Why Are Companies Still Having Ethics and Behavior Issues? Employees Don’t Feel Comfortable Speaking Out, Say Most Ethics Professionals

NEW YORK, June 17, 2019 (GLOBE NEWSWIRE) — According to a new survey and report from LRN Corporation, employees feel discouraged when it comes to reporting ethics violations. Most ethics and compliance professionals say their organizations’ employees – regardless of industry – are not comfortable skipping authority levels to call out ethical issues. And 60% say employees are uncomfortable speaking out about ethical issues during meetings.

Further, far too few executives and board members are actively invested in promoting ethical behavior in their organizations. Based on a survey of 480 ethics, compliance and legal professionals conducted by LRN Corporation, the 2019 Ethics and Compliance Program Effectiveness Report found that only 49% say their companies’ senior leaders take action against compliance failures – and only 38% say company leaders support disciplinary action against high performers who are guilty of misconduct. Just 22% of ethics and compliance (E&C) professionals say their organization communicates lessons learned and remediation measures taken after an ethical lapse.

LRN’s research also shows that companies are still striving to implement E&C programs that work well in practice. Often, there’s too little focus on shaping employee behavior and too much on rules and prohibitions. In fact, more than half of E&C leaders say their organizational efforts continue to focus principally on rules and regulations – on telling employees what not to do as opposed to inspiring them how to behave ethically.

“Employees need a good moral compass. They don’t need a five-pound manual as a guide,” says LRN Advisor Susan Divers.

After Waves of High-Profile Corporate Scandals and Ethical Meltdowns, Many Ethics Programs Have Upped the Ante

There are also positive developments: Evidence shows that a number of companies have recently been taking positive steps towards “operationalizing” E&C programs into every phase of business decision-making, helping both leaders and employees to think and act based on shared values instead of minimum legal requirements.

Critically, 75% of professionals now say their companies’ E&C programs perform a “root cause” analysis when there are instances of misconduct instead of just following a reprimand procedure. And according to the LRN research, it’s much more effective to remediate the underlying process and culture problems than to simply penalize a few employees who are more often than not a symptom rather than the problem itself.

“By embedding E&C programs into organizational operations, the impact is greatly expanded – and it’s much easier for employees to comply,” says Divers. “We’re encouraged to see that 55% of E&C professionals now say ethical behavior is a major factor in their companies’ performance reviews. That’s a full 28% increase from 2018.”

“We found that the E&C programs with the highest impact have created ‘speak out, listen up’ cultures and talk openly about right and wrong, while also prioritizing ethics over short term results,” says Emily Miner, LRN Advisor. “These high-impact functions directly inform business decisions and regularly boost business performance.”

About LRN

LRN’s mission is to inspire principled performance. Since 1994, LRN has helped over 25 million people at more than 700 companies worldwide simultaneously navigate complex legal and regulatory environments and make ethical decisions, and has also helped hundreds of companies foster ethical, responsible, and inclusive cultures. LRN’s combination of practical tools, education, and strategic advice helps companies translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. In partnership with LRN, companies need not choose between living principles and maximizing profits, or between enhancing reputation and growing revenue: all are a product of principled performance. As a global company, LRN works with organizations in more than 100 countries.