How Unethical Customers Cost Organizations Twice

unethical customers

Unethical customers can cost organizations lots of money. For example, customers can steal, cheat, scam, defraud, hoodwink, or make up an overly dramatic story about how the soup of the day was far too salty so that they get a small discount. New research (Greenbaum, Quade, Mawritz, Kim, & Crosby, 2014) shows that there may be hidden costs to organizations that allow customers to consistently get away with these offenses. Specifically, it’s the employees who suffer.


ETHICS VIOLATIONS LEAD TO EMOTIONAL EXHAUSTION

The authors conducted two separate studies and found that customer ethical violations led to employees becoming emotionally exhausted. This is based on the idea that people have a certain amount of internal resources to spend, and when these resources run out, people begin to suffer from emotional exhaustion.

What about unethical customers makes internal resources run low? Specifically, the authors note that we feel an inherent need to live in a law-abiding and just society. When these ideals are threatened, it bothers us, and we become stressed-out. This explains why employees who consistently observe unethical behavior become emotionally exhausted.

In the study, this finding held up even though the authors were only considering unethical behavior targeting the organization, like the stealing that we’ve mentioned. They were not considering unethical behavior targeted against employees, as research has already established that employees can suffer from direct mistreatment. The current study shows that even crimes which occur against others may be disturbing to employees.
HARMFUL OUTCOMES OF UNETHICAL CUSTOMERS

Eventually, when unethical customers lead employees to emotional exhaustion, three specific negative outcomes occur. First, affected employees have higher levels of work-family conflict, which means that it becomes more difficult for them to balance the competing demands between their work life and family life. Second, employees have more negative relationships with their coworkers, and third, employees begin to neglect job responsibilities. All of these three things are known to be harmful to employees and can eventually affect the bottom line of the organizations that they work for. Due to this, unethical customers who steal or cheat end up costing companies twice: The value of the theft, as well as the value of the compromised employee who has to witness the theft.
HOW ORGANIZATIONS CAN STOP THE PROBLEM

So how can organizations, which typically have little control over customer behavior, cut down on the harmful effects of unethical customers? The authors make two recommendations. First, organizations may need to revisit the mantra of “the customer is always right.” While customer service is undeniably important, organizations may not want to allow their customers to get away with anything. Similarly, employees may be given more leeway when it comes to dealing with and punishing ethical violations that they observe. The authors note that observing unethical behavior is really only stressful when you are unable to do anything about it.

The second recommendation made by the authors is that even when employees witness unethical customer behavior, social support (such as increased encouragement) can help mitigate the consequences. Because the unethical behavior first led to emotional exhaustion and loss of personal resources, social support from the organization or from coworkers can help replenish these resources. Employees in jobs in which we’d expect lots of unethical customer behavior to occur may benefit the most from enhanced social support.