4 reasons (backed by research) to prioritise ethics in the workplace

Science proves honesty is the best policy

There are a multitude of good reasons to commit to a culture of honesty and integrity in the workplace, even beyond simple conceptions of right and wrong. 

There’s now a wealth of research that shows explicitly that being ethical pays and third party whistleblower hotlines work, creating better workplace experiences, reducing risk and improving the bottom line. 

The opposite is also true however. Failure to address ethics and compliance issues early comes at a cost. 

What else does the research say?

Reason 1: Poorly managed reports are common – and risky

Drawing on the experiences of 17,778 employees across 46 organisations in Australia and New Zealand, the Whistleblowing: New Rules, New Policies, New Vision report (produced by Griffith University in Queensland), shows that the workplace can be a hostile environment for whistleblowers. 

According to the research, more than 80 percent of whistleblowers face repercussions for speaking up, with 42 percent of reporters feeling mistreated before their complaint. In addition, management and governance professionals who dealt with whistleblowing cases agreed that, in at least 34 percent of cases, whistleblowers “suffered harassment and/or direct adverse employment impacts”.

Making matters worse, reports of harassment are on the rise. The 2019 Ethics & Compliance Hotline Benchmark Report found both harassment and discrimination in the workplace increasing across the board. 

And employees often don’t trust the integrity of their leaders. According to EY’s recent Global Integrity Report, “53% of junior employees are not entirely confident that management abides by the relevant laws, codes of conduct and industry regulations.”

They’re right to have their doubts. According to the same report, senior leaders are prepared to ignore third-party misconduct when it suits them: “13% of all respondents would be prepared to ignore unethical conduct by third parties in order to boost their career or pay.” 

“The figure rises to 20% among board members.”

Reason 2: The ethical bar is getting higher

According to KPMG’s 2019 Insights for the future of ethics & compliance, improvements and enhancement of ethical and compliance functions are top of mind for many. 

“There is a growing consensus across all industries regarding the key areas organizations need to focus on and enhance, not only in ethics and investigations but also on the maturity of ethics and compliance programs,” says Amy Matsuo, KPMG principal and Regulatory Insights national leader.

The top five areas of focus are investigation capabilities, monitoring and testing, data analytics, regulatory change management and reporting and data visualization.

“Increased public awareness and regulatory focus – along with market pressures for greater agility and real-time responsiveness to identify misconduct – are driving organizations to improve their investigations function,” Matsuo said.

Reason 3: The bottom line

Having a whistleblowing hotline such as EthicsPro by Report It Now, is shown to positively affect profitability. The Association of Certified Fraud Examiner’s 2020 Report to the Nations shows that losses from fraud are almost twice as high for organisations without hotlines. 

The research also shows that telephone hotlines and email are especially important conduits for receiving tip-offs: A third of all tips come via those two channels, with another 32% of tip-offs coming from online or web-based forms. Small organizations especially likely to detect occupational fraud via a whistleblower hotline. 

Those findings are supported by the IBE’s report, Does Business Ethics Pay?, which found that companies with a code of ethics generated significantly more economic value than those without.

Still not convinced? Other whistleblowing research shows that even just the presence of an external reporting system can make fraudsters think twice before committing crimes. According to the Association of Certified Fraud Examiners’ report, 38% of employers found out about fraud through an ethics hotline. Even more dramatically, 71% of hotline reports were the first notification these employers received that there was an issue. 

Simply put, being ethical pays and third party whistleblower hotlines work. 

Reason 4: Training works too

The 2020 ACFE Report to the Nation found that organizations with hotlines detect frauds more quickly than those without (with the median duration of fraud shrinking from around 18 months to 12 months). Training also increases the likelihood of detection by tip: Almost half of all cases are detected via “trained” tip off, as opposed to 3% from untrained staff.

Fraud training for employees results in a 38% reduction in losses from fraud, according to the report, with fraud training for managers/executives resulting in a 33% reduction in losses from fraud. The presence of an employee support program further reduces median losses from fraud by 33%. 

Take reporting seriously

At Report It Now, we help businesses prioritise conversations about speaking up – and provide the tools, resources and training required to operate an open, honest, and transparent business. To find out more, contact Report It Now for a free, confidential consultation. 

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