Invest in Ethics for Results
Larger companies get impressive results in positive workforce behavior when they invest in ethics and compliance, according to The State of Ethics in Large Companies, a recently released study.
The Ethics Research Center (ERC; formerly the Ethics Resource Center) analyzed data from its most recent National Business Ethics Survey and concluded that large companies (90,000 or more employees) with strong ethics and compliance programs face half the rules violations as those companies without effective programs. “Companies that invest in ethics reap an enormous return,” ERC CEO Patricia Harned said. “Better workplace ethics cuts business risks by reducing the chance that serious ethics problems will throw companies off course and distract them from their core business,” (ERC, 2015a).
According to the study, each key indicator of ethical performance (pressure to compromise ethics standards, observation of misconduct, reporting of violations, and retaliation for reporting) improves in large companies with strong ethics cultures; performance is strengthened in companies with effective ethics and compliance programs (ERC, 2015b)
For example, only 3 percent of employees in large companies with effective ethics and compliance programs reported feeling pressure to compromise standards and only 4 percent reported retaliation when they reported wrongdoing, as compared to 23 percent and 69 percent respectively in large companies without effective programs. That’s a significant difference.
Further, only 33 percent of employees in large firms with effective E&C programs reported that they had observed misconduct, as compared to sixty-two percent of employees in other large firms. And, to report a positive, a huge 87 percent of those employees in large companies with effective programs who had observed misconduct reported that misconduct. Only 32 percent of employees in large companies without effective programs did the same.
Every instance of a reported concern provides an opportunity for firms to identify and correct problems and to prevent the reoccurrence of those or similar problems. Companies with strong ethics cultures will have employees who feel comfortable reporting their concerns to a direct supervisor, higher management, or anonymously to an ethics hotline. In fact, fully sixteen percent of employees who report workplace misconduct utilize an ethics hotline or helpline at some point, according to the 2013 National Business Ethics Survey of the U.S. Workforce (ERC, 2014).
This current ERC study addresses the benefits of strong, effective ethics and compliance programs in large companies only, but it is reasonable to assume that smaller organizations would also benefit from fostering an ethical culture and ensuring they have strong ethics and compliance programs as well.
Ethical Advocate provides 24-7 support for confidential, secure, and anonymous ethics hotlines and also provides related ethics and compliance training. Contact us to learn more.
Ethics Research Center. “Large Companies Can Boost Ethical Performance, Cut Business Risks.” ERC press release, March 26, 2015. http://www.ethics.org/?q=news/large-companies-can-boost-ethical-performance-cut-business-risks
Ethics Research Center. The State of Ethics in Large Companies: Executive Summary, 2015. http://www.ethics.org/nbes/large-companies/
Ethics Resource Center. National Business Ethics Survey of the U.S. Workforce, 2014.