Increasing Employee Reporting Free From Retaliation

Content provided by the Ethics Research Center (ERC), the research arm of ECI.

Increasing Employee Reporting Free from Retaliation
ECI members get access to this entire report at no charge. The full report is available to members of the public for a contribution of $35.

Download Report

Make a Donation

This study was created by the Ethics Research Center (ERC), the research arm of ECI, and made possible in part by support from KPMG LLP.

KPMG

KPMG International’s trademarks are the sole property of KPMG International and their use here does not imply auditing by or endorsement of KPMG International or any of its member firms.


Increasing Employee Reporting Free from Retaliation
A Research Report from the National Business Ethics Survey® (NBES®)

ECI’s latest National Business Ethics Survey (NBES®), reveals that culture, leadership and values-based ethics and compliance (E&C) programs make a big difference in increasing employee reporting of workplace misconduct free from retaliation. The research shows that in organizations with effective, values-based ethics and compliance programs, employee reporting of wrongdoing increases by 61 percent. These values-based program efforts also decrease retaliation by as much as 93 percent. The likelihood of retaliation against reporters is also lessened in instances where employees believe that individuals at all levels of the organization are held accountable if they violate organization standards or the law.

Executive Summary

Managing the risk of non-compliance is among corporate leaders’ most important responsibilities. One way to minimize this risk is to create an environment where employees feel that they can alert leadership when problems arise without punishment through retaliation. High rates of reporting give organizations a chance to identify and root out systemic problems. Low rates of retaliation tend to boost reporting because workers feel it is safe to report what they see. In combination, high reporting levels and low retaliation rates can create a virtuous cycle that reduces future misconduct and organizational risk.

Given the importance of reporting and retaliation we dug deeper into the data from our most recent National Business Ethics Survey® (NBES®) to find out what organizations can do to influence these key behaviors. The bottom line: organizations that manage their own ethics and compliance risks are able to do so through effective Ethics and Compliance (E&C) Programs and the development of strong ethics cultures.

Accountability is a key ingredient in those organizations; where fairness is perceived and violators at all levels are held accountable, the likelihood of retaliation against reporters is lessened. When organizations do not take on these efforts, retaliation in particular becomes a risk unto itself.

Highlights from the findings include the following: 

  • Reporting rates soar in organizations with effective E&C Programs. More than eight of ten workers (84
    percent) report misconduct in organizations with the most effective programs, compared to 33 percent in
    organizations where programs are weakest or do not exist at all.
  • When workers do not report in organizations with effective programs it is usually because the problem has
    already been taken care of either by themselves or another employee.1
  • All told, 97 percent of observed misconduct is either reported or taken care of by employees — only three percent of violations are allowed to pass without some notice in organizations with effective programs.
  • Reporting is high in organizations with strong ethics cultures (and organizations with effective E&C Programs are also more likely to have strong ethics cultures). Eighty percent of employees report observed misconduct when ethics cultures are strong, compared to 55 percent in weak ethics cultures.
  • Confidence in management is another key motivator. Employees report misdeeds 71 percent of the time when they believe top management is committed to ethics and 69 percent of the time when supervisors are committed to ethics, compared to 56 percent of the time when ethics appears to be a lower priority.
  • Employees are less likely to report when misconduct involves those with more authority. When non-managers are the primary offenders, 67 percent of employees report, but when the primary offenders are top managers or middle managers, 59 percent report the misconduct.
  • Employees are less likely to report when misconduct is more pervasive. When misconduct is ongoing or organization-wide, reporting rates are 59 percent and 57 percent, respectively. However, when misconduct is an isolated incident or involves a single person, reporting rates are 65 percent and 66 percent, respectively.
  • Effective E&C Programs mean less retaliation. Only four percent of reporters experience retaliation in organizations with the most effective programs, whereas 53 percent of reporters say they face retaliation in organizations without effective E&C programs.
  • Management behavior has a significant impact on retaliation as well. Only about one in 20 employees suffer from retaliation in organizations where senior leaders share credit, are perceived as doing the right thing, or treat all employees well. But retaliation rates climb to near 50 percent in instances when any of those behaviors are absent.
  • When employees at all levels are held accountable, retaliation is not as prominent. The retaliation rate is only 16 percent when managers are held accountable compared to approximately 40 percent when managers are not held accountable.

The evidence is clear. Organizations with effective E&C Programs that build strong ethics cultures are places where employees feel confident in doing the right thing when faced with an ethical situation. They are also seen to be workplaces where employees are less likely to retaliate against one another. Higher reporting and lower retaliation are good for organizations and employees alike. Effective E&C Programs and strong ethics cultures are investments that pay off.