Strong Cultures, Cutting Corners, and Reporting Retaliation: My Takeaways on ECI's 2021 Global Survey

For the past 20 years, the Ethics & Compliance Initiative (ECI) has conducted a Global Business Ethics Survey to study global trends for ethics and compliance in the workplace. This year, they surveyed 14,000 employees from ten different countries, and focused on comparing historical data from three previous years; 2015, 2019, and 2020.  

In the third season of my podcast and video series, The BIS: Business Integrity School, I had the honor and pleasure of interviewing Pat Harned, CEO of ECI, whom I have known for many years through my service on the ECI board and as Board Chair.  During my conversation with Harned, I asked her about her insights on this year’s results compared to previous years.

From that conversation as well as my own experience, I pulled together my thoughts and advice for leaders on the key takeaways from ECI’s 2021 survey.

Growing Strength of Company Cultures

As noted by ECI, culture is the single most important determinant of employee conduct. It merits time and attention so that it can grow and flourish. It is the living, breathing “ethos” of an organization.  It is not just a slogan on a piece of paper.  

The good news is that culture strength within companies is among the highest it has been in the U.S. in over 20 years with the global median sitting at 14%.  In the 2021 Global Business Ethics Survey, 21% of U.S. employees said they worked in a company with a strong ethical culture. That is up 11 percentage points since 2000 when only 10% of US employees said they worked in a company that had a strong ethical culture. 

Interestingly, the gap between what top management thinks about their company culture and what the other levels of management (middle, first-line supervisor, and non-management) think has become smaller over the last decade.  Notably, top management’s assessment of the strength of their culture has declined. This suggests that more top leaders have recognized that managing culture is a job, and it doesn’t get done unless it is being actively managed by someone at the top.  

It also suggests that over the last several years top management at some companies have succeeded at driving ethical culture expectations down and through their organizations.  The percentage of front-line supervisors who believe they are working in a company with a strong culture has gone up since 2013.  Driving culture all the way down to first-line supervisors and beyond is no small feat, especially in a large organization. It takes a team with a tremendous amount of creative thought and energy. 

And now for the bad news. Only 21% of US employees say they are working in a company with a strong ethical culture, and globally, that percentage is even lower at 14%. Improvement is being made at a snail’s pace.  And there is still a long, long way to go.  

So What Can We Do?

Culture work should be given greater priority within companies, quantifiable metrics should be set, and progress against those metrics should be measured every year.  That work has to start at the top.  It also has to be embraced and understood by all front line-managers or else the culture will not be strong and enduring. 

Leaders should embrace two things to effectively address this challenge:

• Technology 
• Story-telling

Technology provides different mediums and methods of communication. This is key because employees absorb information differently.  Generational differences also affect how people learn and technology provides the broadest platform for customization to different employee populations.  

The other key to culture-building is story-telling.  Facts and figures may be forgotten, but everyone remembers a good story.  I can’t tell you the number of times colleagues have said to me, “Remember when you shared with us the story and so and so, who did such and such, and then “fill in the blank” happened?”  The lessons from those stories stuck with them.  And it allowed them to pay it forward by retelling the story themselves.   

Pressure to Cut Corners is at an All-Time High

Pressure on employees to cut corners or compromise standards reached its highest level since 2000, according to the ECI report. 

30% of US employees said they experienced this pressure. That is a 14 percentage point increase since 2017. I think COVID is likely the cause for some of this increased pressure; however, I do not believe it is the only reason or the main underlying cause.  I think COVID simply exacerbated the situation and made the survey results more pronounced. 

Shortened business cycles and constant disruptions are commonplace now across industries. Organizations are evolving, faster than ever.  That means frequent organizational change is occurring as well.  The ECI data has shown that employees are more likely to feel pressure to compromise their organization’s ethical standards during periods of organizational change.  When that change is constant or at least more frequent, the perceived pressure is also constant and felt more acutely.  

As the ECI report indicates, the management levels that feel the pressure the most are middle managers followed by top managers.  Middle managers have the toughest role during times of organizational change because they are the ones who have to implement the change.  Top leaders determine what change is needed and why.  Middle managers execute the change. They complete the how.  The old adage of “the devil’s in the details'' rings true here more than ever.  

There are a number of decisions that must be made to orchestrate organizational change and middle managers are the ones who make the calls on a multitude of questions about execution. Trade-offs occur and judgments are made - tough ones. During these times middle-managers are the fulcrum.  The level of success for the execution rests largely on their shoulders. Leaders should give extra attention and support to middle managers for the role they play in change management. Clear direction and support from top leaders for the decisions they are being asked to make goes a long way during these turbulent times.

Observed Misconduct Rate Remains Steady Despite Increased Pressure.  How Can That Be? 

Even though in 2020 employee pressure rose to its highest level in 20 years, the ECI data did not show the same level of increase in misconduct being observed. The rate of observed misconduct has remained relatively steady over the 20 year survey period.

The steady-state of observed misconduct is likely attributable to the growing effectiveness of ethics & compliance programs within companies. These programs give employees the strength to uphold company values and not buckle under the perceived pressure. 

Additionally, as the ECI research revealed, many more employees are reporting misconduct that they see (86%) than they did 20 years ago (56%). 

To turn the dial further on reducing the rate of observed misconduct, the group that needs the most focus is non-management employees, according to the ECI research. These employees worry the most that reporting is useless and they are fearful of using the reporting system because they do not believe they can do so anonymously.  This employee group is also likely to have the highest turnover rate within a company.

Armed with this information, company leaders should focus on key points of time in a non-management employee’s journey (orientation, individual check-in meetings, all hands on deck meetings, etc.) where they can communicate with them effectively about the company’s culture and standards for integrity.  Managers should encourage open dialogue, and communicate often about how to use the internal reporting channels. This is also a great time for storytelling about actions the company has taken when unethical behavior was uncovered in the past.  Stories about culture and integrity can never be told too frequently, especially to a group that likely has a high turnover rate.

Just remember, culture building is not a destination.  The job is never done. It is an ongoing day-by-day journey of continuous improvement.  One step at a time. One story at a time.

Reporting Rates are Up, But so is the Retaliation Rate for Reporting. 

ECI’s research found that employee perceptions of retaliation after reporting misconduct escalated to a record high of 79% in the US. That is a significant increase from what it was in 2017 (44%), and the global trend wasn’t much better.

The increase wasn’t isolated to one management group either.  It was up across all management levels.  This factor is likely affected very much by COVID because the pandemic decreased in-person meetings and conversations. 

The absence of face-to-face conversations, the most effective form of communication, likely played heavily into this precipitous rise. Left unaddressed, companies risk back-sliding on the positive (albeit slow) improvement they have made toward creating strong ethical cultures.  As we emerge from the pandemic, the focus on reconnecting personally (and safely) can not be overstated.   

Remember, too, that retaliating against someone for reporting unethical behavior is itself an unethical act, and the retaliation should be reported. Retaliation destroys a healthy culture. It’s like sour milk in your refrigerator - ick!  And it doesn’t get better with time.  It only gets worse. The best way to root out retaliation is to address it.  Hold employees accountable for doing it and pour out that sour milk.  Then share the stories about what happened, and why (which can be done on a no-name basis.) Once others see that the company takes retaliation seriously and acts on it,  retaliatory behavior should decrease and employee engagement should go up. 

Want to dive deeper?

To learn more about the 20-year trends in ethics and compliance, watch or listen to my video podcast with Pat Harned, CEO of ECI, here. To read the full ECI report, you can find it here.