Tone At The Top Matters When It Comes To Policing Ethics

Pat Harned, CEO of the Ethics and Compliance Initiative (ECI), talks about the organization’s business ethics survey, trends in ethics and the CEO's role in policing ethics.

So when we talk with business leaders, very often, we say, you can’t prevent misconduct from happening in your workplace. As long as you’re hiring people, you will have misconduct but what really matters is, when people observe it, are they going to tell management about it so that they can step in and intervene. And the fact that misconduct is at its low, close to its lowest but reporting has reached a historic high is a very good sign.

Did anything that really kind of popped out that made you think, “Wow, I really didn’t think that was the case. But apparently, it is”?

Well, there were two things that were surprising and yet disappointing. You know, we’ve often seen that when reporting rises in an individual organization, or on a broader level, when reporting rises, retaliation also rises. So we knew that if reporting was going to be at an all-time high, retaliation probably would be as well, but they tend to rise and fall in tandem. And what we saw this time was that, while reporting rose, retaliation rose much higher. It doubled since the last time that we feel did the survey. And that was very surprising and very troubling because retaliation is often a leading indicator of culture issues ahead for an organization.

The second thing that we saw that was surprising and also disappointing is that you would think, and in this environment where on the heels of pretty much every major corporate scandal that happens, later you hear a word that there was a culture problem. People couldn’t raise concerns. There was tremendous pressure. And you would think that, because of that, there would be more of an emphasis on culture, more efforts to strengthen cultures in businesses across the country, and we’ve not seen that. So if anything, the extent to which people are saying that they work in strong ethical cultures hasn’t changed. And we would have hoped that that would be on the increase, because the stronger your culture, the less likely it is that your company will experience problems.

What’s the CEO’s role in curbing some of these issues?

Well, one of the phrases that gets said in our industry, and I’m sure in a lot of industries is “tone at the top matters.” In fact, one of the things that our research has shown is that there are two drivers of culture in an organization. The first comes from the CEO and the C-Suite. The tone that they set, there are expectations that this will be a company with a high standard of integrity. The second major driver is immediate supervisors, managers who on a day to day basis, carry out that expectation. So I think the first thing that CEOs need to know is that they have an a very large influence on whether or not the standards of the organization are going to be taken seriously. So if they’re not regularly committing to talking about the importance of ethics, if they’re not taking steps to model the kind of conduct that they expect others to adopt, they need to start.

The second thing, I think, is for them to make sure that they have given the resources that are necessary for the organization to create a high-quality ethics and compliance program. And there are a lot of indicators of what that looks like. In fact, we can give you a report that is our framework of what some of those objectives are, and the principles that are behind it. But it’s really the CEO that has to be the champion of that making sure that leaders understand they have a role in it, they should be making sure that their chief ethics and compliance officer reports to them directly and also to the board. But then, they also need to make sure that they are holding people accountable for their responsibility in assessing and mitigating risk and driving a strong culture.

Read more: Fast Growth is No Excuse For a Flawed Corporate Culture


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