LL: What is the biggest headline out of this study?
PH: The biggest news is that there has been a significant increase in retaliation against whistleblowers for reporting ethics and compliance violations. In ’07 it was 12 percent in ‘09 it was 15 percent and now its 22 percent.
The retaliation involves everything from behaviors that are subtle (such as being left out of key discussions or team projects) to more overt disciplinary action (such as being transferred, not being able to get a bonus or a raise or being transferred). Thirty-one percent of employees even experience physical harm to their person or property for having reported wrongdoing in the workplace. The challenge for business is creating an environment where people are comfortable and protected for alerting management about unethical behavior.
LL: Doesn’t that responsibility rest with the corner office?
PH: Yes. Creating such an environment starts at the top. That’s why it worries us to see that employees’ confidence in the ethics of their leaders has dropped this year – 38 percent of employees now say that they don’t think their business executives are ethical leaders.
LL: What are some examples of misconducts being reported?
PH: Misconduct is both violations of ethics standards to violations of the law. It ranges from safety violations, environmental violations, bribes, kickbacks, in appropriate political contributions and posting the political views of coworkers on social networking pages.
LL: When do you see more unethical behavior- in good times or in bad?
PH: One would think that the worst behavior would happen in the worst of times, but that’s not the case. When the economy is better, we see more misconduct. That’s because the CEOs are focusing on performance, taking business risks, and they don’t do as good a job of reinforcing the idea that business integrity is a high priority. In bad economic times, leadership is still concentrating on the bottom line, but they also communicate frequently about the importance of integrity, the value they place on their employees, and right behavior.
The other reason that misconduct falls during tough times is that the bad apples keep under the radar so they don’t lose their jobs.
This year 30 percent of employees said that right now bad actors in their workplace are laying low. We expect this to change.
LL: What are the two leading indicators you use when quantifying ethics?
PH: Pressure to compromise standards and retaliation against whistleblowers. Both numbers have increased this year (5 and 7 ppts respectively). That’s why we have concluded that an ethics downturn may well occur.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."