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GLOBAL SURVEY MEASURES WORKPLACE INTEGRITY

By CURTIS C. VERSCHOOR, CMA, CPA
December 1, 2016
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GBES™ finds considerable productivity benefits from an organizational culture that values ethical decision making and reporting.

 

For many years, the Ethics and Compliance Initiative (ECI) has published a highly respected survey of ethics in the workplace of U.S. organizations. In 2016, the Washington, D.C.-based organization published its first global study, the Global Business Ethics Survey™ (GBES™). Titled “Measuring Risk and Promoting Workplace Integrity,” it’s described by ECI President Patricia J. Harned as “a rigorous, multi-country inquiry into worker conduct and workplace integrity, providing insight into workplace ethics in both public and private sector organizations.”

 

 

The study broadly defines misconduct as a violation of the law, an organization’s values or principles, and/or universal ethical principles, e.g., respect, fairness, or honesty. Nearly three-quarters of both private- and public-sector employees surveyed who felt pressure also saw misconduct on the job. GBES concludes there’s a strong causal relationship between the 22% median rate of pressure placed on employees to compromise organizational standards and the 33% median rate of existence of actual wrongdoing. In contrast, only 17% of employees not feeling pressure to compromise standards observed misconduct at their place of business within the last year.

 

In the 13 GBES countries, the median rate of reported pressure is 22%, but that varies widely, with the highest rates in Brazil (47%), India (40%), and Russia (33%). These three countries are described in the report as having the highest overall ethics risks. The lowest rates of pressure to compromise standards are in Spain (10%), Mexico (14%), and Japan (15%). The rate of pressure to compromise in the United States was the same as the global median, 22%.

 

Significant numbers of cases of actual misconduct observed within the past year were reported, with the previously referenced global median rate of 33% in the 13 countries studied. Wide variations in observed misconduct exist, with the highest rates being Russia at 45%, Brazil at 43%, and India at 40%. Lowest rates of misconduct were in Japan at 15% and Spain at 21%. The rate of observed misconduct in the U.S. was reported to be 30%.

 

While there was only a small difference between private- and public-sector organizations in both the pressure to compromise standards and observed misconduct within the past 12 months, three countries were exceptions: Brazil, India, and Great Britain. In these countries, the rates experienced by employees in the public sector were more than 10 percentage points higher than those in the private sector for both metrics.

 

Key findings concerning the pressure to compromise standards and personally observed misconduct within the past 12 months include the following:

 

  • Abusive behavior and lying to stakeholders, such as customers, vendors, the public, or employees, were cited as the most frequent types of misconduct in almost every country.
  • China was an exception in problematic behavior. While lying on the job was a problem, bribery and hiding potential regulatory infractions were more common incidents than abusive behavior in supply-chain organizations.
  • Employees in multinational companies in the private sector are more likely to observe misconduct (36%) and to feel pressure to compromise standards (25%) than employees of companies operating only in one country (29% and 18%, respectively).
  • Employees in “supplier companies” (those providing services and goods to other organizations) are more likely than nonsupply-chain companies to experience pressure to compromise standards (26% vs. 18%), personally observe misconduct (38% vs. 27%), report that misconduct (66% vs. 54%), and experience retaliation for speaking up (39% vs. 27%).
  • A majority of bribery cases in private-sector organizations include participation by management (23% top managers, 32% middle managers).

 

In most of the 13 countries studied, employees who observed misconduct did report it so it could be acted on (median rate 59%). Significant differences in reporting frequency among countries ranged from India at 82%, United States at 76%, and Great Britain at 71% at the high end to Russia at 37%, South Korea at 41%, and Spain at 46% at the low end.

 

Reporting misconduct frequently results in retaliation against the employee doing the reporting. In most of the GBES countries, at least a third of reporters of wrongdoing experienced retaliation. At the upper end, the rate of retaliation is 74% in India and 63% in Great Britain. Generally, reporters of wrongdoing in the public sector are more likely to experience retaliation than those in the private sector. Exceptions are in Germany, where public-sector retaliation rates are only 17%, whereas in the private sector they are 55%. The second exception is South Korea, where public-sector retaliation rates are 33% and private-sector rates are 41%.

 

GBES cites multiple benefits from greater investment of all employees in “establishing and perpetuating an organizational culture that prizes ethical decision making and the raising of concerns:

 

  • Reduced risk of wrongdoing by parties employed by or aligned with the organization;
  • Increased likelihood that, when it occurs, wrongdoing will be made known to management within the organization;
  • Increased likelihood that the organization will responsibly handle suspected and substantiated wrongdoing; and
  • Integrity in the organization’s performance and its reputation as a responsible business.”

 

Management accountants should strive to maintain and improve the ethical culture in their organization so that these benefits can be achieved. Evidence is widely available indicating that a strong ethical culture helps produce superior results, including financial performance.

 

IMA ETHICS HELPLINE

 

For clarification of how the IMA Statement of Ethical Professional Practice applies to your ethical dilemma, contact the IMA Ethics Helpline.

 

In the U.S. or Canada, dial (800) 245-1383. In other countries, dial the AT&T USA Direct Access Number from www.usa.att.com/traveler/index.jsp, then the above number.

 

The IMA Helpline is designed to provide clarification of provisions in the Statement of Ethical Professional Practice, which contains suggestions on how to resolve ethical conflicts. The helpline cannot be considered a hotline to report specific suspected ethical violations.

 

 

Curtis C. Verschoor, CMA, CPA, is the Emeritus Ledger & Quill Research Professor, School of Accountancy and MIS, and an honorary Senior Wicklander Research Fellow in the Institute for Business and Professional Ethics, both at DePaul University, Chicago. He is also a Research Scholar in the Center for Business Ethics at Bentley University, Waltham, Mass., and Chair-Emeritus of IMA’s Ethics Committee. Trust Across America-Trust Around the World awarded him a Lifetime Achievement Award in 2016 as a top thought leader in trustworthy business. His e-mail address is curtisverschoor@sbcglobal.net.
2 + Show Comments

2 comments
    OLUSEUN PASEDA December 2, 2016 AT 12:10 pm

    Quite informative. I would appreciate if a portable document format (pdf) version of the study can be sent to my e-mail box. Thanks for sharing.

    NOTE: You may create a PDF yourself. Go to the article. Click Control P. When the print dialog box appears, look in the bottom left corner for PDF. Use the pull down menu to save as PDF.

    Yu tu December 2, 2016 AT 1:36 pm

    Good article. But too many numbers in the body of the article. Makes it difficult to read. Numbers and percentages should be in a table or chart or graphs.

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