Ethics starts at the top

Victoria University of Wellington's Brian Picot Chair in Ethical Leadership, Professor Karin Lasthuizen, comments on the findings from New Zealand's first Ethics at Work survey.

A new survey of the ethical culture in New Zealand workplaces highlights the need for organisations to clarify their ethical expectations, set clear boundaries and discipline employees who violate them, says Victoria University of Wellington’s Brian Picot Chair in Ethical Leadership, Professor Karin Lasthuizen.

The Brian Picot Chair is national partner of the London-based Institute of Business Ethics (IBE), which this year expanded its triennial Ethics at Work survey to include New Zealand, Australia, Singapore, Canada, Ireland, Switzerland and Portugal, along with existing countries the UK, France, Germany, Italy and Spain.

The New Zealand survey report was launched by IBE Director Philippa Foster Back in an event at Victoria University of Wellington hosted by Lasthuizen.

At the launch, both Lasthuizen and Foster Back highlighted the economic case for ensuring ethical conduct.

And the report – written by IBE researchers Guendalina Dond√© and Katja Somasundaram – does so too, arguing: “In the long term, the cost of preventing an ethical lapse is likely to be much less than that of dealing with the negative consequences that follow from ethical misconduct. As well as economic consequences, ethical misconduct can also lead to reputational damage.”

Based on questions to a nationally representative sample of more than 750 employees, the survey’s key findings include:

  • Although 86 percent of respondents say honesty is practised always or frequently in their organisation’s daily operations, 12 percent say it is practised only occasionally, rarely or never
  • Twenty-six percent of respondents have been aware of misconduct in their organisation in the past year, the most common types being people being treated inappropriately or unethically (46 percent), bullying and harassment (38%) and safety violations (37 percent)
  • Ten percent of respondents have felt pressured to compromise ethics, the main pressures being time (39 percent), under-resourcing (36 percent) and bosses’ orders (29 percent)
  • Thirty-four percent of respondents who have been aware of misconduct did not speak up, the main reasons being they did not believe corrective action would be taken (35 percent), they felt it might jeopardise their job (33 percent) or they felt it might alienate them from colleagues (27 percent).

Only 29 percent of respondents say their organisation has all four building blocks necessary for what the IBE considers a comprehensive ethics programme, while 10 percent say their organisation has none:

  • Code of Ethics – 70 percent say their organisation has written standards of ethical business conduct
  • Speak Up/Whistleblowing process – 56 percent have a means of reporting misconduct confidentially
  • Advice line – 46 percent have access to an advice or information helpline about behaving ethically
  • Ethics training – Only 51 percent are given training on ethical conduct.

Of respondents aware of misconduct during the past year, those in organisations with a comprehensive ethics programme are more likely to have spoken up than those in organisations without a programme (85 percent vs 70 percent).

The survey found that employees pressured to compromise ethics are more likely to find certain questionable practices acceptable. For example, 21 percent of those who have felt pressured say it is acceptable to favour family or friends when recruiting or awarding contracts, compared with 9 percent of those who have not felt pressured.

The importance of providing an environment that supports ethics is shown in the survey, with such an environment defined as one where line managers set a good example (69 percent of respondents say theirs does), support employees in following their organisation’s standards of behaviour (65 percent) and explain the importance of honesty and ethics in employees’ work (56 percent).

Employees in the most supportive organisations who have been aware of misconduct during the past year are more likely to have spoken up than those in unsupportive organisations (80 percent vs 54 percent). And employees in the most supportive organisations are less likely to say they have felt pressured to compromise the organisation’s ethics (7 percent vs 31 percent).

Of the more than 750 employees surveyed, 34 percent are managers and they were asked about their attitudes to ‘petty fiddling’.

Although 33 percent agree “there is no real difference between fraud and a bit of petty fiddling”, there are also the following attitudes:

  • Petty fiddling is inevitable in a modern organisation (28 percent)
  • If we cracked down on every little fiddle we would soon find we had no staff (22 percent)
  • If we cracked down on every little fiddle we would soon find we had no suppliers (16 percent)
  • As long as I come in on time and within budget I am not going to worry about a bit of petty fiddling (15 percent)
  • It is acceptable to artificially increase profits in the books as long as no money is stolen (10 percent).

The survey found significant differences between the ethics of younger (aged 18–34), mid-career (35–54) and older (55+) employees.

For example, younger employees (21 percent) find pretending to be sick to take a day off more acceptable than mid-career (12 percent) and older (6 percent) employees.

Younger managers are more likely to agree with the above statements on petty fiddling.

For example, 30 percent of younger managers say that as long as they come in on time and on budget they are not going to worry about a bit of petty fiddling, compared with 9 percent of mid-career managers and 5 percent of older managers.

And 23 percent of younger managers think it is acceptable to artificially increase the profits in the books as long as no money is stolen, compared with 6 percent of older managers and 2 percent of mid-career managers.

The survey found only 53 percent of respondents believe their organisation disciplines employees who violate ethical standards and that of respondents who have raised misconduct concerns only 55 percent are satisfied with their organisation’s response.

In her comment at the beginning of the survey report, Lasthuizen says that, while many of the findings support New Zealand’s good ethical reputation, more can be done “to reinforce ethical behaviour and really make ethics part of the bottom line”.

She notes that only 21 percent of respondents say their organisation provides incentives for ethical performance, such as taking ethical considerations into account in assessing bonus payments or salary increases.

Pointing out the widespread lack of a comprehensive ethics programme, she writes: “These instruments help managers to create a solid ethical culture, where people can feel safe, speak up against wrongdoings and perform at their best.”

Making the organisational ethics code “a truly living document by discussing relevant ethical dilemmas with employees is, in my experience, one of the most effective and rewarding ways for managers to explain ethical values and norms and enhance individual ethical decision-making”, writes Lasthuizen.

“Working collectively on ethics in the workplace will create support for and stimulate shared ownership of our ethical reputation, and make it into our number one business asset worldwide.”

At the survey report launch, Lasthuizen said that, extrapolated to the entire working population of 2.5 million, 26 percent of employees being aware of misconduct in the past year represents 630,000 people.

She emphasised the importance of leadership and “reinforcement, communication and role modelling”.

“You have to have those three factors,” she said.

“Reinforcement, from ethical leadership, means people feel they can report ethical issues, because when they do it’s followed up with a real response by management. It makes sense to report and in the end you might see the unethical behaviours in the workplace decrease.

“Communication – if managers have an open ear to ethics issues and there is a lot of conversation and feedback around ethics in the workplace it means you create support in this wider environment and it leads to less organisational misconduct.

“And the most important factor is role modelling: if you just look at the leaders and how they do it. That’s why we can’t have exceptions to the rules of conduct for leaders.”

Ethical leadership, said Lasthuizen, quoting Financial Markets Authority Chief Executive Rob Everett,   “is about ethics being very core to everything and not added on, and it’s about demonstrating those beliefs at every possible opportunity”.

Ethics at Work: 2018 survey of employees – New Zealand and Ethics at Work: 2018 survey of employees – Australia, New Zealand and United Kingdom, which compares findings from the three countries, are available as free downloads from the IBE website.

Read the original article on Newsroom.