Corporate ethics programs make a difference, but not the only difference
by Margaret M. Clark

Employees in organizations with formal business ethics programs are more likely to report employee misconduct, but top management that speaks and behaves ethically also is a major factor in building an ethical culture, according to a major national survey released May 21 by the Ethics Resource Center (ERC).

The 2003 National Business Ethics Survey (NBES) asked 1,500 workers nationwide about four key ethics program elements: written standards of conduct, ethics training, ethics advice lines or offices, and systems for anonymous reporting of misconduct. The more program elements that were in place, the more employees said they reported misconduct they had observed, the study found.

Seventy-eight percent of employees in organizations with all four elements said they reported misconduct, compared with 67 percent in organizations where there were written standards plus at least one other element. Fifty-two percent said they reported misconduct where there were written standards only. Where no elements of an ethics program were present, 39 percent said they reported misconduct.

Overall, employee reporting of misconduct increased to 65 percent in 2003, up from 57 percent in 2000 and 48 percent in 1994, when the survey was first conducted. But the study also reported the first overall drop in observed misconduct from 31 percent in 1994 and 2000 to 22 percent in 2003.

SHRM's own studies show that the majority of HR professionals believe they are looked to as the primary ethics resource in their organization," Meisinger added. "They increasingly must provide leadership, along with senior management, to foster an ethical corporate culture from top to bottom."

"Formal ethics programs are important, but, alone, they are not going to get the job done," said ERC senior researcher and survey author Joshua Joseph at a briefing. The study showed that where management both talks and behaves ethically, employees observe far less misconduct.

Specifically, where top management talks about the importance of ethics, informs employees, keeps promises and models ethical behaviour, 15 percent of employees observe misconduct. Where employees feel that top management only talks about ethics or does nothing, 56 percent report observing misconduct.

In 2003, 82 percent of employees said that top management in their organizations keeps promises and commitments, up from 77 percent in 2002.

ERC characterized such findings as "both surprising and important given the troubled economy and series of recent ethics scandals in major corporations and non-profit organizations."

But not all the news is good. The survey report says employees under 30 are far less likely than others (43 percent compared with 69 percent) to report observed misconduct. Younger managers with low tenure are about twice as likely as other employees to experience pressure to compromise company ethical standards.

Despite overall increases in reporting misconduct, nearly half (44 percent) of all non-management employees said they did not report misconduct they observed. Why not? Because they believed that no corrective action would be taken or feared that reports would not be kept confidential, the study found.

Workers in organizations undergoing mergers, acquisitions or restructuring are particularly vulnerable to pressures to compromise ethics, the study found. They report observing misconduct and feeling ethics-related pressures at nearly double the rate of other workers.

ERC collected survey data over a seven-week period between Jan. 31 and March 17. A representative sample of survey participants was selected using a random-digit dialling procedure. Eligible participants were over 18 years of age and employed at least 20 hours per week. Employees at all job levels were included.

The ERC works with businesses, non-profit organizations, schools and governments to create ethical work environments.

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