This week, in this podcast series on the FCPA Compliance Report, I visit with Patricia Harned, Ph.D., the Chief Executive Officer (CEO) of Ethics and Compliance Initiative (ECI), about the firm’s 2018 Global Business and Ethics Survey (GBES). There were four GBES reports released by ECI in 2018: Q1-The State of Ethics & Compliance in the Workplace; Q2-Measuring the Impact of Ethics & Compliance Programs; Q3-Building Companies Where Values and Ethical Conduct Matter; and Q4-Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It.

Q3- Building Companies Where Values and Ethical Conduct Matter

This Q3 survey took the principals from ECI’s definition of a high-quality compliance program and looked at how they have been operationalized in corporate compliance programs. This survey started by reporting on proactive communications by corporate leaders. Harned noted, “We talk all the time with them about setting a proper tone from the top. At the same time we spend a lot of time thinking about how do you build trust in a workplace? We were looking first at proactive communication, not just when you’re talking at employees, but does it make a difference the way you go about speaking with employees about the importance of ethics? And we found that it actually does make a difference.” She added an interesting way to consider proactive communication by senior management stating,  “when leaders talk about ethics in the workplace in a way that makes it relevant to the way employees are doing their jobs, they make it real to every day decisions that people make and when they encourage people to speak up in the workplace.”

That led directly into a discussion about trust, which is absolutely critical to having an ethical organization. Harned began by noting, “trust is in a lot of ways it shows up on a lot of company core values statements. It’s something organizations articulate as being critical to the way they want to make decisions and behave in the workplace.” Further, while it may be a difficult concept to articulate, much like Potter Stewart, they know it when they see it. Moreover, “if employees do not trust their managers, they don’t trust that decisions are being made based on the ethical standards of the organization.”

This final insight is the sum of two big observations. “The first is whether employees are believing and seeing tangible evidence that an organization holds people accountable to the standards of the organization. If you break the rules, will you be held accountable. The second is just having genuine interactions with your leadership. Among colleagues,  people interacting with each other in a way where the values are evident.”

All of this is just another way of discussing institutional justice but ECI advocates taking it down to the individual manager, middle manager and senior manager levels. Some of the questions you might ask are the following: Are you accountable? Are you personally accountable? And is the company accountable in a way that is transparent and fair across the organization? Do you see that as equally important?

Interestingly, in this study employees related that when their managers and their supervisors are willing to admit mistakes, this demonstrates their own personal accountability. Employees believe they are holding themselves accountable to the standards. Harned said employees “are 25 times more likely to believe that their managers and their supervisors value employees and value genuine interaction with their employees.” This demonstrates that “seeing your own leaders, holding themselves accountable is a powerful influence on not only the way people see the culture of the organization, but how they see their own behaviors as well. People are more likely to hold themselves accountable when their manager is modeling that conduct.”

Few would argue about the importance of communication and trust in the workplace; these are well-known ingredients for harmonious working relationships and a productive working environment. But less is known about the reasons that communication and trust are so essential – especially within the ethics & compliance space.

Q4- Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It

A decade ago, companies made headlines for problems such as bribery, financial manipulation, and fraud. The attention has shifted, though. For the past year, mistreatment of employees, especially abusive behavior, sexual harassment and discrimination, has joined data privacy as a critical issue of our time. #MeTooand #TimesUphave given a name to the larger effort to unearth problems that have festered and to find a path towards safer more respectful workplaces. Efforts to expose the issues have uncovered repetitive patterns of interpersonal misconduct in organizations around the world.

This topics of sexual harassment, sexual assault discrimination and/or abusive behavior has been a part of the compliance conversation, just as in society for at least the last two years. GBES is designed to measure trends in workplace misconduct. Unfortunately, one of the leading types of misconduct that people observe is always abusive and intimidating behavior by supervisors towards their employees. The Q4 survey was designed to explore that issue a more. ECI also wanted to take the pulse around sexual harassment and discrimination in the workplace.

Harned said the survey found, “12% of people observed some type of abusive behavior in the workplace and another 12% observed some type of sexual harassment. Even worse was the finding that 21% observed abusive or intimidating behavior and that most were not isolated incidents, with 62% happening on multiple occasions.

One of the most important things about #MeToohas been to raise the awareness that these problems are not simply the responsibility of those harassed, discriminated against or abused. It is the responsibility of someone who sees such conduct to report it. I was therefore interested in what the survey showed on this issue. Harned said, “There are certainly a few risk factors that I think drive a fair amount of people’s decisions when they are observing these types of behaviors, whether or not they’ll come forward and actually report it.

The first is their perception of leaders, whether or not this is something that we’ve sort of seen over the years, that people’s beliefs about their leaders, the conduct that they display, but also their belief about whether leadership really cares about this issue also affects their willingness to come forward.”

The second factor is the focus of the environment of the business, which focused on processes versus outcomes. Harned said, “One of the things that we found was that when an organization focuses on performance and the way they incentivize people; it has a substantial influence on the extent to which they’re observing” untoward behaviors; whether it be abusive behavior, sexual harassment or discrimination in that environment. The survey found that if you have a focus on the overall outcomes as the bottom line, there is usually not an environment of accountability. As Harned stated, “it’s a real problem for a lot of organizations.”

The third factor is the extent to which the organization is going through a fair amount of transition and change. These three items “drive employees decisions about whether they will come forward to report, whether they’ll take action when they’re seeing this kind of behavior in their environment. We have seen this to be a trend with other types of misconduct as well, that there are certain types of shifts that happen in an organization where misconduct is likely to be higher, for example, that would include expansion into new countries, mergers, acquisitions of another organization.” Yet, it can include other events which are familiar in the life of a corporation including  “substantial changes in top management, changes in leadership, layoffs, restructuring, downsizing, and any measures that companies take to cut costs.”

The survey found that employees are “3.8 times more likely to observe discrimination if their organization is going through transition and they are 3.5 times more likely to observe sexual harassment. Finally, organizations going through such transitions are 2.5 times more likely to observe abusive behavior.” Harned concluded, “There’s something about organizations in transition that changed the way people relate to each other or it. Unfortunately, it allows this sort of behavior that goes over the line to take place if heightened awareness.”

The bottom line is that heightened awareness of interpersonal misconduct and the toll it takes on individual employees and organizations is a positive development. But more needs to be known about the nature of the issues, the scope of problems, the factors that exacerbate problems and strategies for fostering respectful workplaces.

Join us tomorrow when we conclude our series by considering the scope of what these four GBES components mean for companies, the compliance professional and the compliance profession.

 For more information on ECI, check out their website by clicking here.  To obtain a copy of all four of the 2018 GBES surveys, click here.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2019

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