Employees who speak out against corporate misconduct have never had it so hard. The latest study on company ethics finds that while workers are witnessing less wrongdoing overall, they are facing a stronger backlash for pointing out the problems they do find.
The Ethics Report Center (ERC) has been examining trends in corporate ethics culture since 1994, and analysts say the study has always observed a predictable pattern: basking in the financial security of good times—profits reign and ethics falter. However, when money is scarce business leadership regains its focus, renews its commitment to ethics, and employees adopt higher standards in kind.
But the ERC said that 2011 revealed something different. The latest installment of the biennial National Business Ethics Survey (NBES) shows that while corporate misconduct has reached a historic low, business ethics culture is eroding, as employees say they feel more pressure than ever to compromise standards.
The NBES found that retaliation against reports of misconduct rose sharply last year. As 2011 whistle-blowers reported incidents of sexual harassment, insider trading, or environmental violations they were increasingly given a transfer, hit with a pay cut, or even experienced physical violence or personal property damage when they spoke out.
Researchers say that this unique combination of low misconduct and widespread retaliation is unlike anything they’ve ever seen.
So what’s driving this unique picture? Analysts point to the uneven quality of the current economy and the rise of social networking.
While there have been signs of economic recovery since 2009, most Americans aren’t feeling much of the positive effects—unemployment levels remain high, fears of a double dip recession loom on the horizon, and employee confidence in their company’s financial future continues to fall. Analysts say this unique economic climate is clearly reflected in the 2011 NBES results.
“Indeed, the rise in retaliation, increased pressure to break rules, and the decline in ethics cultures suggests that—at least at the corporate level—some slippage has occurred already,” states the report. “The stage is set for a larger jump in misconduct once a strong economy reduces companies’ ethics focus and eases employees’ worry about job security.”
Analysts point to data from 2000, which revealed warning signs for a fatal dip in ethics standards. The years that followed demonstrated a wave of major corporate scandals that destroyed companies and cost thousands of employees their jobs.
Researchers say that given this history, there is reason to believe that “current weakness of ethics cultures could foreshadow a new surge of misconduct.”
Meanwhile, new technology has also changed the corporate ethics environment, as active social networkers report far more negative experiences of workplace misconduct. Analysts say that as a group, social networkers are almost four times more likely to experience pressure to compromise standards and about three times more likely to experience retaliation for reporting violations.
The NBES also reports that as employees become more active on social networks, they increasingly express a tolerant view of questionable behaviors that could pose business risks, such as working less to compensate for pay and benefit cuts. Analysts suggest that as technology continues to change, so too may employees’ ideas about what constitutes wrongful conduct at work.
With corporate misconduct expected to rise as the economy shows more improvement, the NBES urges companies to strengthen their standards now, and embrace social networking in their ethics culture. Analysts also recommend that lawmakers reinforce efforts to encourage and protect whistle-blowers.
“Based on what we see now, we expect workplace ethics to decline,” stated study authors. “The extent to which that will happen is largely dependent on how business leaders respond to this report.”
