Good News/Bad News on Business Ethics
There's good news and bad news about business ethics these days.
The good news comes on several fronts: business ethics has become a higher corporate priority, employee perceptions of ethics have become more positive (at least in the U.S.), and ethics programs really do seem to have an impact on behavior.
The Human Resource Institute's 2003 Major Issues Survey, a poll of high-level HR professionals, shows that "ethics in business" has become the third most highly ranked people-management issue, after leadership and managing change. That's up from the 10th ranking (out of 120 issues) in 2001.
In another positive sign, a survey of 1,500 U.S. employees found that observed misconduct in the workplace, as well as pressure to compromise ethics standards, has declined since 2000, the last time the survey was conducted.
Other findings from the Ethics Resource Center's 2003 National Business Ethics Survey strongly suggest that ethics programs do, in fact, have a positive impact on the workplace. The survey highlighted four elements of ethics programs: written standards, ethics training, ethics advice lines/offices, and systems that can be used for anonymous reporting. It's when all four elements are in place that employees are most likely to report on misconduct they've seen in the workplace. As the number of elements declines, so does the reporting. Moreover, workers in large organizations are under less pressure to compromise ethical standards when key programs have been implemented.
Now, some bad news. The Ethics Resource Center notes that 44% of nonmanagement workers still fail to report observed misconduct. In particular, younger workers with less tenure are the least likely to report misconduct, and younger managers with under three years of tenure feel greater pressure than other employees to compromise ethics standards.
Given these findings, it's tempting to conclude that businesses should be most concerned about younger, newer employees. Yet, it's obvious that the bad news doesn't stop there. The worst business scandals in recent years have originated at or near the top of organizations. When 600 corporate directors and general counsels were asked who has a great deal of responsibility for recent corporate scandals, fully 96% of directors and 93% of general counsels pointed to CEOs/senior managers, according to another recent survey.
This suggests that ethics programs should extend all the way up the corporate hierarchy, but a 2003 Conference Board survey of over 80 ethics, HR and legal officers found that just 27% had held training programs for their boards of directors. Over half said their boards are "not engaged enough" in major ethical decisions, and two thirds felt executive compensation is "out of control" in their organizations.
Another study also puts a good share of the ethics blame on leaders. The poll of HR professionals conducted by the Society for Human Resource Management and the Ethics Resource Center found that the "need to follow boss's directives" was the most commonly cited reason for compromising ethics standards.
So what's the best way of improving corporate governance? Even most directors think the most important measure to take is for senior management to create and sustain an ethical business culture, reports The Center for Business Ethics at Bentley College. This notion is supported by the National Business Ethics Survey, which found that workers see a lot less misconduct if their leaders speak about the importance of ethics, keep their promises, support those who follow ethics guidelines, and model ethical behavior.
It seems that by paying attention to culture, programs and leadership behaviors, corporations have the levers for improving their ethical environment. In the end, this may be the best news of all.
For much more information on the 2003 National Business Ethics Survey, please see
http://www.ethics.org/nbes2003/index.html
For more on The Conference Board survey, go to
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=2174
For a PDF version of the results of a poll conducted by the American Corporate Counsel Association and the National Association for Corporate Directors, go to
http://www.acca.com/Surveys/resp_corpgov.pdf
A link to the 2003 SHRM/ERC Business Ethics Survey, which can be bought from SHRM, can be found at
http://shrmstore.shrm.org/shrm/deptall.asp?dept_id=19
For an article on the divide between the public's and senior managers' perspective on business ethics, see
http://www.bizjournals.com/sanjose/stories/2003/11/17/daily19.html
The good news comes on several fronts: business ethics has become a higher corporate priority, employee perceptions of ethics have become more positive (at least in the U.S.), and ethics programs really do seem to have an impact on behavior.
The Human Resource Institute's 2003 Major Issues Survey, a poll of high-level HR professionals, shows that "ethics in business" has become the third most highly ranked people-management issue, after leadership and managing change. That's up from the 10th ranking (out of 120 issues) in 2001.
In another positive sign, a survey of 1,500 U.S. employees found that observed misconduct in the workplace, as well as pressure to compromise ethics standards, has declined since 2000, the last time the survey was conducted.
Other findings from the Ethics Resource Center's 2003 National Business Ethics Survey strongly suggest that ethics programs do, in fact, have a positive impact on the workplace. The survey highlighted four elements of ethics programs: written standards, ethics training, ethics advice lines/offices, and systems that can be used for anonymous reporting. It's when all four elements are in place that employees are most likely to report on misconduct they've seen in the workplace. As the number of elements declines, so does the reporting. Moreover, workers in large organizations are under less pressure to compromise ethical standards when key programs have been implemented.
Now, some bad news. The Ethics Resource Center notes that 44% of nonmanagement workers still fail to report observed misconduct. In particular, younger workers with less tenure are the least likely to report misconduct, and younger managers with under three years of tenure feel greater pressure than other employees to compromise ethics standards.
Given these findings, it's tempting to conclude that businesses should be most concerned about younger, newer employees. Yet, it's obvious that the bad news doesn't stop there. The worst business scandals in recent years have originated at or near the top of organizations. When 600 corporate directors and general counsels were asked who has a great deal of responsibility for recent corporate scandals, fully 96% of directors and 93% of general counsels pointed to CEOs/senior managers, according to another recent survey.
This suggests that ethics programs should extend all the way up the corporate hierarchy, but a 2003 Conference Board survey of over 80 ethics, HR and legal officers found that just 27% had held training programs for their boards of directors. Over half said their boards are "not engaged enough" in major ethical decisions, and two thirds felt executive compensation is "out of control" in their organizations.
Another study also puts a good share of the ethics blame on leaders. The poll of HR professionals conducted by the Society for Human Resource Management and the Ethics Resource Center found that the "need to follow boss's directives" was the most commonly cited reason for compromising ethics standards.
So what's the best way of improving corporate governance? Even most directors think the most important measure to take is for senior management to create and sustain an ethical business culture, reports The Center for Business Ethics at Bentley College. This notion is supported by the National Business Ethics Survey, which found that workers see a lot less misconduct if their leaders speak about the importance of ethics, keep their promises, support those who follow ethics guidelines, and model ethical behavior.
It seems that by paying attention to culture, programs and leadership behaviors, corporations have the levers for improving their ethical environment. In the end, this may be the best news of all.
For much more information on the 2003 National Business Ethics Survey, please see
http://www.ethics.org/nbes2003/index.html
For more on The Conference Board survey, go to
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=2174
For a PDF version of the results of a poll conducted by the American Corporate Counsel Association and the National Association for Corporate Directors, go to
http://www.acca.com/Surveys/resp_corpgov.pdf
A link to the 2003 SHRM/ERC Business Ethics Survey, which can be bought from SHRM, can be found at
http://shrmstore.shrm.org/shrm/deptall.asp?dept_id=19
For an article on the divide between the public's and senior managers' perspective on business ethics, see
http://www.bizjournals.com/sanjose/stories/2003/11/17/daily19.html