Viewpoint for Leadership Strategies and Ethics
By Curt Verschoor
December 2005

Latest Research Highlights Importance of Ethical Culture
Two recent research studies by prominent organizations show that just the existence of a formal ethics and compliance program (now required by Sarbanes-Oxley and the U.S. Sentencing Commission) is not enough to prevent wrongdoing. Both studies reiterate the existence of continuing problems of ethical misconduct in the workplace, with a third to a half of all workers witnessing illegal or unethical acts within the last year. Types of misconduct most observed by employees include abusive or intimidating behavior towards employees and lying to employees, customers, vendors, or the public.

On the positive side, misconduct is much less prevalent in companies with a strong ethical culture, and when it occurs, is more likely to be reported to someone in authority. The most important triggers for companies to put into place a strong culture are clear communication of what is ethical and what is unethical behavior as well as senior managers acting with honesty and integrity.

"Ethics is not just publishing a code of ethics," according to Ira Lipman, chairman of Guardsmark, sponsor of the Ethics Research Center study. "It is a responsibility given to every employee, but led by top leadership," he said. "An ethical culture is one where actions from the top down are met from the bottom up."

See the Ethics Column, "Ethical Culture Most Important Barrier to Ethical Misconduct" in December's Strategic Finance.