What to Do About a Defective Product? Ethical Issues
Giving Voice to Integrity in the Workplace

Ethics and Compliance: Workplace Values That Strengthen Corporate Culture

Ethics & Compliance Initiative 2018 GBES Survey Results

The Ethics & Compliance Initiative (ECI) recently issued its 2018 Global Business Ethics Survey (GBES) that reports on the impact that an ethics and compliance (E&C) can have in the workplace with respect building a sound, ethical culture in organizations. A strong ethical culture is essential today to ensure that ethical values are established and permeate all of the organization. Support mechanisms include:

  • Develop a code of ethics that defines the moral obligations of the organization and how it meets the needs of stakeholder groups.
  • Create an ethical tone at the top whereby top management holds itself to the highest ethical standards and expects those in the organization to do the same.
  • Establish an Ethics & Compliance Officer position (sometimes called VP of ethics) to oversee all aspects of the ethics program and compliance requirements.
  • Develop an anonymous reporting channel (i.e. hotline) for employees to discuss concerns about operating, marketing and financial reporting matters.
  • Enforce compliance with ethical standards including imposing penalties for violating the code. Code of ethics

According to the GBES report, in organizations that establish even a minimal standard for ethics and compliance, employees were 132 percent more likely to report misconduct and 270 percent more likely to be satisfied with the organizations’ response compared to an organization with no program.

The survey found that in stronger ethical  cultures employees have a greater tendency to report observed misconduct – 83% compared to 58% in weaker cultures. Additionally, for those companies that have not implemented and E&C program, only 34 percent of employees observing misconduct reported it and only 20% of those reporting it felt satisfied with the outcome.

These and other results reinforce the concept that a strong ethical culture can be built when employees feel valued, respected and expected by the company to provide feedback when they observe misconduct, without being retaliated against.

It’s interesting to note that in an earlier ECI survey it was found that reporting of suspected wrongdoing in organizations has reached a historic high, while rates of retaliation for reporting of suspected wrongdoing have doubled in the last two years. Other results include:  

  • Sixty-nine percent of employees said they reported the misconduct they observed; a 19% increase and all-time high since the inception of ECI's research. 
  • When asked if employees had experienced retaliation for reporting, 44% of respondents said that they had been retaliated against, compared to 22% in 2013.  
  • Historically, ECI has demonstrated that reporting and retaliation rise and fall together; although in its earlier report ECI found that retaliation rose significantly higher than reporting. 

"The data suggest that, while conduct in organizations has improved, there is cause for concern," said Patricia Harned, CEO of ECI.  "Pressure for employees to cut corners is on the rise, along with retaliation for reporting.  Previous GBES studies have shown that these are the two indicators of trouble ahead."                                                                                                                                       

My takeaway from these surveys is we still have a long way to go to ensure that employees feel comfortable reporting wrongdoing of all kinds within the organization’s reporting system. Concerns about retaliation still exist and the idea that top management should ‘walk the talk’ of ethics still needs to be developed. One thing for sure is improvements in corporate culture require a stronger commitment to ethics at all levels of the organization and ethical leadership so that employees come to believe top management takes these matters seriously.

Blog posted by Steven Mintz, aka Ethics Sage, on November 6, 2018. Visit Steve’s website and sign up for his newsletter. Follow him on Facebook and Like his page.