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Workplace Misconduct on the Decline

Are Companies Getting the Message about the need for Ethics in the Workplace?

New findings from the Ethics Resource Center suggest that overall workplace misconduct is on the decline, while other findings suggest there is room for improvement.

Workplace misconduct is at a historic low, according to the Ethics Resource Center (ERC). ERC’s 2013 “National Business Ethics Survey” (NBES), which surveyed more than 6,400 private-sector workers, found that workplace misconduct has steadily declined since 2007, when it hit a record high. Last year, 41 percent of private-sector workers reported witnessing misconduct at work compared to 55 percent in 2007.

According to the survey, companies are doing a better job of holding workers accountable, imposing discipline for misconduct, and letting it be known that bad behavior is being punished. “The dip in misconduct may reflect workers’ tendency to take fewer risks when economic prospects seem weak or uncertain, given the relatively soft recovery since 2008. But it also is possible—and we believe probable—that businesses’ continuing and growing commitment to strong ethics and compliance programs is bearing fruit and that ethical performance is becoming a new norm in many workplaces.”

The report found that between 2011 and 2013, the percentage of companies offering ethics training increased from 74 percent to 81 percent. There was also a 12 percent increase over the same timeframe in the number of companies using ethical conduct as an employee-performance measure.

“Companies are doing a better job of holding workers accountable, imposing discipline for misconduct, and letting it be known that bad behavior is being punished,” the report noted. The real question is how a company can instill an ethical culture as early as the hiring process.

“It starts right away during the interview,” according to Stacy Tetschner in Associations Now. “It is important to be up front with prospective employees about the culture and values of the organization to be sure there is a good fit. Their first impressions of you are just as important as yours are of them. They need to know what your association stands for and will not tolerate. And more importantly, if they are hired, you then need to show them that you walk the talk you gave them during the interview.”

The findings coming out of the latest EBES weren’t all good, though. For example, the rate of retaliation remains high, at 21 percent—this equates to six million workers who reported experiencing some type of retribution for filing a report about misconduct at work last year. ERC stated in the report that reducing the rate of retaliation is one of the biggest challenges organizations face because, as one might guess, the more workers fear reporting misconduct, the less likely they are to do so. The rate of reporting misconduct also stalled in 2013 after growing in previous years. More than one out of every three people choose not to report misconduct they witness.

Another surprising finding from the report is that amount of misconduct committed by management. Respondents reported 60 percent of the misconduct they witnessed involved an individual with managerial authority. “If allowed to persist, rule-breaking by managers bodes ill for ethics cultures, because managers set the tone for everyone else,” Patricia Harned, ERC president, wrote in the report.

As I have blogged about before, the key is to establishing an ethical culture in a company that reduces instances of misconduct and retaliation for blowing the whistle. This is done by establishing an ethical "tone at the top."

Tone at the top refers to the ethical atmosphere that is created in the workplace by the organization's leadership. Whatever tone management sets will have a trickle-down effect on employees of the company. If the tone set by managers upholds ethics and integrity, employees will be more inclined to uphold those same values. However, if upper management appears unconcerned with ethics and focuses solely on the bottom line, employees will be more prone to commit fraud because they feel that ethical conduct is not a focus or priority within the organization. Employees pay close attention to the behavior and actions of their bosses, and they follow their lead. In short, employees will do what they witness their bosses doing.

Leading by example is the key. That is why we need to develop more ethical leaders in business and society. Leadership can be taught, and is, in colleges and universities. But, nothing replaces the innate desire of a leader to do the right thing. This entails respecting others, acting responsibly, admitting failures, and being accountable for one’s actions.

Blog posted by Steven Mintz, aka Ethics Sage, on March 4, 2014