Ethisphere’s Latest Ethical Culture Survey

Ethisphere has released its latest report on employees’ perceptions of ethical culture, finding that those perceptions generally improved throughout the pandemic, although we have a few troubling patterns with young workers worth pondering.

Generation Z workers, the report found, are the least likely demographic to report bad behavior. At the same time, however, Gen Z employees (roughly 16 to 26 years old) are more likely to report bullying, both at work and in life generally. Indeed, Gen Z might be the cause of one other finding: a 13 percent spike in employees who observed bullying in the workplace, while all other types of misconduct either declined or only increased a tiny fraction.

That, Ethisphere said, raises some interesting questions for internal reporting and training programs. “The experience of Gen Z employees around how they deal with workplace misconduct suggests that while ethical culture overall is strengthening across our data set, it is not strengthening equally for all employees, especially when compared by age,” the report said.

The findings all come from the 2023 Ethical Culture Report, which Ethisphere released last week. This is a longitudinal study of employees’ perceptions of ethical culture that Ethisphere has published since 2016; the data is derived from a 54-question survey that asks about reporting behavior and how that behavior reflected certain realities around organizational speak-up culture.

This year’s report is especially interesting because it includes comparisons of ethical culture both before and after the pandemic. We also have these Gen Z workers, many of whom entered the workforce during the pandemic — so for them, Zoom meetings, remote work, and a labor shortage are the only economy they’ve ever known. Compliance officers and ethical culture leaders will need to juggle all of that somehow.

What Hasn’t Changed About Reporting

We can begin with two stubborn facts that haven’t changed across the pandemic: the vast majority of employees say they’re willing to report misconduct if they see it; but far fewer actually do report misconduct when they observe it in practice.

Figure 1, at right, tells the tale. More than 90 percent of employees say they’re willing to report misconduct in theory, and that number even rose a bit from pre- to post-pandemic years. But barely half of employees actually reported misconduct they observed, and that number fell in recent years. 

Why aren’t employees reporting misconduct when they actually see it? For every age group Ethisphere tracked (Gen Z up to Baby Boomers), the top two reasons were (1) a belief that the company wouldn’t take any action; and (2) fear of retaliation.

Alas, this is not news. Ethisphere had pretty much the exact same findings in 2019, long before covid and Zoom meetings ever came along. Employees have a natural desire to report misconduct, which is great; but far too many are still spooked by a corporate culture they perceive as disinterested or outright hostile to them speaking up, which is bad.

We also have one other finding that’s held constant over the years: more than half of respondents say they typically report misconduct to their immediate manager. 

The figure for this year’s report was 56 percent, down from 61 percent in 2019. Perhaps we could attribute that to employees feeling less connected to their immediate managers thanks to remote work — but then again, I’m not sure that quibbling over a few percentage points matters. What does matter is the role that middle managers play in corporate culture.

Indeed, I would even tie these several findings together. That is, if compliance officers want employees to overcome their fears about speaking up (nothing will get done; I’ll suffer retaliation), then you need to focus on middle managers. With the right tools, training, and support from senior managers, those middle managers are your best bet to improve speakup culture.

We’ve been saying that for years; this Ethisphere report simply underlines the point. Something to remember as you plan your compliance program budgets, investments, and presentations to senior management.

A Look at Generational Differences

Now let’s go back to Gen Z, bullying, and which generations report what types of misconduct.

One finding was that in general, employees observed fewer incidents of misconduct during the pandemic. Ethisphere tracks 27 types of misconduct in its survey, and 21 of them — including harassment, conflicts of interest, bribery, accounting fraud, and anticompetitive behavior — all fell from the pre- to post-pandemic eras. Moreover, among the six types of misconduct that rose (including trade controls, health and safety issues, and insider trading) during the pandemic, five of those six reported increases of roughly 1 percent or less. 

The one glaring exception was bullying. Pre-pandemic, only about 20 percent of employees reported observing an incident of bullying. Today that number is 33 percent.

To be fair, we need to consider all these changes carefully. As Ethisphere itself notes in the report, decreases in observed misconduct could be due to remote work environments that make observing and reporting misconduct more difficult, or due to the mental strain and distraction of working during a global pandemic. Then again, that’s precisely the sort of big, strategic issue that compliance officers should think about: Are you seeing changes in internal reporting numbers due to changes in corporate culture, mundane workplace operations, or external factors beyond your control? 

There’s also Gen Z. It is the generation least likely to report misconduct; but also one that’s most aware of bullying as a form of misconduct, because they’ve been talking about bullying in school for years and grew up with discussions around gender harassment and racial discrimination. 

My instinct is to wonder whether Gen Z employees are (1) less likely to speak up because they’re less certain about how to navigate the corporate world; and (2) less aware of most types of misconduct except for bullying. For example, I am firmly in Generation X, and lord knows I was a naïve newbie in my early 20s. I suspect many of my cohort would concede the same about themselves. So I’d be curious to see what the reporting stats will look like for Gen Z in 20 years, when their penchant for avocado toast has been leavened with wisdom.

Understanding those differences, however, are crucial if a compliance officer wants to steer the whole diverse workforce toward the objective of a strong speakup culture.