Ethics and Employees

Surveys and Trends

(more articles)

• Top 50 Companies for Diversity in the US
• U.S. Job Bias Charges Up in 2006
• U.S. Lags in Family Friendly Workplace Policies
• Employee Confidence in U.S. Management Declining
• Culture & Corruption: Conference Board Survey
• MBAs and CSR: Net Impact MBA Opinion Study
• Barriers and Drivers in Ethical Behavior
• KPMG 2005-2006 Integrity Survey
• Czech Business Ethics Survey
  
• US Corporate Attitudes to Ethics Survey
• International Business Ethics Review

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The Top 50 Companies for Diversity in the US

Survey Shows Connection Between Workplace Diversity and Stock Performance

DiversityInc, a monthly US-based business magazine that reports on diversity in the workplace, has released its fourth annual list of the Top 50 Companies for Diversity, which demonstrate consistent strength in the four areas the survey measures: CEO Commitment (the most heavily weighted), Human Capital, Corporate Communications and Supplier Diversity.

According to DiversityInc, for the fourth year in a row, the Top 50 companies, expressed as a stock index, beat the Standard & Poor's 500, the Dow Jones Industrial Average and the Nasdaq, demonstrating the connection between superior diversity management and sound corporate governance, which produces a consistent return on equity for investors.

The list is determined by responses to a 230-question survey sent to any company requesting it that has more than 1,000 employees, which is also is used to determine 8 specialty lists - Recruitment & Retention, Supplier Diversity, African Americans, Latinos, Asian Americans, Executive Women, GLBT Employees, and  People With Disabilities.

Key Findings Include:

- People of Color: Twenty-five percent of Top 50 companies' management are people of color, compared with 12 percent people of color in management nationwide

- Same Sex Couple Benefits: One hundred percent of the Top 50 offer domestic-partner benefits for same-sex couples, compared with 53 percent of Fortune 500 companies

- Gender Orientation: Seventy-four percent of the Top 50 include gender orientation in their nondiscrimination policies, compared with only 24 percent of the Fortune 500

- Supplier Diversity: Top 50 companies spend 9.7 percent of their procurement budgets with minority- and women-owned suppliers, compared with just 2 percent nationally

- Executive Compensation: Ninety-six percent of the Top 50 companies link executive compensation to diversity goals

The Top 50:

Posted 3/27/07

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In 2006, Job Bias Charges in U.S. Edged Up For First Time in Four Years

Race and Sex Discrimination, Retaliation Most Frequently Filed Cases,
Reports Government Agency

The U.S. Equal Employment Opportunity Commission (EEOC), which enforces federal laws prohibiting employment discrimination, revealed in its 2006 Fiscal Year data that it received a total of 75,768 discrimination charges against private sector employers last year, up from 75,428 in 2005 and the first increase in charge filings since 2002.

Among the findings:

1. Charges based on race, sex, and retaliation were the most frequent allegations, as in past years. 
2. All charges – except age and equal pay - edged up from in 2005.
3. A record 4,901 pregnancy discrimation charges were filed with the EEOC and with state and local Fair Employment Practices Agencies combined.

"These figures tell us that discrimination remains a persistent problem in the 21st century workplace," said EEOC Chair Naomi C. Earp. 

The chart below, also online at http://www.eeoc.gov/stats/charges.html, depicts the number of charges by category from 1997 to 2006:

For more on the statistics and EEOC see http://www.eeoc.gov/stats/enforcement.html

Posted 2/7/07

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U.S. Lags in Family Friendly Workplace Policies

Research by McGill and Harvard Universities highlights gap in government oversight of corporate workplace conditions

U.S. policies to ensure decent working conditions for families still lag dramatically behind those of all high-income countries and many middle- and low-income countries, according to a study released on February 1, 2007 by McGill University's Institute for Health and Social Policy (IHSP).

Using updated and expanded data from her 2004 Harvard University study, IHSP Director Dr. Jody Heymann, finds in The 2007 Work, Family, and Equity Index: How Does the U.S. Measure Up? that:

• Maternal Leave: Out of 173 countries studied, 168 guarantee paid maternal leave, with 98 of these countries offering 14 or more weeks of paid leave. The U.S. provides no paid leave for mothers. Lesotho, Liberia, Swaziland and Papua New Guinea are the only other countries studied that do not guarantee leave with income to mothers.
  
  
• Paternity Leave: Sixty-five countries grant fathers either paid paternity leave or paid parental leave, with 31 of these countries offering 14 or more weeks of paid leave. The U.S. guarantees fathers neither paid paternity nor paid parental leave.
  
  
• Breastfeeding: At least 107 countries protect working women's right to breastfeed and the breaks are paid in at least 73 of these countries. The U.S. does not guarantee the right to breastfeed, even though breastfeeding is demonstrated to reduce infant mortality one-and-a-half to five-fold.
  
  
• Sick Days: At least 145 countries provide paid sick days for short- or long-term illnesses, with 127 providing a week or more annually. The U.S. provides unpaid leave only for serious illnesses through the Family & Medical Leave Act, which does not cover all workers, and has no federal law providing for paid sick days.
  
  
• Annual Leave: One hundred and thirty-seven countries require employers to provide paid annual leave. The U.S. does not.
  
  
• Maximum Length of Workweek: At least 134 countries have laws that fix the maximum length of the work week. The U.S. does not have a maximum work week length or a limit on mandatory overtime per week.
  
  
• Day of Rest: At least 126 countries mandate that employers provide a day of rest each week so workers are not required to go for long periods without a day off. The U.S. does not.

"More countries are providing the workplace protections that millions of Americans can only dream of," said Dr. Heymann, the study's lead author, founder of the Harvard-based Project on Global Working Families and Director of the McGill Institute for Health and Social Policy.

"The U.S. has been a proud leader in adopting laws that provide for equal opportunity in the workplace, but our work/family protections are among the worst. It's time for change."

Posted 2/5/07

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Employee Confidence in Values of U.S. Senior Management Declining

Fewer Than Half of U.S. Workers Trust Their Bosses, Study Finds

American employees' confidence in the values of their companies' senior management has declined over the past two years, according to a survey by Watson Wyatt Worldwide, a global consulting firm.

Watson Wyatt’s WorkUSA® 2006/2007 survey of 12,205 full-time U.S. workers across all job levels and major industries showed that only 55 percent believe that thier senior management behaves consistently with the company’s core values (down from 57 percent in 2004) and only 49 percent of employees said they have trust and confidence in the job senior managers are doing (down from 51 percent in 2004).

“This dip in ratings is concerning because employees’ attitudes about their senior leaders are a key factor in building engagement,” said Ilene Gochman, national practice director for organization effectiveness at Watson Wyatt. “People want to work for companies where they have confidence in the organization and trust what senior management is doing. Fostering that trust is especially important in today’s global market as it creates an environment in which employees understand that changes to the workplace may be necessary to remain competitive.”

The survey also found considerable disparities among companies in the frequency of senior management’s communication with employees. Forty-three percent of employees reported that their firm’s senior management takes an active, visible role in communicating to employees, down from 45 percent in 2004.

“Communication is often thought to be the direct supervisor’s role,” Gochman said, “but companies can create stronger teams and fuel excitement about the future if senior managers lay out the broad frameworks the firm will follow and supervisors reinforce that message. By engaging employees, such communication has a direct impact on the bottom line.”

For more on the Watson Wyatt WorkUSA® 2006/2007 survey click here.

Posted 1/8/07

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Building a Corporate Culture of Compliance is the Key Driver in
Widespread Use of Anti-Corruption Programs

The commitment of senior corporate management leadership and personal convictions are the most important drivers in company decisions to strengthen anti-corruption programs, according to a Conference Board report. Resisting Corruption: An Ethics and Compliance Benchmarking Survey, written by Conference Board principal researcher Ronald Berembeim, was released on Dec. 5, 2006. It is based on a mid-2006 survey of 165 multinational companies conducted by The Conference Board in collaboration with the Ethics and Compliance Officer Association (ECOA).

Management, Culture Main Drivers For Anti-Corruption Programs

Thirty three percent of those surveyed say senior management leadership and conviction is the single most important factor in their company's decision to develop an anti-corruption program.

Companies now, as in a similar 2000 survey by The Conference Board, seldom cite a bottom-line rationale for anti-corruption programs. Instead, they cite legal (e.g., General home country prohibitions were picked as the single most important factor by 27 percent of the participating companies while 7 percent accorded Sarbanes-Oxley Section 404 (2002) this designation) or ethical (bribery is wrong — 13 percent) considerations as justifications for investing in anti-corruption initiatives.

Significantly more respondents (two-thirds) say that their company has a formal anti-corruption program in the current survey than in the 2000 survey (half). Company anti-corruption statements are also more detailed and precise than they have been in the past. For example, descriptions and labeling of corrupt practices and discussion of structures and procedures that support the company's anti-corruption policy are today much more common than six years ago.

Anti-corruption programs are subject to high levels of review. More than three-quarters of the survey participants report or, in some cases, have dual reporting relationships to a C-Suite executive, board member or board committee.

Chief legal officers are much more likely to be involved in all phases of the program (development, implementation, monitoring) than they were in the past. In addition, companies are now more likely to seek outside assistance in some aspect of their anti-corruption program. Nearly one-third (32%) used outside counsel compared to the 21% that did so in 2000, and 18% used a consultant. The 2000 survey did not ask if companies used consultants.

China Major Challenge to Implementing Anti-Corruption Programs

More than 40% of the survey participants do business in China, Brazil, Mexico, and India, countries that are at high risk for corrupt practices in business. According to 36% of the companies active in China, that country poses "the greatest overall challenge to the company's operations because of the level of corruption."

Facilitation Payments Becoming More Restrictive

Facilitation payments (a fee paid to an individual who performs no necessary services) may be the most vexatious anti-corruption policy issue. However, in recent years, the trend has been for companies to become more restrictive in the policies that allow employees to make these payments. In 2000, 19% of the surveyed companies said that within the last three years their policy has become more restrictive. In 2006, 27 companies moved in this direction.

The most common reason given for the institution of more restrictive facilitation policies was the company's involvement in some kind of global anti-bribery network such as Transparency International or the International Chamber of Commerce Significantly more companies now say that hotlines or helplines can be effective (40% compared with 18% in 2000). But the highest number of companies (11) cited whistleblowing programs as the anti-corruption measure that was ineffective.

Disclosure of Corruption Incidences Rare

Other than Internet posting, company sharing of information regarding anti-corruption programs and disclosure of corrupt practices (even in sustainability reports) are rare.

For the Full Report Follow This link

Posted 12/12/06

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Study Shows Most U.S. and Canadian Business Students Are Ethically Minded

A Net Impact Study of MBA Student Opinions on the
Relationship between Business and Social/Environmental Issues

To view as .pdf

Between September 15 and October 15, 2006 Net Impact -  a nonprofit organization with over 130 student and professional chapters on 4 continents, whose mission is to grow and strengthen a network of leaders who are using the power of business to make a positive net social, environmental, and economic impact – conducted an online survey to measure current opinions among U.S. and Canadian MBA students about the relationship between business and broader social and environmental issues. It sent a 31-question, online survey to club leaders at 100 MBA programs in the U.S. and Canada, asking them to send the survey to their student body email list.

Response Rates
• 2,112 current MBAs responded
• 87 programs were represented
• 41 programs had 10+ student responses
• 13 programs had 50+ respondents

Respondent Profile
 70% of respondents are in the 1st year of their program
• 87% are in a full-time MBA program
• 37% of respondents are currently Net Impact members; 38% would consider or like to learn more; 25% are not interested in joining
• 68% are originally from the United States; 85% are at school in the United States
• 45% of respondents are female; 34% are people of color

Findings
Only 1/3 of respondents prefer to work in medium to large businesses five to ten years in the future, down from 2/3 immediately following business school.

Five to ten years after you received your MBA degree, which employment site would you prefer at that time? (N = 2113)

Immediately after you receive your MBA degree, which employment site do you most prefer to work in? (N = 2111)

The majority of students express an interest in learning about corporate social responsibility, sustainability, international development, and social entrepreneurship during their MBA.

Please indicate whether or not you would like to learn more about any of the concepts while you are pursuing your MBA. (N=2104)

The majority of students say that CSR (corporate social responsibility) should be integrated into core (required) business school classes.
• Overall, 78% agree with this statement
• For students not interested in Net Impact membership, 64% agree

The majority of students say that during their career they will seek a job that is socially responsible.
• Overall, 79% agree with this statement
• For students not interested in Net Impact membership, 60% agree

The majority of students say that business professionals should take into account social and environmental impacts when making business decisions.
• Overall, 89% agree with this statement
• For students not interested in Net Impact membership, 81% agree

The majority of students say they believe that businesses should work towards the betterment of society [such as a healthier environment, the eradication of poverty, and other societal issues].
• Overall, 81% agree with this statement
• For students not interested in Net Impact membership, 66% agree.

Few students believe that most corporations are currently working towards the betterment of society.
• Overall, 18% agree with this statement
• For students not interested in Net Impact membership, 24% agree

Women are more likely than men to seek socially responsible careers (87% v 74%).

Registered Democrats are more likely than registered Republicans to seek socially responsible careers (86% v 68%).

Conclusion
Current MBAs believe that social and environmental issues are important considerations for business. They think that social and environmental topics should be integrated into the business school curriculum. Most students will look for jobs during their career that are socially responsible, and many plan to look beyond the traditional employment site of MBAs, medium and large businesses. MBAs believe business employees should consider the social and environmental implications of business decisions, and they believe that currently few corporations are improving society.

Further analysis of these results will be published in December 2006, with analysis of responses by geography, public v. private institution, and citizenship of respondent.

For further information, please contact Net Impact Executive Director Liz Cutler Maw at 415-984-3300 x306 or lmaw@netimpact.org.

Posted 11/2/06

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Employee Decision Making: Barriers and Drivers in Ethical Behavior

To download as .pdf

In March 2006 the Institute for Supply Management (ISM), the world’s largest supply management* association, released the findings of its survey of 1,245 supply managers and employees that interact with them concerning ethical behavior within their organizations. In analyzing the surveys findings, ISM differentiates between two types of unethical behaviors (1) Deceitful Practices, which include activities such as inventing (making up) a second source of supply to gain competitive advantage and purposefully misleading a supplier in a negotiation; and (2) Subtle Practices, such as sharing confidential information about one supplier with another supplier and allowing gifts or entertainment to influence sourcing decisions. While most of the surveys were initially sent to supply managers, the questions and findings are relevant to company-wide ethics policies and cultures, and provide useful information for companies seeking to improve their ethics programs and policies by learning which factors most influence ethical behavior.

The following, excerpted with permission from the report**, are ISM’s findings on what barriers to ethical practices and drivers of unethical practice most influence employee decision making:

BARRIER-RELATED FACTORS APPLIED TO ETHICAL PRACTICES

Tables 2 and 3 list a set of conditions that can affect ethical behavior. The presence of one or more of the conditions can facilitate subtle or deceitful practices. These 10 barriers were entered into a multiple regression analysis for each of the sets of practices, and those barriers that significantly relate to the practices are highlighted in each of the tables. In the case of deceitful practices, differing standards across functions, a lack of internal consequences for unethical activity, business priorities taking precedence over ethical practices, supplier pressures to engage in unethical activity and pressure to perform within the respondent’s organization all lead to significantly higher levels of unethical practices. Regarding subtle practices, ineffective training, regulatory complexity and supplier pressures were all significantly related to higher levels of unethical activity.

These findings have several interesting implications. First, it would appear that a lack of training, defined as either a total lack of training or providing ineffective training, can lead to higher levels of subtle practices. This would suggest that providing more and better training might lessen employee involvement in subtle practices. Conversely, the finding of no relationship between a lack of training and deceitful practices suggests that employees will engage in deceitful practices regardless of training provided. It is likely that employees are already aware that these deceitful practices are unethical, and that training will not affect their decision of whether to engage in these activities. Instead, deceitful practices are affected by a lack of internal consequences (including a failure to enforce internal sanctions and punishments against unethical behavior), business priorities taking precedence over ethical behavior and pressure to perform well by meeting or exceeding metrics, often with associated time pressures. These findings suggest that organizations might lower the incidence of deceitful practices by attempting to refocus their culture from one of a strict and perhaps short-term goal of improving the bottomline to one that considers the bottomline in concert with ethical issues. Many of these issues are discussed in more depth next.

* Adjusted R2 from multiple regression analysis = 0.1710 (F = 21.61, p<.0001). Bolded items are significantly related to the Deceitful Practices dependent variable.

Table 3: Barriers That Enable Subtle Practices*

* Adjusted R2 from multiple regression analysis = 0.0832 (F = 10.07, p<.0001). Bolded items are significantly related to the Subtle Practices dependent variable.

DRIVERS OF ETHICAL PRACTICES

Six potential drivers of unethical practices are shown in Tables 4 and 5. Two of these drivers result in significantly lower levels of deceitful practices — individual employee values and a people-oriented organizational culture that promotes corporate citizenship — and one antecedent results in significantly higher levels of deceitful practices — an organizational culture (also see Appendix 1) that focuses on short-term bottomline gains. These same relationships hold in the case of subtle practices. In addition, subtle practices can be lessened through the development and use of written corporate policy that includes explicit sanctions and punishments for unethical behavior. The survey results suggest that individual values are a key facilitator of ethical behavior in the case of both deceitful and subtle practices. Some of the comments by survey respondents to our open-ended questions perhaps best summarize this finding:

“Ethics are part of a person’s values. If the person is ethical, then their dealings with suppliers will be on a good basis.”

“Integrity is who you are when no one else is looking. It comes from within.”

“I believe that the moral character is the most important factor in ethical behavior. Especially since the people who know the rules generally know how to get around them, if they want to.”

Respondents also suggested that the values of individuals could be further supported by a company’s culture:

“Ethics begin with the quality and moral values of the employees, and fortunately we have very good people. The company, in turn, is supportive of their efforts.”

“The standard is the highest ethical behavior. It is a subject covered in interviews when hiring senior employees. The standard and example are in the culture.”

“It is all up to the individual. I must add, however, that the environment surrounding the individual will go a long way to help sway the individual’s train of being.”

“Ethical behavior is brought with the employee when employment begins. The working environment can and often does influence those with moral/ethical boundaries that are not well-defined. That makes the selection of employees with high standards critical. It also points to the responsibility of the employer to provide a working environment that requires/expects only the highest level of ethical behavior, and models such behavior at all levels of management.”

Conversely, an organizational culture that focuses on short-term gains can lead to higher levels of unethical practices among employees, as shown in Tables 4 and 5, and as highlighted by this comment:

“I believe that the business trend of always beating the last quarter profits is hurting organizations ethically. People are always creating arms-length relationships because there might be something better down the road. In fact a strong supply base can only be built around those suppliers who are fair to their customers and also to themselves. Until U.S. businesses understand this, there will always be room for those unethical suppliers who are just trying to make a quick sale for this quarter’s numbers.”

Finally, the use of policies and procedures appears to reduce subtle ethical practices, but not deceitful practices. One explanation for these findings is that communication of policies can create awareness of some of the subtle, “grey” ethical issues that might exist. Conversely, the deceitful practices consist of activities that most employees already recognize as being ethical improprieties, mregardless of the presence of ethical policies and procedures. As was stated by one study participant regarding policies and training:

“Most people know right from wrong — but the ‘grey’ cases, which are most of the situations, can be problematical.”

* Adjusted R2 from multiple regression analysis = 0.1279 (F = 29.98, p<.0001). Bolded items are significantly related to the Deceitful Practices dependent variable.

* Adjusted R2 from multiple regression analysis = 0.0792 (F = 18.04, p<.0001). Bolded items are significantly related to the Subtle Practices dependent variable.

USE OF SURVEY RESULTS

The survey was designed to provide practical information and suggestions for use by management across disciplines and by supply professionals. Compare and contrast the policies and procedures of your organization to get a sense of how you measure up to the results of the study. Then use the study results to determine where you can most effectively influence individual behaviors and company practices.

For the Full Report, “Social Responsibility and the Supply Management Profession: A Study of Barriers and Drivers of Ethical Practices,” see ISM’s website, or follow this link.

Posted 10/3/06

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KPMG's 2005-2006 Integrity Survey

Between 2000 and 2005 the U.S. experienced a wave of corporate scandals followed by the passage of a wide variety of new regulations. KPMG Forensic’s 2005-2006 Integrity Survey, based on the perceptions of over 4,000 employees in U.S. companies, seeks to guage what effects these reforms have had on corporate misconduct.

The survey is divided into five sections with graphs explaining the details of its findings:

1. Overall Results (the prevalence, nature, prevention, and detection of misconduct; corporate response to misconduct; and the perceived corporate
    
2. Comparison of 2000 and 2005 Data
   
   
3. Impact of Ethics and Compliance Programs (with roughly the same categories as Section 1)

4. Meeting the Regulatory Challenge (explanations of reforms that have taken place between 2000 and 2005: Sarbanes-Oxley of 2002; new corporate governance listing standards in the New York Stock Exchange (NYSE) and National Association of Securities Dealers Automated Quotation (NASDAQ) system; new federal sentencing guidelines that require the establishment of corporate codes and ethics programs for certain organizational defendants, amendments to the Department of Justice’s prosecution policy for organizational defendants; and court rulings that increase director and officer liability for their employees’ misconduct.
   
   
5. Background and Methodology of the Survey (the results of the survey are based on responses from 4,056 U.S. employees, spanning all levels of job responsibility, 16 job functions, 11 industry sectors, and 4 thresholds of organizational size)

Executive Summary of KPMG’s 2005-2006 Integrity Survey:

Nearly three out of four employees reported that they had observed misconduct in the prior 12-month period, with half of employees reporting that what they had observed was serious misconduct that could cause “a significant loss of public trust if discovered.”

Between 2000 and 2005, employees reported:

- Consistent levels of overall misconduct, with 74 percent reporting in 2005 that they had observed misconduct, compared with 76 percent in 2000

-Consistent levels of serious misconduct, with 50 percent in 2005 characterizing the misconduct they had observed as serious, compared with 49 percent in 2000

Although the level of observed misconduct has remained constant, employees reported that the conditions that facilitate management’s ability to prevent, detect, and respond to fraud and misconduct within companies are improving.

Between 2000 and 2005, employees reported the following positive changes in conditions and attitudes:

- Pressure to engage in misconduct to meet business objectives has decreased.

- The adequacy of resources available to meet targets without cutting corners has improved.

- Apathy and indifference toward codes of conduct have declined.

-Comfort levels in using a hotline to report misconduct have risen.

-Confidence that appropriate action would be taken in response to alleged improprieties has increased.
- Confidence that whistleblowers would be protected from retaliation has increased.

- Perceptions of chief executive officers and other senior executives as positive role models have improved.

- The perception that top management is approachable if employees have questions about ethics or need to deliver bad news has increased.

-The perception that business leaders would respond appropriately if they became aware of misconduct has increased.

Employees who work in companies with comprehensive ethics and compliance programs reported more favorable results across the board than did those who work in companies without such programs. For instance, employees who work in companies with such programs reported fewer observations of misconduct and higher levels of confidence in management’s commitment to integrity.

At companies with ethics and compliance programs:

- Employees reported fewer observations of misconduct.

- A significantly higher percentage of employees reported that their colleagues felt motivated and empowered to “do the right thing.”

- A significantly higher percentage of employees reported that their colleagues felt comfortable raising and addressing ethics concerns.

- A significantly higher percentage of employees believed their CEOs and other senior executives valued ethics and integrity over short-term business goals.

For the full survey please see KPMG’s website here.

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Critical Issues Highlighted In Czech Business Attitudes to Ethics

By Adriana Krnáčová          
Executive Director, Transparency International Czech Republic http://www.transparency.cz/

The concept of “business ethics” is a vague one for many Czech companies.  In part this may be due to the fact that the Czech Republic, like many other Central and Easter European countries, lacks a long history of private sector regulation and shareholder activism.  Clearly, approaches to business ethics in this country differ significantly from those widely found in leading Western economies. This discrepancy poses challenges to both to Czech citizens concerned with enhancing domestic business ethic, as well as to current and potential Western investors.

Transparency International – Czech Republic released a report in December 2005 on a survey it conducted to determine the attitude of the business community towards adherence to ethical principles.

Surveying 254 representatives of middle management of Czech Companies, the report seeks to answer, among others, the following questions:

1. is the current economic, cultural, and regulatory environment favorable or detrimental to business and in what ways;
2. in which sectors is corruption the most prevalent and why?
3. how do Czech businessmen see the costs and benefits of bribery and is it perceived to hurt business in the long-run.

The surveys results illustrate some critical issues for anti-corruption initiatives in former Soviet-bloc countries, many of which possess customs, laws and political and cultural climates inimical to traditionally Western notions of business ethics.
          
The survey found that, for the most part, Czech companies define “business ethics” in a significantly more limited way than do Western countries. They tend to regard ethics as relating more to business customs, contracts and payments rather than to the avoidance of bribes or patrimony. Those surveyed differentiated between “good” and “bad” corruption, determined by whom it affects – an unethical practice that hurts the company is viewed as censurable, while one that increases its profits is generally tolerated, at times, even encouraged.

The report found that while many businessmen concede that unethical practices may damage the reputation of a company, most believed that this lost reputation will not affect the welfare of the company in the short or long run. In fact, 4 out of 5 of the interviewees accepted that corruption in business represents a competitive advantage. The report attributed several factors to this outlook including ambiguous, overly complex and weakly enforced business legislation, preferential treatment of foreign companies, corrupt public procurement procedures, and a high tax burden.

For many businesses, which are struggling to survive in a shaky and relatively new business environment, a corruption-free attitude is seen as secondary matter compared to ensuring the very existence of their companies.  Concepts of ethical responsibilities are seen as more a matter for the individual, than for the company.

According to the survey, the public sector, particularly the public procurement process, is seen to be significantly more corrupt than the private sector for several reasons. It is said to be non-transparent, with ample opportunities for fraud. Then, public sector agencies are not seen as being subject to the same effective rules as private sector companies – they do not have to make a profit, their future is not endangered by their business management, they do not run the risk of insolvency and their budgets are fixed. In sum, public officials have little incentive to manage funds in a responsible and transparent manner.  Those surveyed suggested that, as a result, the winner of public tender is often decided on, usually from a pool of personal contacts, before the formal bid process commences.         

The aim of the survey was to find out what is the attitude of the business community towards the adherence to ethical principles. The first part of the survey was carried out by both CATI (Computer Assisted Telephone Interviewing) and CAWI (Computer Assisted Web Interviewing) methods, using an identical structured questionnaire. The sample comprised 254 representatives of middle management of Czech companies and 39 representatives of middle management of British companies with an annual turnover of more than CZK 100 mil. (incl.). The second – qualitative - part of the survey was carried out by means of individual in-depth interviews with 50 top managers of companies with an annual turnover of more than CZK 100 mil. (incl.). The survey was carried out for TIC by GfK Praha.

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U.S. Business Views of Critical Ethics Issues

An important survey of corporate attitudes to ethics has been published by the Center for Corporate Citizenship at Boston College , supported by the U.S. Chamber of Commerce. Survey results include:

Executives fall into two camps regarding business’ role in society. Slightly more than six in 10 perceive business as balancing the interests of multiple stakeholders, including investors, employees, consumers, communities, and the environment. The remaining respondents take a more compliant perspective focused on fulfilling employee and shareholder obligations. And while all companies engage in similar corporate citizenship activities, large companies are far more likely to have an expansive definition of their role in society. Among large companies:

• 64% indicate that corporate citizenship is part of their business strategy (44% overall)
• 68% have increased investment in corporate citizenship over the past two years (29% overall)

Engagement is largely driven by internal considerations – seventy-three percent of companies cite their company’s traditions and values as the primary actuating factors – and few respondents name employees (16%), top management (10%), or middle management (8%) as hindrances in their corporate citizenship efforts. Despite this internal recognition of corporate citizenship importance, 54% of executives report that a lack of resources is their biggest barrier. And while executives clearly view their role as societal stewards as important, the findings suggest a modest gap between executives’ expressed attitudes and the actions companies are actually undertaking.

The findings do reveal that, across the board, companies are actively engaged in public life. Private sector involvement in social issues includes environmental protection, supporting education, and economic development in our poorest communities. The means by which each company relates to society is unique, and there is no one universal corporate citizenship strategy.  Details at The State of Corporate Citizenship in the U.S.: Business Perspectives in 2005.

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International Business Ethics Review

Spring/Summer 2005, published by the International Business Ethics Institute

The Review contains an article by former Lockheed and World Bank ethics executive Anita B. Baker on international developments in evolving common ethics standards. The article examines a range of codes and initiatives. Dr. Baker notes that an increasing number of companies are developing their own codes of conduct by drawing from “over 100 sets of international standards and guidelines.” Convergence in a number of areas appears to be evolving, and an increasing number of academics are researching this fertile area.

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