Leonard DiCaprio’s Wolf of Wall Street is a bit late. Despite the economic rebound, research shows that behaving badly in business is down for the eighth year in a row.
A report from The Ethics Resource Center (ERC), a 90-year-old non-profit, surveyed 6400 part-and full-time workers finding that 41% had observed misconduct in their offices last year. That’s down from 45% in 2011 and from 55% at the highest point six years ago. The president of the ERC, Patricia Hamed, says that more companies are doing what they need to do.
The following is a summary of some of the relevant findings from 2013 contrasted with 2011 from the ERC’s survey:
- Lying to employees, 17%, down from 20%.
- Violating company policies related to internet use, 12%, down from16%.
- Abusive behavior toward employees, 18%, down from 21%.
- Lying to customers, vendors, or the public, 10%, down from 12%.
- Abusing substances such as drugs or alcohol, 9%, down from 11%.
- Sexual harassment, 7%, down from 11%.
- Breaching customer or consumer privacy, 5%, down from 7%.
- Falsifying and/or manipulating financial reporting info, 3%, down from 5%.
Dr. Hamed indicated that this was very different than what they expected.
Why fewer behaving badly?
This, in spite of the rising stock market. Significant, because the long-term trend in survey data suggests that when the stock market is up, so are the sightings of crooked practices. What, then, is the explanation?
There are a number of possibilities. The survey found that 81% of companies now have ethics an compliance programs–in contrast to 74% just two years ago. Still, it’ll take more work than an ethics and compliance program. That may be merely window dressing–little more than varnish to some seedy operations.
Smart execs are beginning to notice that there is a return on their ethics and compliance programs. The result is that they are embedding these programs into their culture rather than merely providing a training class. That means that they’ll need to prioritize ethics and emphasizing hiring and promoting ethical employees.
Another exec also suggested that the positioning of the office as an organization with status is very important. The department will need leverage and reporting relationships with senior officers.
One other possible rationale for enhanced ethical standards, says Elizabeth Barber of the Christian Science Monitor, might be the federal government’s promise that companies with strong ethics and compliance programs will receive some leniency if accused of wrongdoing. In 2012, in what was a landmark case for such programs, investigators declined to charge Morgan Stanley for a managing director’s criminal activities, saying the financial heavyweight had done what it could to guard against rogue employee misdeeds.
It’s also intriguing to contrast this summary survey with the international Corruptions Perception Index of 2013. In the analysis of 175 nations, the US came up 19th in terms of least corruption.
Both of these surveys suffer from serious analytical and interpretation problems. Indeed, the creator of the corruption index resigned his position over his understanding of the difficulties of interpreting the information that provides for the Index.
So two things must be said about these surveys. At best, they are merely pointers toward the problem. Absolutely nothing more. Readers are inevitably intrigued by statistics so take them with a grain of salt. The findings are best used as a means of surfacing the problem and motivating organizations to watch for and resolve misconduct. But one thing of certainty that can be said was Dr. Hamed’s statement “Misconduct isn’t happening as much, but where it is happening, it’s very worrisome.”
Flickr photo; Mo_Co2013