Employees doubt that their colleagues are ethical

November 13, 2017

Just 25% of employees believe their teammates conduct business ethically, according to results of a study from Gartner.

For almost a decade, building a culture of integrity has been the most frequently cited goal of compliance executives, according to the researchers. In fact, more than half of compliance executives stated it was their most critical objective in 2016.

However, their programs have not been even close to successful: An analysis of nearly 2 million employee responses on corporate culture and misconduct shows that, within the past eight years, there has been a less than 1% decrease in the number of employees who observed misconduct at their organizations.

“Employees today do not believe their companies are any more ethical than they were eight years ago,” said Brian Lee, compliance practice leader at Gartner. “Most companies’ top-down approach to improving corporate integrity and culture—focused on senior leaders’ messages and tone—is clearly not enough to create change.”

What would help? Lee said that employees at every level must walk the talk. “Seeing and sensing integrity in the everyday actions of their peers is what really makes a difference, and until companies focus efforts there, cultural challenges are likely to remain and fester.”

Companies should not discount the impact of improving tone at the top. Using a top-down approach requires limited resources and ensures employees learn about culture from individuals that they know and trust. More than half of employees Gartner surveyed believe that senior leaders engage in and model the right ethical behaviors, and 61% believe the same about their direct managers. However, those leader-level efforts are not enough if they aren’t reinforced by the behaviors front-line employees sense and experience among their colleagues.

“Leaders need to model appropriate integrity and ethical behavior, but companies can’t stop there,” said Lee. “To trust that employees will behave with integrity at all times, leaders must also create an environment where a culture of integrity is consistently reinforced among front-line employees.”

Indeed, Gartner research shows employees from strong cultures of integrity are 90 % less likely to observe misconduct and are more likely to report that which they do see. They are also more likely to over-perform on individual and team goals.

There are financial opportunities, too – notably, companies with strong cultures of integrity have 10-year total shareholder returns that are 7 percentage points higher than companies with low perceptions of integrity.

Research contact: andrew.spender@gartner.com

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