Global Business Ethics Report

More corporate investment in strengthening core values and ethical leadership can help reduce misconduct in the entire organization, according to a new business ethics report.

The 2019 Global Business Ethics Survey report released last week by the Ethics & Compliance Initiative also found that employees who work in organizations with a strong commitment to values and ethical leadership are less likely to feel pressure to compromise standards and are more likely to want to remain at their organization.

The Ethics & Compliance Initiative, based in Vienna, Virginia, is a nonprofit group that provides research and a best practice community to its members and their general counsel, as well as certification opportunities for ethics and compliance professionals.

CEO Pat Harned said the summary, "The Impact of Organizational Values and Ethical Leadership on Misconduct: A Global Look," is one of four reports based on the group's annual survey. This year's survey collected data from 18,000 employees based in 18 countries and asked about observed misconduct and the reporting of misconduct.

"We've been looking at organizational cultures for a very long time," said Harned, who has led the group for two decades. "This year we focused the survey on how employees perceive the culture in their own organization."

Harned said the data were consistent with past findings. On median scores, globally 39% of employees did not see a strong commitment to values in their organization, and 58% did not see a strong commitment to ethical leadership.

Broken into regions, the data show that Europe scored the worst on the commitment to values, with 48% saying their organizations were lacking. Africa and the Middle East had the best score at 33%.

More employees in the Asia Pacific region saw a lack of ethical leadership, at 67%, while only 47% in North America shared that perception.

The survey asked employees about observing three common types of company misconduct in the past 12 months: abusive behavior by managers, violations of health and safety regulations, and conflicts of interest. It then correlated their answers to that question with their perceptions of commitment levels.

About 60% of the employees were supervisors or above while 40% were non-management.

Not surprisingly, Harned said, employees who reported the weakest commitments to values and ethics also reported the highest observance of misconduct in their companies.

"When employees feel that their leaders are committed to the values of the organization then there is a significant difference in how often employees see wrongdoing," she explained.

She pointed out the report contains several tips for strengthening values and ethical leadership. They include:

  • Leaders need to assume the role of ethical champions, talking about the importance of ethical conduct, referencing values as a framework for decisions and encouraging employees to speak up about issues.
  • Leaders should act in accordance to organizational values and also need to be held accountable for their performance in relation to ethics and compliance.
  • Employees' performance evaluations should include how their actions align with organizational values.

One corporate sponsor of this year's study was Walmart Inc., where CEO Doug McMillon exhibits traits cited in the report by openly talking about the company's values and unique culture.

In an introduction to the company's statement of ethics, McMillon wrote that it is "a daily resource for making honest, fair and objective decisions while operating in compliance with all laws and our policies … Through your ethical behavior and willingness to speak up for the highest standards, we earn and keep the trust of our customers, each other and our local communities."