March 26, 2015
ARLINGTON, Va., -- Large companies can dramatically improve their integrity by implementing effective ethics and compliance programs to reduce employee misconduct and improve every key measure of workplace behavior, the newly-renamed Ethics Research Center (ERC) said in a study released today. On average, large companies (90,000 or more employees) with effective programs face half of the rules violations as those without effective programs. Their employees experience less retaliation for blowing the whistle on rule-breaking and feel less pressure to compromise standards, the study added.
Drawing on data from ERC’s most recent National Business Ethics Survey®, the study also credited effective programs and strong ethics cultures for making it more likely that employees will report wrongdoing when they see it. Nearly nine of ten employees (87 percent) who observe violations at large companies with effective programs report those violations for action by higher ups, compared to just 32 percent who report wrongdoing when programs are lacking. That’s significant because reporting is essential for identifying and eliminating potential ethics risks.
“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.”
In large companies with effective programs, only three percent of employees say they feel pressure to compromise standards and four percent say they’ve faced retaliation for reporting wrongdoing. That compares to 23 percent who feel pressure and a stunning 59 percent who’ve experienced retaliation when programs are weak. High rates of pressure and retaliation tend to foreshadow rules violations and future ethics breakdowns.
The report “The State of Ethics in Large Companies” was sponsored by the Center for Audit Quality (CAQ) and is the first released by ERC as part of the Ethics & Compliance Initiative it recently formed with the Ethics & Compliance Association and the Ethics & Compliance Certification Institute. CAQ works with the audit profession to enhance investor confidence and public trust in global capital markets.
“As an organization that is active in the fight against financial reporting fraud, the Center for Audit Quality is pleased to support The State of Ethics in Large Companies,” CAQ Executive Director Cindy Fornelli said. “We applaud the researchers at the Ethics Research Center, whose work helps illuminate the necessity and impact of robust ethics and compliance programs."
Download the executive summary of the report at www.ethics.org/nbes/large-companies/