Dive Brief:

• Corporate conduct during COVID-19 and reopenings will be a “stress test” for employers’ ethics and compliance programs, according to experts from advisory firm LRN Corporation.
• That prediction came as the firm released the results of a survey of 500 ethics, compliance and legal professionals; the report revealed mixed sentiments on employers’ ability and desire to identify and weed out workplace misconduct. Forty-six percent of those surveyed said senior leaders support “effective sanctions or penalties” on executives and high performers involved in misconduct. Most, however, said their organization considers ethical behavior in promotions and has the resources it needs “to inspire ethical behavior.”
• LRN’s analysis also found that considering ethics in employee bonus decisions and holding senior leaders accountable are the characteristics that are most common in “high-impact” ethics and compliance programs. It is in organizational leadership’s best interest to have strong programs because failures in this area can be costly, LRN senior advisor Susan Diverssaid in a statement. “In the cases of Vale SA, PG&E and Boeing, the problems leading to catastrophes were known, regulators were deceived and decision-makers ignored concerns raised by employees who pointed to weaknesses that led to disaster,” she said. As the country aims to recover from the COVID-19 pandemic, “we will learn which ethics and compliance programs are ‘paper only’ and which ones represent, and live at the heart of, the organization.”

Dive Insight:

The conditions surrounding the coronavirus pandemic are sure to test the cultures and codes of conduct at many organizations. Particularly in companies where remote work is now the norm, conducting investigations into misconduct and monitoring for unethical behavior will be tougher. The start of businesses and states reopening will be another test for companies.

The outcomes of poor corporate culture can have costly legal and business ramifications, but they can also impact turnover and employer brand. A recent SHRM study estimated that toxic workplace cultures have cost employers $223 billion in turnover costs in the past five years, and found that front-line managers play a large role in employee perceptions of the company culture.

To motivate a culture of compliance and ethical behavior, experts say it is imperative that employees speak up when they see something wrong. An April study from Zenefits found that one-fifth of workers say they don’t trust HR and 30% “actively avoid” going to HR. Of those who avoid going to HR, 35% said they didn’t believe it would be helpful and 31% said they feared retaliation. More recently, amid the pandemic, data from NAVEX Global found that workplace harassment reports were down.