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Ethical pressure on employees is rising

01 October 2018 by Simon Webley

Ethical pressure on employees is rising - read more

With employees facing an increasing number of ethical challenges at work, organisations need to offer support and guidance on doing the right thing

One in six employees in Europe say that they have felt some form of pressure to compromise their organisation’s ethical standards, according to the IBE’s latest ‘Ethics at Work’ survey. The number of employees experiencing this pressure has risen in all of the countries for which historical data is available.

The countries where these pressures are most severe are Portugal (22%) and France (20%), while it seems to be less problematic in Ireland (11%), Spain and the UK (both 12%).

Employees have felt more time pressure and were asked to take shortcuts more often than three years ago. They also say they are more likely to have felt pressure to compromise their organisation’s ethical standards in order to be a team player or save their job.

“Employees are more likely to have felt pressure to compromise their organisation’s ethical standards in order to be a team player or save their job”

The results suggest employees are under more stress to deliver than ever before and this is increasing the pressure to then cut ethical corners. These figures should be seen as a warning sign to organisations that they need to be more supportive of their employees when it comes to making ethical decisions.

Changing context

IBE’s ‘Ethics at Work’ survey is the only one of its kind covering Europe and it provides real insight into employees’ views on corporate ethics across all sectors and job roles.

First introduced in 2005, the IBE asks employees how they experience ethical dilemmas in their day-to-day working lives. It looks at whether they have witnessed misconduct, whether they have reported it, the pressures they are under and what stops them speaking up.

Context is crucial to understanding how these results are relevant to organisations. This survey took place in February 2018 against a backdrop of deep economic uncertainty and political turmoil.

“The uncertainty that characterises the current economic and political situation impacts on companies, with public perception that business is not being held accountable”

Since the last IBE survey was conducted in 2015, significant and largely unexpected events have produced the widespread feeling that the current political and economic situation is at a decisive moment in history. Divisive elections, an increasingly divided society and a growth of extremism in politics and society have fuelled uncertainty about the future.

There is a fear that many will be excluded from the benefits of a fast-paced globalised and increasingly digitalised economy. Public concerns about the effect of immigration and artificial intelligence on the workplace have compounded this sense of insecurity.

The changing nature of employment is exemplified by the agile workforce or gig economy. Data shows that the number of people working on a project or contract basis, or as a freelancer, is on the rise, particularly in sectors like construction. Although this provides more flexible ways of working, it significantly affects job security, employment rights and benefits, as well as inclusion in the workplace.

The uncertainty that characterises the current economic and political situation impacts on companies, with public perception that business is not being held accountable. This has a significant negative impact on how much people trust organisations to contribute to the development of society.

Global application

In this context, a key challenge that the international community faces is to develop governance systems that apply effectively to globalised markets. It is paramount that organisations of all sizes step up their commitment to be a positive driver of change, adopting governance frameworks that go beyond what is required by law and regulations.

Supporting an ethical culture in the workplace is a necessary first step for organisations.

The IBE suggests three critical dimensions that responsible organisations need to take into account to ensure that their ethical values are effectively embedded in practice.

  1. Assessing the ethical culture is essential to understanding the role that ethics plays in the organisation and how deeply the core values are rooted in the day-to-day decision-making process
  2. Identifying ethical risks is important in order to understand which of them should be the focus of an organisation’s ethics programme, the aim of which is to ensure that employees do not feel pressured to compromise ethical standards
  3. Supporting ethics standards at work by providing the fundamental components of an effective ethics programme minimises ethical risks and shapes organisational culture around core ethical values.

The IBE’s survey data clearly shows the importance of an ethics programme. In organisations where employees are aware of a code of ethics, training and a speak up mechanism, employees say that:

  • Honesty is practised more frequently (86% vs 74%)
  • The organisation acts more responsibly with its stakeholders (86% vs 57%)
  • They are less aware of misconduct (27% vs 31%)
  • They are more willing to speak up if they become aware of misconduct (73% vs 42%) and more likely to be satisfied with the outcome (72% vs 28%).

However, although these results clearly provide a business case for boards to establish an ethics programme as part of their governance agenda, even with an ethics programme, establishing a unified ethical culture is a challenge. Global corporations, working across multiple jurisdictions, find achieving consistency particularly difficult, as reported business scandals in the news testify.

Support the programme

Establishing an ethical culture requires an understanding that everyone has an individual perception of what is right and wrong. Organisational ethics need to be simple and clear, including not only verbal and written guidance, but adequate and regular training.

“Creating a supportive environment for ethical behaviour is essential in applying business ethics in practice”

That is why having a programme is one thing, but visibly supporting that programme is the key to driving behaviour in a more positive direction.

Creating a supportive environment for ethical behaviour is essential in applying business ethics in practice and closing the ‘say-do gap’ between how an organisation says it behaves and the reality of day-to-day working practices.

The survey uses the following elements as indicators of a supportive environment for ethics in an organisation, asking employees for their perception on:

Tone from the top

This includes the ability of managers to set a good example for ethical business behaviour, explanations of the importance of honesty and ethics at work and support for employees in following the organisation’s standards of behaviour.

Stakeholder engagement

Whether an organisation discusses issues of right and wrong at staff meetings; whether it lives up to its stated policy of social responsibility; and whether it acts responsibly in all its business dealings with its different stakeholders.

Addressing misconduct

The ability of an organisation to discipline employees who violate its ethical standards at whatever level they occur.

Duty to understand

The results are striking. In organisations with a ‘supportive environment for ethics’, employees say that:

  • Honesty is practised more frequently (91% vs 53%)
  • They are less aware of misconduct (21% vs 60%)
  • They are more willing to speak up if they become aware of misconduct (70% vs 47%) and more likely to be satisfied with the outcome (90% vs 15%)
  • They felt less pressures to compromise their organisation’s ethical standards (87% have not felt pressured vs 59%).

These results – directly from employees – should focus the mind. Culture is a hot topic at the moment, with the revised UK Corporate Governance Code requiring directors to understand their culture and make steps to assure themselves that the organisation’s ethical values are embedded within the business.

Improving corporate culture is is seen as essential for business to regain its standing in society, so that companies can secure their long-term franchise and their right to be heard in the debate on public policy.

When it comes to ethical culture, it is clear that most employees want to do the right thing. But the pressures upon them in this complex and changing work environment mean that they need support and guidance to be able to do it.

Simon Webley is research director at the Institute of Business Ethics

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