Good News On Business Ethics? Maybe: The Ethics Research Center’s 2014 National Business Ethics Survey

ERC surveyThe Ethics Resource Center, a distinguished Washington, D.C. based ethics research and consulting firm, performs a survey of business employees every two years to measure trends in workplace ethics. It’s 2013 survey and report was released last week, and appears to bear good tidings. Workplace misconduct is on the decline, the data says.  41 percent of employees observed misconduct in 2013, way down from 55 percent in 2007. Moreover, ERC’s “National Business Ethics Survey,” which polled 6,400 U.S. employees, found that only 9 percent of employees polled felt pressure to compromise their standards in 2013, down from 13 percent in the previous survey in 2011.

ERC Chairman Michael G. Oxley  (of Sarbanes-Oxley fame) said in a release,“The results of the survey are encouraging and show that companies are doing a better job of holding workers accountable, imposing discipline for misconduct, and letting it be known publicly that bad behavior will be punished.”

Among the survey’s intriguing findings:

  • “Over the last two years, observed misconduct fell in every one of the 26 specific categories we asked about in both NBES 2011 and NBES 2013.
  • “Pressure to compromise standards, often a leading indicator of future misconduct, also was down – falling from 13 percent in 2011 to nine percent in the latest survey.”

Less encouraging are these:

  • While misconduct is down overall, a relatively high percentage of misconduct is committed by managers – the very people who are supposed to set a good example of ethical conduct and make sure that employees honor company rules.
  • Workers reported that 60 percent of misconduct involved someone with managerial authority from the supervisory level up to top management. Nearly a quarter (24 percent) of observed misdeeds involved senior managers.
  • Among those who observed misconduct in 2013, 63 percent reported what they saw, compared to 65 percent in 2011 and 63 percent in 2009.
  • For the second straight survey, more than one in five workers who reported misconduct said they experienced retaliation in return. In 2013, 21 percent of reporters said they faced some form of retribution, virtually unchanged from a record high of 22 percent in 2011.

The ERC (full disclosure: I have worked closely with the ERC , its managers and leadership in the past, and have the greatest respect for its staff, its work and its mission) concludes from the report that ethics programs are working. The survey concluded that due to increased attention to building an ethical culture within businesses, the percentage of companies with a “strong” or “strong-leaning” ethics culture increased to 66 percent in 2013 from 60 percent in 2011. A greater percentage of companies provided ethics training in 2013 (81 percent) than in 2011 (74 percent), and 67 percent of companies are now including ethical conduct as a performance measure in employee evaluations, up from 60 percent in 2011.

It could be. I am dubious, for many reasons.

1. The ERC is an organization that works with businesses to help them comply with ethics training requirements, and most of its support comes from those businesses. It has a strong motivation to believe that its work pays of and that the explosion of ethics training programs in the corporate sector since 1991, when the trend began in earnest, actually accomplishes something. In other words, there is the danger of confirmation bias and an inherent conflict of interest here.

2. The increase in ethics programs does not tell us anything about the nature or effectiveness of those programs. As someone who discusses this with corporate officers regularly, I can say with confidence that the vast majority of corporate ethics programs concentrate, not on ethics, but compliance (as in: do this and you get fired or arrested), which does nothing to improve ethical culture, the increased sensitivity to right and wrong. Note than Oxley’s statement above is entirely focused on compliance rather than ethics. Corporate ethics programs are also widely regarded as boring, check-box exercises, and a waste of time.

3. The survey’s data showing that most of the reduction in observed misconduct comes from colleagues in the ranks rather than managers is red flag to me. In this time of job uncertainty, employees may be less willing to see misconduct (and to report such misconduct) on those whom they regard as similarly at risk and under financial pressure, while prompting them to subject superiors to greater scrutiny and tougher standards.

4. If the percentage of workers who are willing to report misconduct hasn’t changed, I question how much “ethical cultures” have improved, if at all.

5. There is another explanation for why fewer employees felt that they were pressured “to compromise their (ethical) standards” than in the past. That would be that the ethical standards have fallen. Lies are considered more justifiable. Cutting corners to survive is now normal…hey, it’s essential!. Fudging? Cheating? Why not? Everybody does it!

I hope the ERC is correct in its rosy analysis, but I strongly suspect it is not. Others surveys show that trust has declined catastrophically up and down the culture and those who do not trust tend to become less trustworthy. Institutions like government and journalism are held in contempt. Lies, spin and deceit dominated the national elections in 2012, and the most effective lies won. 2013 was about rationalizing those lies. The Affordable Care Act couldn’t have been enacted unless the President and Congressional leaders lie about everyone keeping their health care plans, so the lie was justifiable: most of the news media and the dominant political party have been arguing this without shame or hesitation. How could the public’s ethical standards, and those of the members of the public who work in the business sector, not be lowered, and lowered significantly, when the ethical culture of the nation has deteriorated?

You can read more about the survey and download it here.


Sources: WSJ, Bloomberg

8 thoughts on “Good News On Business Ethics? Maybe: The Ethics Research Center’s 2014 National Business Ethics Survey

  1. Aw man.

    You called it on #5. I was gonna say when I read “only 9 percent of employees polled felt pressure to compromise their standards in 2013, down from 13 percent in the previous survey in 2011” that maybe people lowered their standards and generally care less.

    Which I submit is more accurate in our generally more “it don’t make no difference” and “take it easy man” culture.

  2. Jack- I saw the survey this morning and decided to “pass” on reading because the headline made no sense. Somehow the survey is flawed- My guess is it’s either because standards have been lowered or less incidents are being reported, regardless of whether or not they occur.

    Ethical culture is set by an ethical leader. It’s not regulated via compliance. Until more leaders begin to embrace ethics, integrity and trust as a business “norm” I will remain skeptical of reports like this.

  3. How many employees chose to give less-than-candid answers to the survey?

    If my employer were unethical, I would suspect the survey to be a company-laid trap (or at least distrust its confidentiality) and answer accordingly.

  4. Compliance. No damns were given that day.
    I’m compliant with a lot of things I don’t give a damn about. From my experience degree of compliance is a direct measure of cynicism.

    • Compliance is a euphemism for “knuckling under”. Probably it is worse in the regulations that the government imposes upon it’s citizens and employees ( i.e. “affirmative action”) than in business. But not having much experience working for corporations I’m not sure.

  5. This year marks 10 years working in my company’s “Ethics Office” and 5 years since I started to read Ethics Alarms / Scoreboard. It’s been a great addition to my job and while I recognize our “compliance” goals in training, I’ve always looked for ways to push our communications and training toward “ethics”.

  6. The movie “Compliance” is a great example of how people can comply but are far from ethical. The movie is based on a true story. I didn’t believe anything like this could ever happen because it seemed so over the top. I looked up the information regarding the story and it went down just as the movie portrayed it.

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