The Ethics Resource Center has completed its 2007 National Business Ethics Survey, which is a measurement of trends in workplace ethics, and a guide in identifying ethics risks and measures of program effectiveness. The results of the survey, which are available in full at ethics.org, suggest that although the number of formal ethics and compliance programs is on the rise, ethical misconduct is still very high. Conflicts of interest, abusive behavior, and lying pose the most severe ethics risks to companies today.
Among other findings, the survey shows that:
- 56 percent of employees surveyed at U.S. public and private companies had personally observed violations of company ethics standards, policy, or the law, with many observing multiple violations.
- Employees are reluctant to report observations for fear of retaliation or belief that reporting would not lead to corrective action, with 42 percent of employees who witnessed misconduct not reporting it through any company channel.
- Less than 40 percent of employees are aware of comprehensive ethics and compliance programs at their companies.
The survey concludes that coupling a strong ethical culture with a tough ethics and compliance program is the path to the greatest reduction in ethics risk. In addition, the survey identifies the characteristics that comprise an effective ethical culture. By many indications in the survey, what seems to matter most is the extent to which leaders intentionally make ethics a part of their daily conversations and decision-making, supervisors emphasize integrity when working with their direct reports, and peers encourage each other to act ethically.
The survey results have important implications for both management and auditors. Management should consider strengthening ethics policies, doing more to inform and educate employees about Company policies and expectations, encouraging employees to report unethical behavior and taking swift and severe action against violators. Auditors should assess the effectiveness of the Company’s ethical policies and procedures and consider this assessment in assessing the risks of material misstatement due to fraud and in designing further audit procedures that are responsive to those assessments. |
