March 2014

ON ETHICS
Workplace Unethical Behavior Drops to Historic Lows

Fewer US workers are witnessing misconduct in their companies due to a strengthening economy combined with improved ethics and compliance programs, according to a new survey.

The level of misconduct is lower in firms that value ethical performance and believe in building a strong culture of accountability, according to the Ethics Resource Center. In 2013, 20% of workers reported seeing misconduct in companies where cultures are considered to be strong, compared to 88% of workers who witnessed misconduct in companies with weaker cultures. Companies that provided ethics training grew from 74% to 81% between 2011 and 2013.

Firm leaders are also holding workers more accountable for their conduct and ensuring consequences for unethical behavior. Sixty-seven percent of firms reported that they include ethical conduct as a part of employee performance evaluations, up from 60% in 2011. When misconduct does occur, 74% of companies communicated to staff about the disciplinary actions.

When misconduct is observed, it is often within the ranks of management. Employees reported that 60% of the misconduct they observed involved an individual with managerial authority from a supervisor level up to top management.

The survey made the following recommendations for firm leaders, board members, and ethics and compliance officers to improve the workplace culture and to drive down misconduct:

• Companies should continue to stress the importance of ethical performance as the responsibility of everyone in the firm. Companies with high misconduct rates should make it a priority to build up their ethics and compliance programs.

• Focus on efforts to empower employees and deepen their commitment to the company and its long-term success.

• Empower the ethics and compliance team to develop the ongoing programs and structures to monitor misconduct within the company and seek systematic fixes for areas of concern.

• Target management employees for special attention given their prominence as role models, because the survey reveals that employees observe misconduct by managers more often than among nonmanagement employees.

• Give greater weight to ethics in performance reviews and career advancement for employees with the greatest leadership responsibilities.

• Identify strategies and programs to increase reporting in addition to designing special programs to address misconduct by management level employees.

Access the National Business Ethics Survey of the U.S. Workforce 2013 at www.ethics.org.