Business Ethics: Some Progress, But….

Corporate compliance officers—those hard-working, well-intentioned executives who worry about obeying the law and acting ethically—have had some good news recently. There are definite signs of progress on several levels. But some very high-profile failures, most notably the scandal at General Motors involving faulty ignition switches, make the rest of us wonder whether progress is really being made. The answer, I think, is, “Yes, but…” There are signs of improvement, but there’s still a long way to go.

The good news was highlighted this week in a blog by Linda Fisher Thornton that points to five reports suggesting progress. But the headline on the blog, “5 Reports Say Business Ethics Is Improving,” is a bit too optimistic for my taste because the studies and surveys cited reveal a far-more nuanced situation. And some offer more hope than results. One publication cited, for example, notes that “CEOs are increasingly seeking ‘good growth’ aligned with business ethics and sustainability.” That’s all well and good, but only if those CEOs are putting real muscle into the effort and achieving results.

The most compelling evidence of progress comes from the Ethics Resource Center, a nonpartisan, nonprofit organization funded through donations and grants from various foundations. Its 2013 National Business Ethics Survey of 6,420 private-sector business employees found that the percentage of workers who said they observed misconduct on the job fell to an all-time low of 41 percent in 2013, down from 45 percent in 2011 and 55 percent in 2007. That’s progress, but when four in ten of those surveyed report misconduct, it’s hardly cause to cheer. That’s still an awfully high figure.

The survey also revealed that a relatively high percentage of the misconduct, 60 percent, was committed by managers, and 24 percent of it was ongoing. The survey found that 63 percent say they reported the misconduct, which has to make you wonder why so much of it is ongoing. Even more troubling, 21 percent of those who reported misconduct said they faced some form of retribution.

The survey, along with the recent problems at General Motors and the scandal at the Veterans Affairs Administration, where executives were pressured to cover up serious problems, points to the need for ever stronger whistleblower policies that encourage employees to report problems and protect them when they do. An excellent panel discussion on the subject was held this month by the Journal of Business Compliance Round Table. The panelists outlined just how far corporations still need to go to create the atmosphere and culture that will make employees feel they can speak up without fear of the consequences. This is crucial because until company leaders are able to do a better job of instilling ethical behavior from the top down, the whistleblower is the best protection for the rest of us.


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