We all know we’re supposed to have an ethical culture, just like we all know we’re not supposed to follow the dress code and we’re supposed to turn in our expense reports on time. But in the crazy, hectic, fast-paced way of business these days, the amorphous, intangible and non-KPI like things such as “ethical cultures” get shoved to the back burner. However, there are tools you’re already using and things you’re already doing that can improve your culture, every day.
Last spring I was speaking with several of our clients at an event in Atlanta and the discussion was around ethics and compliance program effectiveness. Specifically, these clients were saying that more and more often they were being asked by their management and their Boards to show that their ethics and compliance programs were effective. Various regulatory bodies mandate that companies must have a compliance program in place, so it’s not a question of having one, but whether the program is actually working, whether it’s actually protecting the company.
While it’s important to measure, I also think you have to be careful, because you can easily jump to incorrect conclusions if you look at metrics in isolation or without context. If you only look at, for example, hotline calls, and you see that they spiked up this year, you may think “wow, misconduct is on the rise at my company… we must have a terrible culture.” But you have to look at the whole picture. Perhaps your HR team just rolled out a great awareness campaign or improved corporate ethics training that year… perhaps it was so effective, you’re just fortunate enough to have increased the reporting, not the misconduct.
The Ethics Resource Center just recently released The National Business Ethics Survey® and it produced some interesting results. There are some noteworthy statistics that can provide benchmarks for organizations looking for some of that context.
The first major thing we noticed when we were going through the results is that observed misconduct is steadily decreasing. From the record high of 55% in 2007, the share of private-sector workers who said they had observed (not reported) misconduct on the job in 2013 fell for the third straight survey to 41%. It is good news that observed misconduct is falling; of course, my first inclination is to ask “how much is being reported… how much is going unreported?” but that may not be easily answerable.
The percentage of companies providing corporate ethics training rose from 74% to 81% between 2011 and 2013. This is also good news. Companies are clearly getting the memo that corporate ethics training is important. The survey also revealed that in 2013, one in five workers (20%) reported seeing misconduct in companies where cultures are “strong” compared to 88% who witnessed wrongdoing in companies with the weakest cultures. What a huge gap… but it’s not at all surprising to me. We believe in building strong ethical cultures – it is part of our mission here at The Network. When an organization has ethics built into the fabric of the culture and into the foundation, employees become less tolerant of misconduct in the first place. Strong ethical cultures prevent retaliation and encourage employees to “speak-up.” You begin to build that culture with employee-facing tools like your Code of Conduct, policies and training.
Speaking of retaliation… this is where the survey results got a bit ugly. More than one in five workers (21%) who reported misconduct said they suffered from retribution as a result, which was almost identical to the 22% retaliation rate in the 2011 version of the survey. This is unfortunate because retaliation was not always so widespread: the rate was only 12% in 2007, which was the first time it was measured in the survey. So clearly, retaliation is climbing.
In the survey, 34% of those who declined to report misconduct, when asked WHY, revealed that they feared payback from senior leadership within their company. Another 30% worried about retaliation from a supervisor, and 24% said their co-workers might retaliate against them. That is just downright scary. Compliance officers and HR Leaders, take note: there are incidents going unreported in your organizations because your employees are afraid to come forward! Alarm bells should be going off for you; ethical cultures foster employee confidence, not fear.
Maybe your corporate ethics training programs need a louder, clearer anti-retaliation message or you. I’d check out this OCEG illustration on creating a speak-up culture and preventing retaliation. Ethics training and awareness programs are a critical part of ensuring retaliation does not occur within your organization. So are a strong Code of Conduct, policies that clearly articulate the standards of expected behavior and a culture of ethical decision-making, which should be a foundational element in the way you do business.
There is a lot more interesting data in the National Business Ethics Survey and I encourage you to download it and read it for yourself. Remember when you use these statistics or other benchmarks, or your own metrics when evaluating the effectiveness of your ethics and compliance program, to be sure to look at context and not one measurement in isolation. Choose the metrics that will be your “canary in the coal mine”; trends you can watch so you know whether your culture is where it should be or if you have work to do, to get it back to inspiring and encouraging employees to speak up.