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Survey of Workplace Ethics

By Curtis C. Verschoor, CMA, CPA
July 1, 2018
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Pressure grows to compromise ethics, and little progress is being made in developing strong ethical cultures.

 

The 2018 survey of ethics in the U.S. workplace from the Ethics & Compliance Institute (ECI, formerly known as the Ethics Resource Center) finds favorable outcomes in the lowered observation of suspected misconduct and an increased willingness to speak up when it’s found. But, as ECI’s The State of Ethics & Compliance in the Workplace report also shows, there’s increasing pressure to disregard ethics guidance, and the rate of retaliation for those who reported wrongdoing more than doubled since the last survey. Most significant, the number of companies with a strong ethical culture remains stagnant.

 

MISCONDUCT TODAY

 

The 2018 percentage of U.S. respondents who said they had personally observed conduct that violated either the law or organizational standards is 47%, down from 51% in the previous survey four years ago. Misconduct observers reported that two-thirds of the incidents were recurring or part of an ongoing pattern. The types of misconduct that were reported remained largely the same, with telling lies to either external stakeholders or other employees the most frequent at 26%.

 

The 2018 percentage of respondents who said they reported the misbehavior they had observed rose to 69%, a new all-time high that represents a 23% increase over the nearly 20 years since the first study. The leading reported misdoings included misuse of confidential information, giving or accepting bribes or kickbacks, stealing, offering products or services that failed specifications, and sexual harassment.

 

BAD NEWS

 

The ECI report indicates that 16% of respondents reported being pressured to compromise ethical guidelines, a 23% increase from the previous measurement date and part of an ongoing upward trend since the low point of 8% in 2000. Misconduct was observed by 84% of those who experienced pressure to ignore ethical standards, compared with 39% for those who didn’t feel pressure. The authors believe “Pressure [to cut ethical corners] creates an environment or ethical culture in which questionable business practices are almost twice as likely to be accepted. 63% see such practices rewarded, fueling the likelihood that violations will appear.”

 

Retaliatory acts against those who reported wrongdoing doubled to 44% since the last survey. This is far greater than the rate of increase of reporting wrongdoing: 9%. This is particularly troubling in view of the U.S. Supreme Court decision that narrows the protections against retaliation in the Dodd-Frank Act. According to the report, retaliation occurs swiftly, with 72% of employees stating it happened within three weeks of their raising the ethical issue.

 

CULTURE CONCERNS

 

Perhaps the most significant finding in the ECI is that little, if any, progress is being made to address what the report calls “the biggest influence on employee conduct,” which is culture. The report defines culture as “the shared understanding of what really matters in an organization, and the way things really get done.” A strong ethical culture provides many benefits, yet only about 20% of respondents indicated that their company has a strong ethical culture, and twice as many believe their company’s ethical culture is weak or weak-leaning.

 

The principal focus of the 2018 report is on the four major favorable measures of company ethical culture. It states, “when organizations prioritize integrity, employees are:

 

  • Less likely to feel pressure to violate ethics standards;
  • Less likely to observe misconduct;
  • More likely to report misconduct they observe; and,
  • Less likely to experience retaliation for reporting it.”

 

Table 1 compares 2018 outcomes in companies with a strong and a weak ethical culture.

 

 

Pressure to compromise ethical standards results in misconduct—the survey found that 84% of those who felt pressure also observed misconduct, compared with 39% who didn’t experience pressure. Pressure is also twice as likely to lead to acceptance of questionable business practices, as 63% of those experiencing pressure to compromise saw bad practices accepted, whereas 32% of those without pressure did so. ECI found a continuation of the association between stock market performance and pressure to compromise, as more pressure occurs when the S&P 500 Index rises.

 

IMPROVE THE ETHICAL CULTURE

 

The State of Ethics & Compliance in the Workplace concludes with a series of recommendations for improving workplace ethical culture:

 

  1. Promote a statement of values throughout the organization and set ethical standards to guide employee actions.
  2. Include ethics and compliance in performance goals.
  3. Regularly survey employee attitudes about pressures to disregard ethics.
  4. Assess the ethical culture in the company and provide support in areas it may be weak.
  5. Reinforce cultural norms of the unacceptability of performance without integrity.
  6. Make sure company ethics and compliance programs are of high quality.

 

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 IMA 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 Committee on Ethics. Trust Across America—Trust Around the World awarded him a Lifetime Achievement Award in 2016. In 2017, IMA published his book, Curt Verschoor on Ethics. His e-mail address is curtisverschoor@sbcglobal.net.
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