Survey: Pandemic Ordeal Boosts Corporate Culture
LRN has released the 2022 edition of its annual Ethics & Compliance Program Effectiveness Report, finding that most companies’ ethical culture has emerged stronger than ever thanks to two years of the Covid-19 pandemic.
LRN polled nearly 1,200 ethics, compliance, and legal officers at corporations around the world, most of them with 1,000 employees or more. Those respondents painted an upbeat picture, that most companies emphasized their ethical values during the pandemic and senior executives leaned on those ethical values when responding to Covid-19’s challenges.
Some of the more notable numbers:
- 82 percent said their ethical culture is stronger as a result of their experience with coping with the COVID-19 crisis;
- 78 percent said their firms relied upon company values rather than rules and procedures to weather the COVID crisis;
- 83 percent said ethics and compliance considerations played an important role in shaping their organization’s response to COVID-19;
- 66 percent said senior leaders integrated ethics and compliance considerations into their decision-making during the crisis; and
- 64 percent said executive leadership communicated candidly about challenges facing the organization.
Many of those figures increased from already high numbers in 2021, by the way. (See Figure 1, below.) Cynics might have assumed that last year’s high numbers were a one-time bump induced by the pandemic and its unprecedented turmoil — but perhaps not. Perhaps the pandemic has tilted the C-suite’s thinking about ethics in a more fundamental way.
If such a change is indeed the case, I suspect the proof of it will come in next year’s numbers. After all, this report reflects compliance officers’ sentiments in 2021; we still had plenty of pandemic turmoil, and large corporations generally had a good year financially. The coming year, with inflation, rising interest rates, and prolonged supply chain disruptions, might be more challenging for the bottom line. Let’s see how many C-suites still embrace a thoughtful, ethical culture under those circumstances.
Culture and Managers vs. Leaders
The LRN report also had some interesting statistics about the actions of senior managers compared to those of middle managers. I’m always curious about such comparisons, because they help compliance officers to see the cracks in your corporate culture.
See Figure 2, below, comparing senior executives against middle managers across several questions about ethical behavior.
I’m not sure how alarmed I am by any of those divisions. Several almost strike me as to be expected. For example, senior executives have an easier time responding to challenges in a manner that’s consistent with corporate values, because senior executives have more discretion to put aside financial targets (that they probably set themselves) in favor of other goals that are more ethical, but less financially lucrative. Middle managers don’t have the discretion to say, “I decided to cut the quarterly goal to give employees more time off.”
Conversely, that 56-63 split where middle managers were better at balancing business goals and employee well-being — that tracks because middle managers have a better understanding of what’s important for employee well-being, rather than senior executives perched in their lofty spots on the org chart.
My advice for compliance officers reading this report would simply be to ask yourself, “OK, how would our managers and senior executives rank on questions like this? Where would we see splits in ethical conduct and understanding, and how big would those gaps be?” You could even conduct your own internal poll if your company has enough managers and senior executives lying around.
The value of that exercise would be, as mentioned earlier, to identify gaps in the corporate culture. That can help you have more productive conversations with both groups, anticipate potential problems with investigations, guide policy development in a more thoughtful way, and even help you with training or presentations to the board. It’s a good exercise to undertake, if you can.
The LRN report did flag a few potential concerns around ethics training. Now, we should always remember that LRN sells ethics training materials, so of course the report would voice such concerns — but it’s not wrong to say that the pandemic did make training more difficult since so many employees now work remotely. Compliance officers do need to think about whether the training methods we use today really are as effective as they could be.
The LRN report asked compliance officers what steps they’ve taken to make ethics and compliance materials more accessible to employees. That is, can people access your Code, policies, and necessary forms from wherever they are working? Are online materials easily found and used, perhaps in interactive format? Or are they static documents that look like someone just PDF’ed the policy manual?
Figure 3, below, shows the measures that only a minority of compliance officers were making last year.
The only statistic that alarms me here is the fourth one: that only 40 percent of respondents took steps to strengthen controls around cybersecurity, privacy, and third-party risk management. Those are going to be huge concerns for corporations in years to come, and success on those fronts will depend on employee behavior much more than on technical controls. Compliance programs will have a big role to play for all these risks in the future.
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