I recently had the opportunity to visit with Dr. Pat Harned, President of the Ethics & Compliance Initiative (ECI), about the organization’s 2021 Global Business Ethics Survey (GBES). Since 1994, ECI has conducted this cross-sectional study of workplace conduct from the employee’s perspective. ECI’s GBES data provides the only global benchmark on the state of ethics and compliance (E&C) in business. 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.
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 will review the key findings, how retaliation against whistleblowers has taken an alarming turn, the impact of Covid-19 on compliance, closing with conclusions and recommendations. In Part 2, we consider its key trends.
Ethical Culture Strength Remains High. The GBES noted that higher quality E&C programs are linked with stronger cultures. Moreover, the single most significant influence on employee conduct is culture. In strong cultures, wrongdoing is significantly reduced. Globally, most employees did not work in organizations with strong ethical cultures. The global median for strong culture was 14%. Employees from India were the most likely to perceive working in a strong ethics culture; employees from France were the least likely and this was even lower than Russia.
Pressure to Compromise Standards Is the Highest It Has Ever Been. Pressure to compromise standards serves as a warning signal for both ongoing and future misconduct. Employees working in high-pressure organizations are much more likely to observe misconduct in their workplace. Globally, the 10-country global median also showed higher levels of employees reporting pressure compared with 2015 and 2019.
Observed Misconduct—While Steady—Is Inching Upwards. The rate at which employees observe misconduct is a fundamental indicator of the strength of a company’s ethics culture. Companies with high rates of misconduct are likely to have ineffective compliance programs, a lack of accountability, and senior leaders that fail to communicate the importance of ethics in the workplace. The four types of misconduct surveyed included improper hiring practices, abusive behavior, conflicts of interest and health violations. Globally, the median for observed misconduct is the same as in 2015, although there was a slight dip in 2019.
More Employees Are Reporting Misconduct. The only way to improve an ethics culture is to understand the nature of misconduct within a company. It is imperative that employees feel comfortable reporting misconduct because without said reports, it is impossible for organizations to develop effective E&C programs and to ensure that those who commit wrongdoing are held accountable.
Retaliation. By far the most troubling finding is around retaliation. The GBES practically screams out, “retaliation rates have skyrocketed”. The GBES has been tracking this key metric for almost 15 years and retaliation has been steadily increasing, with a jump from 22% in 2013 to 44% in 2017. In 2020, the rate of retaliation against employees for reporting wrongdoing in the US was 79% in 2020, an increase of 35 percentage points. As the GBES dryly notes, “If left unaddressed, high rates of retaliation can erode ethical culture and undermine efforts to encourage employees to speak up and raise concerns.” Retaliation was felt at all levels of an organization, with “top managers and middle managers driving much of this increase in recent years. Between 2013 and 2020, rates of retaliation among top managers and middle managers increased by 62 and 67 percentage points respectively. In contrast, retaliation rates among non-management employees increased by 24 percentage points.” The global trends were equally troubling as “the global median for retaliation was 61%, a large increase from 2015 (40%) and 2019 (33%). Employees from all countries examined reported higher rates of retaliation than before.”
There were specific types of retaliation catalogued. They included that co-workers and supervisors intentionally ignored whistleblowers or began treating them differently. Whistleblowers reported verbal abuse from supervisors, being excluded from team decisions and work activities, being given poor performance reviews and unfavorable work assignments. They also reported their property was damaged and both personal and work items were stolen from them.
The GBES concludes, “Retaliation against reporters is one of the most intractable issues that organizations must address. Retaliation can take many forms, and it is often difficult to isolate and prevent. However, it is imperative that organizations investigate retaliation and make it clear that there is no tolerance for it within their organization.”
For a deeper dive into the GBES, check out a 5-part podcast series this week on the FCPA Compliance Report. You can check them out on iTunes here. To obtain a copy of the Survey, click here. To find out more about ECI, click here.
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