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Building an Ethical Corporate Culture

Are Business Ethics Improving or Declining?

NBES Survey about Ethics in Business Shows Mixed Results

The Ethics Resource Center recently issued its 2011 National Business Ethics Survey (NBES) and the results are mixed. Here are some of the major results reported in its Executive Summary.

  • The percentage of employees who witnessed misconduct at work fell to a new low of 45 percent.  That compares to 49 percent in 2009 and is well down from the record high of 55 percent in 2007.
  • Those who reported the bad behavior they saw reached a record high of 65 percent, up from 63 percent two years earlier and 12 percentage points higher than the record low of 53 percent in 2005.
  • Retaliation against employee whistleblowers rose sharply.  More than one in five employees (22 percent) who reported misconduct say they experienced some form of retaliation in return.  That compares to 12 percent who experienced retaliation in 2007 and 15 percent in 2009.
  • The percentage of employees who perceived pressure to compromise standards in order to do their jobs climbed five points to 13 percent, just shy of the all-time high of 14 percent in 2000.
  • The share of companies with weak ethics cultures also climbed to near record levels at 42 percent, up from 35 percent two years ago.

The encouraging news is that instances of misconduct have declined in the workplace. I attribute this to stronger internal controls put into place in response to the Sarbanes-Oxley Act and increased attention given to building an ethical culture. Also, it is quite common for companies today to have a code of ethics, ethics training programs, and a top-level management official to oversee compliance with laws and regulations.

The rest of the results are not so encouraging. It appears that instances of bad behavior are on the rise; pressure to compromise one’s values has increased; and retaliation against whistleblowers rose sharply. It’s no wonder more companies have a weak ethical culture according to the 2011 survey when compared to past surveys. The weak economy and competitive global business environment may have something to do with these troubling results.

I was somewhat surprise that more employees have a negative view of their supervisors’ ethics: 34 percent in 2011 versus 24 percent in 2009. One explanation is that workers often perceive the ethics of those around them as weaker than their own. Another is that pressure in the workplace to compromise one’s standards typically comes from top to bottom.

The kinds of misconduct in the workplace are all on the rise. Here is the NBES analysis.


TYPE OF MISCONDUCT                           2009       2011        INCREASE


Sexual harassment                                    7%         11%            4%


Substance abuse                                        7%         11%            4%


Insider trading                                            1%          4%             3%


Illegal political contributions                     1%          4%             3%


Stealing                                                        9%         12%            3%


Environmental violations                             4%          7%             3%


Improper contracts                                      3%          6%             3%


Contract violations                                      3%          6%             3%


Improper use of competitor's information  2%          5%             3%


Health or safety violations                         11%        13%            2%


Anti-competitive practices                          2%          4%             2%

The results with respect to ethics identified by active social networkers reflect the growing use of Internet websites to engage in improper conduct. Workers who spend 30 percent or more of their work day participating in various social networking sites report far more negative experiences of workplace ethics. As a group, they are almost four times more likely to experience pressure to compromise standards and about three times more likely to experience retaliation for reporting misconduct than co-workers  who are less active with social networking.  They also are far more likely to observe misconduct. Meanwhile, active social networkers differ from co-workers in their more tolerant attitudes toward a number of questionable workplace behaviors.   For example, half of active social networkers say it is okay to keep a copy of confidential work documents for possible use in future jobs, compared to 15 percent of non-networkers who believe such behavior acceptable.  In addition, by a five-to-one margin, networkers differ from colleagues in saying it is acceptable to do a little less work to compensate for cuts in benefits or pay.

Finally, instances of reporting specific misconduct in the 2011 survey run the gamut: reporting stealing or theft; insider trading; illegal political contributions; falsifying expense and time reports; violating terms with customers; financial statement fraud; and workplace issues such as a hostile work environment and sexual harassment.

Unfortunately, it appears that businesses have a long way to go to create a truly ethical organization environment. It starts with the tone at the top, as my next blog will address.

Blog posted by Steven Mintz, aka Ethics Sage, on January 11, 2012