Home > Risk > Disturbing survey on business ethics

Disturbing survey on business ethics

The Ethics Resource Center recently published their bi-annual business ethics survey, looking at the American business environment.

While I would not say the changes in results are remarkably different from their prior survey (in 2009), I was surprised by some of the statistics:

  • 45% of employees have witnessed misconduct. While this down from 49% in 2009 and 55% in 2007, it is still remarkably high and justifies continued vigilance
  • 65% say they have reported the misconduct they saw: the highest level on record
    • 22% of those who reported misconduct suffered as a direct result. This is higher than the 15% in 2009 and 12% in 2007, and should be a cause of great concern.
    • The only conclusion I can draw is that employees are not aware of their company’s hotline process. The report says only 5% of reported misconduct were via hotlines! Unfortunately, the study did not ask about awareness of hotlines
  • The number of companies with ‘weak ethics cultures’ rose from 35% in 2009 to 42%. Yes, folks. This is America we are talking about, not some ‘emerging’ nation!
  • 42% say “their company has increased efforts to raise awareness about ethics”. Not the language: they are not saying their company succeeded in improving ethical practices!
  • 4% (up from 1% in 2009) report observing offers of improper payments to public officials

The report includes a discussion about the increased pressure on people who are active in social networking (defined as spending 30% (!) or more of their work day on social media sites). Presumably, if you complain through social networks you are more likely to get management attention (not always in a positive way) than if you complain through company channels. Interestingly, 42% of these people think it’s OK to criticize your company on blogs, etc.

The section on page 16 that describes how retaliation occurred is chilling.

Equally chilling was the report that more people (now at 13%) are feeling pressure to bend the rules, or even to break the law.

Fully 34% of employees said their managers do not display ethical behavior (24% in 2009). That will cascade in effect through the organization, with the result that all employees are more likely to violate the code of ethics.

Can you believe that the level of sexual harassment is 11%, up from 7% in 2009? Stealing is up from 9% to 12%, and health/safety violations up to 13%.

The report includes these recommendations:

  • Invest in ethics and compliance programs, and make ethics a business priority
  • Make ethical leadership part of how you evaluate managers at all levels
  • Communicate your personal commitment to ethical conduct
  • Use social networks to connect with employees and engage them in ethics-related discussions
  • Revisit retaliation policies and practices
  • Focus on the supervisors, for their actions (walking the talk) and responses to reports of misconduct are at the heart of the matter

But is this enough?

Is it time to revisit the HR-preferred “talk to your supervisor” and replace it with encouragement to report independently of your supervisor?

Shouldn’t the program be risk-based, looking at the areas of greatest potential harm (which may not include reports of wasting time at work – the most frequently reported misconduct according to the survey), ensuring policies and controls are sound (including training), putting metrics in place, and then monitoring at regular intervals?

How about asking internal audit to assess all or part of the program?

  1. Buddy Rojek, CPA
    April 2, 2012 at 3:31 PM

    We could adopt these laws to ensure everybody acts ethically, not because they ought to but because they fear retribution.


  2. April 2, 2012 at 4:44 PM


    Good observation regarding “emerging nations” :). I have consulted and worked in over 300 organizations in India, and 50% of them were MNCs/ Just in a couple of them I had seen an effective ethics programs. Most just have some mandatory training with no follow up or real focus on building an ethical culture. It is something like in the training employees are told -no bribes should be given, and then when they go to their desk, let us say in finance department, the boss gives instructions – give bribe to get the work done or avoid a legal case.

    And what message do employees get when there is public retaliation on employees who stood up for ethics, that too led by the management. Do you think employees will have the courage to do the right thing when they see one hanged everyday? In dysfunctional organizations, senior managers lead unethical behavior, so expecting juniors to do the right thing is unrealistic.


  3. April 3, 2012 at 5:09 AM

    Oh, people don’t even like honest comments. Pity, that honesty is sold for a price.


  4. Tim Nowe
    April 3, 2012 at 6:51 AM

    “Make ethical leadership part of how you evaluate managers at all levels.”
    If managers are judge more on their ethical approach to business and less on the monetary results, the outcome might be a surprise. Profits will be “a real number,” and the profits gained will be a result of actions derived from right and wrong behavior.

  5. The Really Real Me
    April 3, 2012 at 10:16 AM

    The corporate environment is a tricky one. I used to create processes and programs for large Fortune 500 companies on such topics. It’s great to have policies in place, to require training for the workforce…but at the end of the day, it is what is put into action and practice that really matters.

  6. April 4, 2012 at 11:12 AM

    It appears to me that the most common reason for ignoring an employer’s guidelines for ethical behavior is that many companies base compensation on criteria which appear to be in conflict with those guidelines. The guidelines then appear to be irrelevant. Management by objective is important; but if all the objectives are based on financial benchmarks, and there is no guidance on how those benchmarks must be achieved, employees lacking a personal moral compass will strive to achieve their benchmarks by the most convenient means available.

  7. Tim Hediger
    April 5, 2012 at 7:09 AM

    A quote from Dr. Wells (founder of the Association of Certified Fraud Examiners): “There is no ethical policy stronger than the leadership provided by the head of the organization.”

    All other policies are secondary.

    • June 24, 2012 at 7:00 AM

      I could not agree more… How many times I saw code of ethics installed, employees told to sign… And at the same time certain behavior of the leaders sticked out of the rules. Code of ethics only ensure the “law” but having the law clear does not ensure that ethical behavior spreads. What can we accept if even presidents break the law (Nixon, Clinton)?

  8. April 10, 2012 at 2:55 AM

    I ‘d like to suggest that it would be a great advance if the ethics survey could start measuring and reporting on instances/frequencies of positive ethical behaviour eg. the number of times supervisors have talked about potential ethical risks for employees and how to handle them etc. My fear is that if we don’t start measuring what really counts we’re just going to have more of the same in every survey and its just gets depressing to read and what where is the learning? Isn’t it time we moved on to demonstrate and celebrate what ethical behaviour looks like in the workplace?

  1. April 9, 2012 at 6:28 AM

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