Over a special five-part podcast series, I have visited with Dr. Pat Harned, President of the Ethics & Compliance Initiative (ECI), about the organization’s 2021 Global Business Ethics Survey (GBES). This year’s GBES is the first compliance related survey conducted after the global pandemic hit. It has significant information for the compliance professional which they need to consider for every compliance program, literally on a world-wide basis. Today we close with some conclusions and recommendations.
While a multitude of factors influence ethical behavior, the GBES reports interplay of four major ethics outcomes are tied to the daily decisions employees make with respect to how they behave in the workplace. These are: pressure in the workplace to compromise ethical standards; observations of misconduct; reporting misconduct; and, ultimately, the retaliation perceived by employees after they reported misconduct. Some of this year’s findings are quite troubling as they are clearly trending in disturbing directions. Over this series we reviewed the key findings, saw how retaliation against whistleblowers has taken an alarming upturn, noted the impact of Covid-19 on culture.
One area made clear in the 2021 GBES is that change can bring increased risk. Although the GBES data collection occurred during the COVID-19 pandemic, it was not the pandemic which was the causative event but change itself. This has significant implications for every compliance professional. In the Department of Justice’s (DOJ) 2020 Update to its Evaluation of Corporate Compliance Programs, it mandated risk assessments be performed whenever your organization’s risks change. I now take that a step further and believe that when there is change, your risk profile will change. It may not necessarily be a negative change but your risk profile will change.
COVID-19 has led to employees working and organizations operating differently alongside a backdrop of upheaval in global and local economies. Therefore, it is not unexpected that employee perceptions of their workplaces and the behaviors that take place within the workplace have been impacted by circumstances that are far from “regular business operations.” The GBES survey focused on these changes as that respondents were answering questions about their organizations within the context of the COVID-19 pandemic. The increases in pressure, observed misconduct, reporting and retaliation all follow from these massive changes.
The GBES showed that employee conduct around the world has been drastically impacted by the Covid-19 pandemic. It is important for every compliance professional to note that “in light of the worsening of three key indicators in 2020 (pressure, observed misconduct and retaliation) and the status quo of organizational culture strength since 2017, trouble may be ahead.” A clear conclusion is that “without an effective E&C program, senior leaders and organizations as a whole will find it very difficult, if not impossible, to improve their workplace cultures.”
The GBES found that while “rates of misconduct have increased slightly” the pressure on employees and, therefore, corporate culture has skyrocketed. Moreover, if retaliation for reporting remains at this elevated level, it is only a matter of time before reporting decreases. Subsequently, “protecting employees who report misconduct through anti-retaliation programs and monitoring is paramount.” Finally, “higher management levels are associated with increased rates of pressure, observed misconduct and retaliation. Conversely, top managers are more likely to work in strong ethical cultures and to report the misconduct they report.”
Some of the areas which compliance officers in the US need to pay attention to is observing misconduct both at the front line and senior management level. More troubling is that “this is mirrored by an increase in pressure to compromise standards that is largely driven by higher rates of pressure among top managers and middle managers.” As noted throughout this series and the GBES is the increase in retaliation, literally at all levels of organizations. This must be addressed as well. Globally, companies need to improve their ethical cultures and work to alleviate in addition to those areas of improvement needed in the US.
It is clear from the findings and conclusions that companies must improve their ethical culture for this is the basis of all E&C programs. A robust ethics and compliance program is even more important now, in the face of the massive changes brought about by the pandemic. In addition to having a robust compliance program, companies need to develop or revisit their core values and ensure that they “are woven into your E&C activities and/or program.” Written standards should clearly set behaviors that guide employees’ actions. There must be communications about values and expectations about employee behaviors in organizational communication. Another area is to “Set performance goals for senior leaders and managers to visibly support the organization’s values and reinforce the importance of speaking up and listening.”
The bottom line is that every compliance professional and business leader cannot not and must not take your culture for granted. The GBES has shown that when businesses undergo transition or circumstances around the organization changes, culture may erode, leading to a rise in misconduct and retaliation for reporting of misconduct. The GBES suggests that you (1) Regularly ask your employees about the pressure they feel and reinforce to them that performance without integrity is unacceptable. (2) Raise the bar for your E&C program. Truly successful programs integrate E&C across all aspects of the business. Evaluate the effectiveness and quality of your E&C program through continuous monitoring and continuous improvement. (3) Reinforce the importance of culture among senior leaders and middle managers and “assess your culture and provide additional support to your business areas where employees perceive it to be weak.”
To obtain a copy of the Survey, click here. To find out more about ECI, click here.
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