate profits so the company can get a bank loan. Honesty and professional duty clash with loyalty to your employer. Refusing, raising it internally and escalating if needed is the usual model response.

How do I resolve an ethical dilemma in the exam?

Identify the dilemma, list the stakeholders, check the law and code, compare the options, choose the lawful and least harmful one, and explain the reporting route. Show each step in your answer.

What is the difference between an ethical issue and an ethical dilemma?

An ethical issue is any situation involving right or wrong conduct. A dilemma is a choice between options where each has a moral cost, so no option is fully right.

What are the main sources of ethical issues in organisations?

They come from individuals, the organisation's structure and culture, leadership behaviour and external pressures. Unrealistic targets and weak controls are common organisational causes.