Construction Industry Ethics

Posted by on Jul 09, 2014

Last year’s National Business Ethics Survey (NBES) reported an overall decline in workplace misconduct. The percentage of workers who said they observed misconduct on the job fell to an all-time low of 41 percent in 2013; good news indeed.  See Ethical Advocate’s Business Ethics Survey blog post for a general summary.

For the construction industry, the news is not as good. As reported by the Ethics Resource Center in its 2012 National Business Ethics Survey of the U.S. Construction Industry, 53 percent of employees in the construction industry said they had observed some form of misconduct during the prior year.

There was some good news. Observed misconduct was reported by 74 percent of construction employees, as compared to 65 percent for U.S employees overall. This good news was tempered by the incidence of retaliation; 37 percent in the construction industry, compared to 22 percent overall. However, 80 percent of employees in the construction industry are positive about their companies’ efforts to encourage ethical conduct. (ERC, 2012)

Why does this matter? Ethical misconduct exposes companies to legal liability, puts its reputation and business at risk, and hurts morale, which also comes with negative consequences. Employee reports of misconduct provide an excellent opportunity for firms to identify potential or developing problems and to take appropriate action. When supervisors or others retaliate against whistleblowing employees, they put their companies at legal risk and they restrict the future flow of what could be essential information to decision makers.

The Ethics Resource Center encourages firms in the construction industry to take the following actions. More details are included in the full report.

Prioritize and invest in well-implemented ethics and compliance pro­grams. Use the seven basic program elements defined by the Federal Sen­tencing Guidelines for Organizations (FSGO) as a foundation for a program that emphasizes both ethics and compliance.  Those seven elements are:

  1. Establish standards and procedures to prevent and detect criminal conduct.
  2. Ensure that the company’s governing authority (board of directors, etc.) exercises reasonable oversight of those standards and procedures.
  3. Keep bad actors out of managerial ranks (or other key positions).
  4. Conduct effective training and communicate periodically and in a practical manner to all levels of employees.
  5. Take reasonable steps to ensure that the program is followed. This could include a system for anonymous reporting, such as an ethics hotline.
  6. Promote and enforce the program through appropriate incentives and disciplinary measures.
  7. Take reasonable steps to respond appropriately to criminal conduct and to prevent further similar criminal conduct.

Measure the effectiveness of your program. Construction compa­nies should not assume that their existing ethics and compliance pro­gram is achieving its intended objectives. Assessment is a critical tool for identifying specific areas of need.

Recognizing that resources are limited, focus your energy on key areas re­vealed by the NBES-CI. The top two areas are:

– On the job response to misconduct, since more types of misconduct occur on the project site and are reported to supervisors, and

– Supervisors as the first line of defense in terms of setting the tone that ethics are a priority on par with budgets and timelines. Supervisors are the primary recipients of reports of misconduct and need to be adequately prepared to address reports and to protect reporters from retaliation.

Provide information and resources to on-site employees, especially those who are not supervisors and/or who work in craft fields. These groups were less likely to be aware of ethics resources and to feel pre­pared to address ethics issues.

As evidenced by participation in the Construction Industry Ethics and Compliance, and as recognized by the Ethics Resource Center, the construction industry has taken good steps to encourage ethical conduct. Ethical Advocate understands the needs of construction industry clients, and can help you implement and maintain governance, risk, and compliance solutions.

References:

Ethics Resource Center. National Business Ethics Survey of the U.S. Construction Industry, 2012.

United States Sentencing Commission. “Effective Compliance and Ethics Programs”, 2012 Guidelines Manual, section 8B2.1. http://www.ussc.gov/guidelines-manual/2012/2012-8b21