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HR Leadership Column

Examining Organizational Ethics

A new report looks at some of the elements that motivate employees to report illegal or unethical violations at work. The findings offer some insights for HR leaders interested in creating an ethical workplace environment.

Monday, June 11, 2012
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Years ago at a reception in Houston -- just as Enron was beginning to implode -- I met two HR executives who had left the company before the scandal became apparent.

When I asked them -- individually -- what it was like working at Enron and why they had left, they both had the same answer: They were tired of executives pulling them aside, putting an arm around them as they asked them to do something that didn't feel right, and then saying, "Come on, you want to be part of the team, don't you?"

I've often used this story when HR professionals ask me how they can create an ethical culture in an organization where they believe the top executives and/or board members are acting unethically. My advice is always the same: Leave.

Despite best efforts and good intentions, no HR executive is going to be able to reshape organizational behaviors when the opposite behavior is being modeled at the top. The two executives who left Enron early -- neither of whom had a new job in hand -- certainly made the right career decision.

But, at the same time, I also believe each HR executive has a responsibility to actively encourage and nourish an ethical culture -- when it is possible to do so and even when he or she thinks it already exists.

HR executives can't assume "it goes without saying" that the workplace is ethical and that all employees believe that. HR needs to keep saying it, and needs to take steps to encourage employees to say something when they see something they believe to be unethical or wrong.

Since 1994, the Ethics Resource Center has conducted the National Business Ethics Survey, a longitudinal research effort examining organizational ethics from the employee perspective. In 2000, ERC began asking about observations of misconduct and whether those observations were reported to an appropriate person who could help address the situation.

The most recent NBES reveals that, over the past two years, nearly half -- 45 percent -- of U.S. employees have observed illegal or unethical behavior at work -- and 65 percent of them reported the wrongdoing.

That's an all-time high, but while it may sound like good news, is it really? It still means that more than one in three people who saw misconduct decided not to report it to anyone.

Late last month, ERC released Inside the Mind of a Whistleblower, a supplement to its 2011 NBES report. This new report offers important insights into what motivates employees to report illegal or unethical behaviors.

Importantly, the research finds that employees are more likely to report a problem if they believe it will make a difference -- that is, that something will actually happen as a result of their effort.

It can take courage to step up and say, "That's wrong!" Employees want to know that their courage will lead to some action -- and that their company values ethical behavior.

Far more employees (72 percent) report a problem when they feel their company rewards ethical conduct; only 57 percent do so when they feel such conduct is not rewarded.

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Those reporting wrongdoing also need to feel a sense of safety, security and engagement.

When employees see the company as successful and financially secure, reporting rates increase. In addition, reporting employees tend to be more personally invested in their companies: 72 percent of those who are engaged or strongly engaged report ethical violations, compared to 55 percent of those who are weakly engaged or not engaged.

Similarly, only 57 percent of employees who intend to stay for two years or less in a company report a problem, while 70 percent of those planning to stay three years or more do so.

The study also finds that, when an employee feels supported at work by their co-workers, professional colleagues and company resources, the likelihood increases that they will report illegal or unethical behavior.

Seventy-two percent of those who agree that "my workplace is a close community" are willing to report problems, but only 58 percent of those who disagree make that choice.

These findings show there's a real opportunity to improve an organization's ethical environment by ensuring employee efforts to report problems are recognized and rewarded, by taking steps to increase employee engagement, and by helping employees feel supported and valued in the workplace -- all good HR management practice.

Employees want to work for ethical organizations, and many of them are courageous enough to report instances of illegal or unethical behavior. HR should make it an easy decision for them.

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

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