New ECI Report on Complaints, Retaliation

The Ethics & Compliance Initiative published its 2018 Global Business Ethics Survey today, with both good and bad news for corporate compliance officers nudging their companies to higher standards of conduct.

The good news (ECI divides the report into “good news” and “bad news” sections) is that fewer employees say they personally witnessed misconduct in 2017 — only 47 percent, which one of the lowest percentages ECI has recorded in the 18 years it has published this survey.

[UPDATE: On Wednesday afternoon, ECI told me it has postponed publication of the final report until March 19. You can look for it on the ECI website then, although the statistics here still stand. Radical Compliance always brings you the important news no matter what!]

More good news: among those employees who did witness some type of misconduct, 69 percent of them reported it to senior manager. That figure has been marching steadily upward from 2005, when it was only 53 percent. You can see some of the most common types of misconduct that get reported in the graphic below.

 

The bad news is that more employees say they feel pressured to compromise ethical standards: 16 percent, up from 13 percent in 2013. That may not seem like much in total numbers (the ECI survey polled 5,100 people last year),  but in relative terms, it’s a steep increase. Nearly twice as many people reported feeling pressure in 2017 as they did in 2009 — and as I recall, 2009 was a pretty miserable year.

One intriguing item is the correlation between observing misconduct and feeling pressure. ECI notes that 84 percent of those who feel pressure to compromise their standards also say they observed misconduct. “Where there’s smoke, there’s fire!” the report breathlessly warns in a headline.

Compliance officers might also want to contemplate how true that statement is when you run it in reverse: How many people who report misconduct also feel pressure to compromise standards?

The GBES survey doesn’t address that specific point. But the number of misconduct reports a company receives is something you can quantify. And if people who report misconduct also do feel pressure to commit misconduct themselves — well then, a large number of reports would suggest a lot of pressure to violate standards, and you have a problem of corporate culture on your hands.

Most alarming is that the percentage of people reporting retaliation doubled since 2013, from 22 percent to 44 percent.

Historically, the ECI says, rates of reporting misconduct and experiencing retaliation move in tandem. That makes sense; if more people are filing complaints, that means more uneasy managers eager to shut down a potential problem. What’s alarming is that the jump in retaliation far exceeds the increase in reporting.

Another telling statistic is that 72 percent of employees who experienced retaliation said it happened within three weeks of them first filing their report; 40 percent of them said retaliation happened within the first week.

Compliance officers might want to contemplate how that news ties back to protocols for internal reporting and investigations. It’s not surprising that retaliation comes swiftly; if a senior executive sees potential trouble on the horizon, he or she wants to squelch it before other executives come snooping around. Still, if most employees first submit reports of misconduct to their managers, how can that process be protected from others who want to intercept the complaint and retaliate?

Compliance officers might also want to contemplate how true that statement is when you run it in reverse: How many people who report misconduct also feel pressure to compromise standards?

For example, compliance officers might want to consider policies that require managers to bring reports of misconduct to your attention immediately and discreetly, rather than giving that manager any opportunity to tell the offender about the issue. (Even if the manager sincerely wants to help the offender “resolve” the problem.)

Compliance officers also need to think about how they respond to someone once a complaint is made, since time is of the essence. Two rules of thumb I’ve heard are that (1) employees will try to report misconduct twice before they give up, or take their concerns elsewhere; and (2) you have about one month to make serious headway on a case before employees start wondering whether the company is dragging its feet.

You can string those rules together with the GBES survey data into a best practice: follow up with every complaint you can, as quickly as you can. Tell the person that he or she should also bring retaliation concerns to you directly, rather than to managers. And then set a reminder several weeks into the future to keep communicating with the employee, even if the only message is “we’re still working on it, and haven’t forgotten you.”

ECI has the full report available on its website, with plenty of statistics, cool graphics, and food for thought. Compliance officers would do well to give it a read, and I’d love to hear your thoughts, too. [email protected].