Are We Experiencing an Ethics Bubble? Results of the Sixth National Business Ethics Survey Suggest That Fewer Instances of Ethical Misconduct Are Being Observed, a Higher Percentage Is Being Reported, and More Employees Perceive That the Ethical Culture within Their Company Is Strong

By Verschoor, Curtis C. | Strategic Finance, January 2010 | Go to article overview

Are We Experiencing an Ethics Bubble? Results of the Sixth National Business Ethics Survey Suggest That Fewer Instances of Ethical Misconduct Are Being Observed, a Higher Percentage Is Being Reported, and More Employees Perceive That the Ethical Culture within Their Company Is Strong


Verschoor, Curtis C., Strategic Finance


Evidence that ethical conduct in the workplace improved during the recent recession is contained in the sixth National Business Ethics Survey[R] (NBES). While conventional wisdom says that a downturn results in greater amounts of fraud being committed, facts may prove that more fraud is being discovered rather than more fraud being committed. These studies of interviews with employees in the U.S. workforce are a biennial effort of the Washington-based Ethics Resource Center (ERC). ERC is a private, nonprofit organization devoted to independent research and the advancement of high ethical standards and practices in public and private institutions.

The 2009 NBES study, titled Ethics in the Recession, is based on 3,010 interview responses to a random national telephone survey. Respondents were 18 years or older and currently employed at least 20 hours per week for a company with at least two employees. Those working in the government sector were removed from the analysis.

The report found that most key measures of ethical behavior actually improved from those reported in 2007, shortly before the recession started. NBES detected a similar pattern occurring from 2000 to 2003 when a severe downturn took place because of the dot-com bubble, 9/11, and corporate scandals such as Enron and World-Com. Because ethical wrongdoing returned as business conditions improved, organizations today need to stay alert and keep their ethics and compliance programs intact in order to keep their ethical culture at a strong level.

Former Ohio Representative Michael Oxley, who was the cosponsor of the 2002 Sarbanes-Oxley Act and now is chair of the ERC board of directors, said, "Business ethics is one of the pillars of a strong economy, and, in today's environment, it is more important than ever that our nation's business leaders set and meet the highest standards of ethical conduct. [Ethics in the Recession] provides an important measure of the strengths and weaknesses of our culture of business ethics."

Perhaps the most significant finding reported in the NBES study is that substantially fewer employees said they had witnessed misconduct on the job. This metric, which includes violations of company ethics standards, policy, or the law, fell seven percentage points from 56% of interviewed employees in 2007 to 49% in 2009. This compares to an average of 52.3% of surveyed employees in the previous four studies. The types of misbehaviors observed stayed relatively constant, however, with company resource abuse, abusive behavior, lying to employees, and e-mail or Internet abuse the most common.

The favorable strong downward trend in observed ethical misconduct was matched by an almost equally large increase in employee reporting of any observed misbehavior. This measure increased from 58% in 2007 to 63% in the latest report, compared to an average of 57.8% of surveyed employees in the previous four studies. As in the past, most reports of misconduct are made to management--either a direct supervisor or higherlevel management.

Perhaps the most favorable result reported in Ethics in the Recession is the percentage of employees that perceive their company's work culture is strong. This measure increased from 53% in 2007 to 62% in 2009. This result averaged 55.5% in the previous four studies. A strong ethical culture consists of ethical leadership, accountability, and values, not just the existence of rules or a written ethics code.

As in past studies, the 2009 report showed there's a strong association between rising awareness in ethics and a strengthening ethical culture in times of anxiety, worry, and dislocation. A likely reason involves supervisors and managers speaking more often and more convincingly about ethical behavior or other ethicsrelated issues in times of concern about the company's well-being or even its continued existence. Another reason may be that employees who are prone to misbehave aren't as likely to take risks in times of high alert by management. …

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Are We Experiencing an Ethics Bubble? Results of the Sixth National Business Ethics Survey Suggest That Fewer Instances of Ethical Misconduct Are Being Observed, a Higher Percentage Is Being Reported, and More Employees Perceive That the Ethical Culture within Their Company Is Strong
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