Do your senior managers support your organization’s ethics hotline and all other components of your ethics and compliance program? How do they rate the effectiveness of the program? How about all other employees? How well do they understand your ethics and compliance program? How do they rate its effectiveness? How do their perceptions align with those of senior leaders?

You may be surprised to learn that there is a knowledge, understanding, and perception gap between senior leaders and employees. If the gap is large, your compliance program’s effectiveness could be at risk.

In 2013, a division of Ernst & Young surveyed 3,000 board members, executives, managers, and their teams in 36 countries for its international fraud survey. Among other high-level findings, survey results show that too many executives think fraud and corruption are problems faced only by other companies or in other sectors. This kind of thinking can lead to complacency about how well the workforce understands and complies with ethics and compliance programs.

The report highlights the following “compliance perception gaps” between board directors and senior managers (S), other managers (M), and non-management employees (EE.)

We have an anti-bribery/anti-corruption policy and code of conduct:

Agreeing: 74% (S) / 69% (M) / 51% (EE)

Senior management has strongly communicated its commitment to our anti-bribery/anti-corruption policies:

Agreeing: 67% (S) / 63% (M) / 44% (EE)

There are clear penalties for breaking our anti-bribery/anti-corruption policies:

Agreeing: 65% (S) / 61% (M) / 43% (EE)

The company would support people who reported cases of suspected fraud, bribery or corruption:

Agreeing: 60% (S) / 51% (M) / 34% (EE)

The company has taken action against employees for breaching our policies:

Agreeing: 57% (S) / 50% (M) / 33% (EE)

We have a whistle-blowing hotline to report cases of fraud, bribery or corruption:

Agreeing: 49% (S) / 44% (M) / 30% (EE)

There is training on our anti-bribery/anti-corruption policies:

Agreeing: 50% (S) / 42% (M) / 29% (EE)

One of the best ways to deter unethical behavior is to make all employees highly aware of what constitutes unethical behavior. Another is to make it easy for employees to report suspected wrongdoing through anonymous ethics hotlines and other mechanisms.

However, the Ernst & Young survey shows a significant gap between senior leaders and non-management employees in their respective awareness about ethics hotlines, training, and communications, among other aspects of ethics and compliance programs.  If employees don’t know about the hotline, if they don’t recall receiving ethics and compliance training, and if they deem communications efforts to be weak, then the ethics and compliance program cannot be as effective as it should be.

You may believe the preceding survey results do not apply to your organization. Perhaps they do not or perhaps, like executives in the survey, you just think these problems are faced only by other companies. Don’t assume. Instead, take the time to survey all employees about aspects of your ethics and compliance program. Then take steps to address all gaps between your program’s intent and your workforce’s awareness.

Ethical Advocate provides comprehensive ethics and compliance solutions, including ethics and compliance training and confidential and anonymous hotlines. Contact us for more information.

References:

Ernst & Young. 2013. Navigating Today’s Complex Business Risks: Europe, Middles East, India and Africa Fraud Survey 2013.