Ethical Leadership

Ethical Leadership: Every Leader Sets a Tone
A Research Report from the National Business Ethics Survey® (NBES®)

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Employee Views of Leaders’ Personal Conduct Drives Perceptions of their Ethical Leadership.  Workers’ Judge Leaders Primarily by Three Factors.

Corporate leaders who are perceived by their employees as demonstrating strong personal character are much more likely to be perceived as setting a strong tone from the top.

It is often said that a strong tone for ethics begins at the top,” ERC Chief Executive Officer Patricia Harned said. “The value of this report is that it specifically identifies the most important things that leaders can do to set that tone.

ERC also found, however, that direct supervisors also can have a significant impact when comes to modeling good behavior, keeping promises, and upholding company standards. It concluded that ethics is increasingly a 24-7 job because workers expect their managers to behave ethically off the job as well as in the workplace.

Everything a leader does sets a tone,” Harned said. “Leaders and companies need to recognize that the line between public and private gets less clear every day.

ERC recommended that companies that want to support strong ethical leadership should:

  • Seek out personal character when hiring and make 24-7 integrity a job expectation.
  • Educate managers about the way employees evaluate leaders
  • Encourage leaders to share credit for success and seek honest feedback from employees.
  • Annually review business objectives and policies to ensure they promote ethical performance.

This report was made possible in part by a generous contribution by our sponsor, the Raytheon Company.

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About The National Business Ethics Survey of the U.S Workforce 2013

NBES 2013 reveals substantial good news about the state of ethics in American workplaces.  Observed misconduct is down for the third report in a row and is now at a historic low; the decline in misconduct is widespread; and the percentage of workers who said they felt pressure to compromise standards also fell substantially.

  • The percentage of workers who said they observed misconduct on the job fell to an all-time low of 41 percent in 2013, down from 45 percent two years ago and a record high of 55 percent six years ago.
  • The improvement was pervasive.  Over the last two years, observed misconduct fell in every one of the 26 specific categories we asked about in both NBES 2011 and NBES 2013.
  • Pressure to compromise standards, often a leading indicator of future misconduct, also was down – falling from 13 percent in 2011 to nine percent in the latest survey.

The dip in misconduct may reflect workers’ tendency to take fewer risks when economic prospects seem weak or uncertain, given the relatively soft recovery since 2008.  But it also is possible – and we believe probable – that businesses’ continuing and growing commitment to strong ethics and compliance programs is bearing fruit and that ethical performance is becoming a new norm in many workplaces.  That belief will be tested once economic growth becomes more robust and widespread.

NBES 2013 also reveals some areas of concern.  While misconduct is down overall, a relatively high percentage of misconduct is committed by managers – the very people who are supposed to set a good example of ethical conduct and make sure that employees honor company rules.  Workers reported that 60 percent of misconduct involved someone with managerial authority from the supervisory level up to top management.  Nearly a quarter (24 percent) of observed misdeeds involved senior managers.  Perhaps equally troubling, workers said that 26 percent of misconduct is ongoing within their organization.  About 12 percent of wrongdoing was reported to take place company-wide.

What the Numbers Revealed

Also troublesome are the facts that the percentage of workers who reported the misconduct they see has stalled, and retaliation against workers who reported wrongdoing continues to be a widespread problem.   High retaliation rates are especially worrisome because they discourage reporting and make it harder for organizations to identify and root out bad behavior.

  • Among those who observed misconduct in 2013, 63 percent reported what they saw, compared to 65 percent in 2011 and 63 percent in 2009.
  • For the second straight survey, more than one in five workers who reported misconduct said they experienced retaliation in return.  In 2013, 21 percent of reporters said they faced some form of retribution, virtually unchanged from a record high of 22 percent in 2011.

In sum, NBES 2013 provides cause for optimism as well as a blueprint for the work yet to be done.  The steady and sharp drop in misconduct since 2007 suggests that something both fundamental and good is taking place in the way Americans conduct themselves at work.

Companies’ investments in ethics and compliance are paying off, but there remains room for improvement. The data show just enough negative results to suggest that progress is not necessarily irreversible – especially if a revitalized economy arouses workers’ willingness to engage in riskier behavior.  It is clear that manager behavior could be improved, and that reducing retaliation is essential. Building strong ethics cultures remains a constant work in progress.

NBES 2013 also includes in-depth investigation of  several types of misconduct, including corruption;  analysis of factors that increase employee reporting of observed misconduct; and the implications of retaliation against whistleblowers.

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NBES 2013 is Sponsored by:
Altria Group, Inc., Walmart Lockheed Martin Corporation, Edison International, PricewaterhouseCoopers LLP, United Technologies Corporation Raytheon, KPMG LLP, Assurant, Inc., Archer Daniels Midland, SAIC, BAE Systems and Bechtel Group, Inc.

NBES 2013 Sponsors

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Key Findings: NBES of the Construction Industry

No industry in America is immune to ethics challenges. In truth, certain industries are just inherently more “at risk” for facing ethics issues depending on the kind of work they do. The construction industry is one such industry, especially given the contexts in which companies conduct business, the safety risks that are inherent to their work, and the performance pressures they face.

This risk is evident in the feedback provided by employees in the construction industry, especially when compared to the U.S. national average. More construction employees indicated that they feel pressure to compromise standards; they see more misconduct; and when they report wrongdoing to management, they are far more likely to experience retaliation for having done so. At the same time, however, the construction industry set a new standard for Corporate America with regard to employee reporting.

Employees in the construction industry reported wrongdoing more frequently than any other group of employees in the 19 year history of the ERC’s National Business Ethics Survey® research.

Construction Industry Compared to U.S. Average

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Past NBES Research

   First implemented in 1994, the NBES is the national benchmark on business ethics.  

NBES 2013 of the U.S. Workforce
Download report.
View key findings.
NBES 2013 reveals substantial good news about the state of ethics in American workplaces.  Observed misconduct is down for the third report in a row and is now at a historic low; the decline in misconduct is widespread; and the percentage of workers who said they felt pressure to compromise standards also fell substantially.

NBES of the Construction Industry
Download report.
View key findings.
No industry in America is immune to ethics challenges. In truth, certain industries are just inherently more “at risk” for facing ethics issues depending on the kind of work they do. The construction industry is one such industry, especially given the contexts in which companies conduct business, the safety risks that are inherent to their work, and the performance pressures they face.

NBES of Social Networkers
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View key findings.
Social Networking is changing the workplace. Ethics Resource Center data, first in the 2011 National Business Ethics Survey and subsequently in a supplemental survey of social networkers conducted in 2012, make clear that social networking is now the norm and that a growing number of employees spend some of their workday connected to a social network. More than one in ten employees are “Active Social Networkers” (ASNs) who spend at least 30 percent of their workday linked up to one or more networks.

2011 National Business Ethics Survey (NBES)
Released: January 2012
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From 2009 to 2011, 45 percent of U.S. employees observed a violation of the law or ethics standards at their places of employment. Reporting of this wrongdoing was at all-time high – 65 percent – but so too was retaliation against employees who blew the whistle: more than one in five employees who reported misconduct they saw experienced some form of retaliation in return. According to the 2011 National Business Ethics Survey® (NBES): Workplace Ethics in Transition, ethics cultures in business are also at their weakest point since 2000.

Employee perspectives on ethics truly matter because they provide a real view of what is happening within organizations. Such input helps leaders assess effectiveness and risk using models based on real – not theoretical – information.

2011 NBES Supplemental Reports

2009 National Business Ethics Survey
Released November 2009
View Survey Methodology

The 2009 NBES Supplemental Research Briefs:

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