Mind the Gap

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SallyMarch_webSMby Sally March, (sjmarch10@gmail.com) is Director, Drummond March & Co. in London

Tone at the top. We hear this again and again. Increasingly, we’re hearing “muddle in the middle” and “buzz at the bottom,” too.  The point is, in building an ethical culture, leadership provided by bosses is critical, and this is not limited to senior executives.  Ethics must be exhibited and rules implemented by middle management and line supervisors, too. When people are faced with an ethical dilemma, they look first to what their boss would do (or worse, what they imagine the boss would want). Then they look to what their peers would do. Then they might ask themselves, “Does this seem right to me?”  Ethics and compliance staff and the code of conduct are way down the list.

Go into any company and ask the C-suite, and they’ll all say, “I’m an ethical person” and “Tone at the top is very strong here.”  As Ronald Reagan said to Mikhail Gorbachev, “Trust, but verify.”  The most recent survey of business ethics conducted by the Ethics Resource Center (ERC) found that “managers are responsible for a worrisome share of workplace misconduct [60%], and senior leaders are more likely than lower-level managers to break rules.  In sum, the very people that are supposed to act as role models or enforce discipline are often guilty of bad behavior – a troubling insight that ethics and compliance programs should account for.”[1]  Another troubling insight is that senior executives are the least likely to do their compliance training, according to EY’s most recent 14th Global Fraud Survey.[2]

Here in the U.K., only about a third of employees think their bosses have high ethical standards and put ethics at the heart of decision-making.[3] (I’ll bet that number would be 100% if you ask the bosses.) It’s even worse if you ask the general public. Only 20% trust business leaders to tell the truth and make ethical and moral decisions.[4]

But the data that we should all find most troubling is this: The ERC found more than one in five workers who reported misconduct said they experienced retaliation in return. This number is not going down in spite of our best efforts.

Leaders must be challenged – constructively, of course – to take a hard look in the mirror. This isn’t easy, but the CECO must hold up that mirror. Try putting some of this data into next quarter’s report to the compliance committee.

[1] Ethics Resource Center, National Business Ethics Survey of the U.S. Workforce, 2013.   Available at http://www.ethics.org/downloads/2013NBESFinalWeb.pdf

[2] EY: Overcoming Compliance Fatigue: Reinforcing the commitment to ethical growth. 14th Global Fraud Survey. Available at http://www.ey.com/GL/en/Services/Assurance/Fraud-Investigation—Dispute-Services/EY-reinforcing-the-commitment-to-ethical-growth

[3] Marcus Leach: ”Bosses failing on ethics, according to UK workers.” Fresh Business Thinking.com, April 10, 2011. Available at http://www.freshbusinessthinking.com/news.php?NID=10338&Title=Bosses+fai#.U8azi0Db6jU

[4] The 2014 Edelman Trust Barometer. Available at  http://www.edelman.com/insights/intellectual-property/2014-edelman-trust-barometer/trust-in-business/