National Business Ethics Survey by Ethics Resource Center Reveals Decline in Workplace Misdeeds, Improvement in Ethics Culture in Past Six Years
ARLINGTON, VA — FEBRUARY 4, 2014 — Research released today by the Ethics Resource Center (ERC), America’s oldest nonprofit advancing high ethical standards and practices in public and private institutions, reveals that workplace misconduct is at an historic low, having steadily and significantly declined since 2007.
The eighth National Business Ethics Survey (NBES) shows that 41 percent of more than 6,400 workers surveyed said they have observed misconduct on the job, down from 55 percent in 2007. In addition, the report found that fewer employees felt pressure to compromise their standards, down to nine percent from 13 percent in 2011.
Noted Michael G. Oxley, ERC Chairman of the Board, former Congressman and House co-sponsor of the Sarbanes-Oxley Act of 2002, “Companies are working harder to build strong cultures and implement increasingly sophisticated ethics and compliance programs. The results of the survey are encouraging and show that companies are doing a better job of holding workers accountable, imposing discipline for misconduct and letting it be known publicly that bad behavior will be punished.”
The continued decline in wrongdoing defied two factors that often accompany observed misconduct – retaliation and pressure to violate rules, which both rose two years ago in NBES 2011 and seemed to foreshadow an uptick in bad behavior. Historically, higher stock prices have been accompanied by higher rates of misconduct, presumably because workers and companies both were tempted to take more risks in order to enjoy the rising tides. The reverse was also true: In times of economic challenge, companies focused on ethics in order to weather the storm and misconduct declined accordingly.
“It seems likely that the severity of the recession and the relatively soft recovery have taken a toll on workers’ confidence and tempered risk-taking on the job,” said ERC President Patricia J. Harned, Ph.D. “A key question for the future is what happens to misconduct rates when economic growth becomes more robust and widespread. We found that when a company has a weak culture, it is more likely to have frequent incidents of misconduct vs. rogue incidents in a company that has a stronger culture.”
Pattern of Ongoing Misconduct
The survey shows that a significant amount of misconduct involves continuous, ongoing behavior rather than one-time incidents: Employees say that more than a quarter (26 percent) of observed misconduct represents an ongoing pattern of behavior. Another 41 percent said the behavior has been repeated at least a second time. Only one-third (33 percent) of rule breaking represents a one-time incident.
Most Misconduct Committed by Managers
Managers – those expected to act as role models or enforce discipline – are responsible for a large share of workplace misconduct (60 percent) and senior managers are more likely than lower-level managers to break rules. Surveyed employees said that members of management are responsible for six of every 10 instances of misconduct and they pointed the finger at senior managers in 24 percent of observed rule breaking. Middle managers were identified as the culprit 19 percent of the time and first-line supervisors were identified as bad actors 17 percent of the time.
Reporting and Retaliation
More than one in five workers (21 percent) who reported misconduct said they suffered from retribution as a result, nearly identical to the 22 percent retaliation rate in NBES 2011. Retaliation has not always been so widespread: The rate was only 12 percent in 2007, the first time it was measured in NBES. Asked why they kept quiet about misconduct, more than one-third (34 percent) of those who declined to report said they feared payback from senior leadership. Thirty percent worried about retaliation from a supervisor, and 24 percent said their co-workers might react against them.
Furthermore, among those who did choose to report, those who experienced retaliation were less likely than those who did not experience retaliation to say they would report misconduct the next time they see it: 86 percent compared to 95 percent who say they would report.
Additional results of the 2013 NBES:
- The percentage of companies with “strong” or “strong-leaning” ethics cultures climbed to 66 percent in 2013, compared to 60 percent in the previous survey.
- The percentage of companies providing ethics training rose from 74 percent to 81 percent between 2011 and 2013.
- Two-thirds of companies (67 percent) included ethical conduct as a performance measure in employee evaluations, up from 60 percent in 2011.
- Almost three out of four companies (74 percent) communicated internally about disciplinary actions when wrongdoing occurs.
- Extremely serious forms of misconduct such as falsifying company financial data and public reports or bribing public officials were observed less frequently in 2013: Three percent of employees said they were aware of misleading information on financial reports and two percent stated that they observed somebody in their company who had offered bribes to public officials.
First implemented in 1994, the NBES is the national benchmark on business ethics. Biennial since 2003, the eighth NBES surveyed 6,400 American workers ages 18 and older who work 20 or more hours a week in companies of two or more employees. The survey was conducted from September 30 to November 15, 2013 and has a sampling error of +/- 1.2 percent at the 95 percent confidence level.
The complete report can be downloaded free at //www.ethics.org/nbes.
Upcoming NBES Reports to Further Explore Workplace Trends
Over the next several months, ERC will release a number of supplemental reports that take a closer look at the specific trends that impact workplace ethics. Upcoming report topics include ethical leadership, ethics culture and collective identity, accountability and fairness, reporting and whistleblower trends and ethics and large companies.
About the Ethics Resource Center
The Ethics Resource Center (ERC) is America’s oldest nonprofit organization devoted to independent research and the advancement of high ethical standards and practices in public and private institutions. Since 1922, ERC has been a resource for public and private institutions committed to a strong ethical culture. ERC’s expertise informs the public dialogue on ethics and ethical behavior. ERC researchers analyze current and emerging issues and produce new ideas and benchmarks that matter — for the public trust. Visit www.ethics.org for more information.
The rate of observed misconduct has crept back above where it was in 2000. And employees' willingness to report misconduct has not improved, either.
WASHINGTON (PRWEB) November 28, 2007
Interviews with almost 2,000 employees at U.S. public and private companies of all sizes for the biennial NBES(R) show disturbing shares of workers witnessing ethical misconduct at work - and tending not to report what they see. Conflicts of interest, abusive behavior and lying pose the most severe ethics risks to companies today.
The measurable lack of progress in business ethics should signal a need for company management, Boards of Directors, policy-makers, investors and consumers to reassess their approach to that challenge, said ERC President Patricia Harned, Ph.D.
"Despite new regulation and significant efforts to reduce misconduct and increase reporting when it does occur, the ethics risk landscape in American business is as treacherous as it was before implementation of the Sarbanes-Oxley Act of 2002," Dr. Harned said.
Over the past year, more than half (56 percent) of employees surveyed had personally observed violations of company ethics standards, policy, or the law. Many saw multiple violations. More than two of five employees (42 percent) who witnessed misconduct did not report it through any company channels.
According to Dr. Harned, "There is a strong sense of futility and fear among employees when it comes to reporting ethical misconduct, and that increases the danger to business. More than half (54 percent) of employees who witnessed but did not report misconduct believed that reporting would not lead to corrective action. More than a third (36 percent) of non-reporters feared retaliation from at least one source; but our research shows that having a strong ethical culture virtually eliminates retaliation."
"Employees at all levels have not increased their 'ethical courage' in recent years," Dr. Harned said. "The rate of observed misconduct has crept back above where it was in 2000. And employees' willingness to report misconduct has not improved, either."
"The good news is that the rate of misconduct is cut by three-fourths at companies with strong ethical cultures, and reporting is doubled at companies with comprehensive business ethics programs," said Dr. Harned. ERC helps organizations design and measure the strength of their culture and the effectiveness of ethics programs.
The study found less than 40 percent of employees are aware of comprehensive business ethics and compliance programs at their companies. The programs are largely driven by legal and regulatory compliance, and designed in reaction to past mistakes, Dr. Harned observed. "The fact is, only about 25 percent of companies actually have a well-implemented ethics and compliance program in place, despite their transformative impact," she said.
The NBES also found most employees prefer to report misconduct to a person, especially someone with whom they already have a relationship, rather than to a company "hotline." Only 3 percent of misconduct reports were made to company hotlines.
As part of the latest National Business Ethics Survey, ERC developed The ERC Ethics Risk IndexSM. It categorizes 18 different types of misconduct by their incidence and whether they would be likely to be reported, and assigns a value to that type of misconduct. While the Index presents data in a continuum, the projected risk of various types of misconduct falls generally into three categories: severe risk (happens frequently and usually goes unreported), high risk (happens often and often goes unreported), and guarded risk (happens less frequently and may go unreported).
To download the full NBES report, go to //www.ethics.org/download.asp?fid=91.
More About NBES
First conducted in 1994, the NBES is the national benchmark on organizational ethics - the country's most rigorous measurement of trends in workplace ethics and compliance, a snapshot of current behaviors and thinking, and a guide in identifying ethics risk and measures of program effectiveness.
The 2007 NBES is part of a larger workplace survey conducted for ERC this year; data collection was managed by the Opinion Research Corporation, with ERC establishing the survey questions and sampling methodology. A total of 3,452 employees in the business, government and nonprofit sectors were polled; responses from 1,929 individuals in the business sector have been isolated and are presented in the NBES. Survey participants were: age 18 or older; currently employed at least 20 hours per week for their primary employer; and working for an organization that employs at least two people. They were randomly selected to attain a representative national distribution. All interviews were conducted during the period June 25-August 15, 2007, via telephone; participants were assured that their individual responses to all survey questions would be confidential. The sampling error of findings presented in the report is +/- 2.2 percent at the 95 percent confidence level.
For more information about Ethics Resource Center, visit //www.ethics.org.