In this podcast series 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). In this series we consider each of the four GBES reports released by ECI. These include The State of Ethics & Compliance in the Workplace, released in Q1 2018; Measuring the Impact of Ethics & Compliance Programs, released in Q2; Building Companies Where Values and Ethical Conduct Matter, released in Q3 and Interpersonal Misconduct in the Workplace: What It Is, Where It Occurs and What You Should Do About It, released in Q4. We discuss each report in a separate podcast and then in Part V, tie them all together. Today, in Part 1, we consider the state of ethics and compliance (E&C) in the workplace.

The study was designed to take the pulse of employees in business workplaces. ECI has been doing this since 2000 and the survey has become, over time, the global benchmark on ethics in the workplace. Harned said, “every couple of years we ask employees about the extent to which they are observing misconduct and some of the other patterns and their perceptions of culture.” The good news is that fewer employees indicated that they have observed some type of wrongdoing, as defined by whether it was a violation of their company’s standards or the law, within the past 12 months. While the number was still high, at 47%, those responding told ECI they had observed something, this is lower than has been observed in quite a long time.

When it comes to reporting observed misconduct, Harned said, “The big question is, will people come forward and alert management to misconduct? And again, we found good news when we did this update to this study. 69% of employees told us that if they had observed some kind of wrongdoing, they found a way to report it to management in some way, shape, or form. That’s actually the all-time high highest level of reporting that we’ve had in the history of this study.” Unfortunately the news on pressure employees felt to compromise ethics standards was not as positive.

Harned noted, “16% of respondents told us that they are feeling some sort of pressure to compromise standards just to get their job done. That is the highest level of pressure that we have seen in the history of the study.” When you couple this with the fact that “84% of people who told us that they are feeling pressure are also observing some kind of outright violation in their workplace”; it becomes a worrisome metric. It is certainly not a good sign that pressure is on the rise.

Regarding retaliation, the study found 44% of respondents indicated that “if they reported misconduct to management, they experienced retaliation for having done so and that rate has doubled since the last time we took that measure.” Harned characterized this as “an alarming number for a lot of reasons. One, because we’ve seen over the years that retaliation is a leading indicator of a declining culture. If you think that if you come forward to report wrongdoing, you are going to be harmed for having done so, employees are going to be quiet in the future and problems will persist.”

We concluded by looking at culture which is such a powerful influence on people’s attitudes about how real their code of conduct is at their organization down to their individual workplace. Harned believes that culture not only trumps compliance “every day of the week” but also that “it is a huge influence on employees own decisions when they don’t know what to do.” Unfortunately, one of the things the survey found was the percentage of people who say they work in workplaces with strong cultures has not substantially increased over the past years. Yet when employees are working in companies with strong cultures, it makes a huge difference. The survey found 88% “of people who say they work in a strong culture reported wrongdoing if they observed it, and the level of retaliation was 43%, still not at the great greatest of numbers, but certainly less than if they’re working in an organization with a weaker culture”. The bottom line is that employees are far less likely to say they feel pressure to cut corners if they are working in an organization with a strong culture.

The outcome is that conduct in US workplaces continues to shift. Based on historic findings and current indications, ECI suggests that leaders brace for employee conduct to worsen in the days ahead.

Join us tomorrow when we discuss the survey Measuring the Impact of Ethics & Compliance Programs. 

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.