More Companies Are Leveraging Ethics and Compliance as a Strategy – Embedding it Throughout the Business, New Survey Finds

Focus is on Driving Ethical Behavior, Making Ethics a Bigger Factor in Performance Reviews, and Influencing Business Initiatives, According to Report from LRN Corporation

NEW YORK, March 20, 2019 (GLOBE NEWSWIRE) — The wave of explosive ethical crises and scandals at big companies over recent years has laid bare the importance of having an effective ethics and compliance (E&C) program in place, one that truly influences behavior.

Companies are responding to this new environment by investing in and embedding effective E&C practices throughout their operations, rather than simply burnishing table-stake components like hotlines, rules and training. That’s a key finding of the 2019 Ethics and Compliance Program Effectiveness Report, based on a survey of 480 ethics, compliance and legal professionals at large companies conducted by LRN Corporation.

“‘Operationalizing’ ethics and compliance programs instead of relying on checklists is increasingly necessary in order for companies to thrive today. In this time of radical evolution of workplace norms and social media transparency, this is a critical shift if organizations are to meet the expectation of government watchdogs while mitigating the growing risks,” says LRN Advisor Susan Divers.

Among the survey findings that suggest that ethics and compliance considerations and positive practices are becoming more prominent within organizations overall:

  • Most – 55% – of E&C and legal professionals said ethical behavior is now a major factor in their companies’ employee performance reviews, whereas only 35% of professionals said that in the 2018 survey.
  • Nearly a third of professionals – 31% – say ethical behavior plays a strong role in bonus allocation at their companies, compared with only 11% and 10% in the two previous years’ surveys.
  • The majority of professionals – 67% – say their companies modify or abandon business initiatives on the basis of ethical concerns.

In addition, more effective best practices are on the rise:

  • The number of professionals saying their companies use cultural diagnostics to evaluate E&C programs doubled between the 2018 and 2019 surveys, and the number of respondents who say their E&C programs are employing data analytics jumped by 30% during the same period.
  • Three-quarters of professionals now say their companies’ E&C programs perform a “root cause” analysis when there are instances of misconduct, rather than just following a reprimand procedure or doubling down on rules.
  • The vast majority of respondents – 87% – say their companies’ E&C program have increasingly focused on values over rules. Only 44% said that in the 2018 study.

Still a Lot of Room for Improvement – and Risk for Companies Whose Programs Don’t Get It Right

Despite the positive trajectory in many dimensions of embedding ethics and E&C rigor throughout companies, deficiencies remain, especially when it comes to leaders and managers “walking the walk” in E&C.

  • Fewer than half of E&C and legal professionals say senior leaders at their firms take action against compliance failure when it occurs.
  • Only 38% say company leaders support disciplinary action against high performers who are guilty of misconduct.
  • Just 49% of professionals say employees in their organizations are comfortable skipping authority levels when it comes to calling out ethical issues.

What the Highest-Performing E&C Programs Do

According to the survey and analysis, the E&C programs that have the greatest positive impact on the organization overall and are most likely to inspire ethical behavior do the following:

  • Help create “speak out, listen up” cultures. Three-quarters of professionals at companies with high-performing E&C programs say employees rarely hesitate to speak out for fear of how their managers will react.
  • De-emphasize short-term results in favor of ethical behavior. Ninety percent of professionals from the most effective E&C programs say employees at their firms do not feel pressured to achieve immediate objectives at the expense of their values. And 80% say employees are very likely to question decisions that conflict with their values.
  • Calibrate codes of conduct with values. The most effective E&C programs were three times more likely than less effective ones to develop codes of conduct that emphasize achieving business goals that align with organizational values.

“Embedding E&C programs into organizational operations broadens the programs’ impact and makes it easier for employees to comply. The best programs have found ways to do that – often by making the E&C guidelines simpler and more accessible,” says Emily Miner, member of the E&C advisory team at LRN.

For more insights on ethics, compliance, corporate culture and reputation, please subscribe to LRN’s E&C Pulse Newsletter here.

To learn more, or to speak with Susan Divers, please contact Michael-Jon Romano of Sommerfield Communications at +1 (212) 255-8386 or