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The National Survey of CEOs on Business EthicsThe National Survey of CEOs on Business Ethics

Hired new staff or restructured organization responsible for ethics and compliance

Have the recent changes in regulations regarding ethics and governance (i.e., the Sarbanes-Oxley Act, the updated Federal Sentencing Guidelines, revised listing requirements of stock exchanges, etc.) affected how your organization manages ethics and compliance?

YesNo

Of those who said yes, what did they do?

Updated ethics or compliance policies Revised mission, vision or values statements

YesNo

YesNo

YesNo

YesNo

YesNo

YesNo

YesNo

Created new ethics/compliance committees Developed new communication strategies for managing conduct Increased budget for ethics and compliance management Created or strengthened ethics and compliance training

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A stated ethics policy (e.g., Code of Ethical Conduct)?

Do you have or plan to implement in the next 12 months…

A board level committee responsible for ethics and compliance? An ethics and compliance training program?

A company ethics helpline (e.g., to report concerns)? A statement of values to guide corporate conduct? An assigned ethics and/or compliance officer? A department that is primarily responsible for ethics and compliance?

YesNo

YesNo

YesNo

YesNo

YesNo

YesNo

YesNo

Percent

Provide positive guidance for employee conduct 50.8%

Ensure legal compliance 21.2%

Be socially responsible 16.2%

Improve/protect public reputation 5.8%

Improve profits/shareholder value 4.6%

Motivate employees 1.2%

Retain employees 0.4%

Total 100.0%

If you answered yes to any item above. . . What is the single most important motivation for implementing an ethics initiative within your firm?

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How important are these factors for explaining unethical conduct in most organizations?

1 1.5 2 2.5 3 3.5 4 4.5 5

Not agreeing with the company'sethics policies

Not understanding the company'sethics policies

Desire to harm the employer

Failure of the organization to establishan effective compliance program

Pressure to meet deadlines andschedules.

Inadequate training andcommunication

Indifference or low morale

Pressure to meet unrealisticperformance or financial goals

Desire to advance career

Weakness of personal character

Failure of organizational leadership toestablish ethical standards and culture

Personal greed

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In your judgment, how do high ethical standards affect a company’s competitive position?

… in the short term

70%

7%

23%

Strengthen

Weaken

No effect

… in the long term

94%

1%5%

Strengthen

Weaken

No effect

CEOs who thought high ethical standards strengthened a company’s position were not significantly more positive about regulation, than those who thought high standards weakened or had no effect .

Strengthen Weakened or had no effect

Agree 51.8% 53.6%

Disagree 48.2% 46.4%

“The Sarbanes-Oxley Act and related regulatory measures have improved the standard of ethical performance of corporate America”

“The Sarbanes-Oxley Act and related regulatory measures have improved the standard of ethical performance of my business”


Agree 21.1% 17.6%


“The Sarbanes-Oxley Act and related regulatory measures have strengthened public and investor trust in corporate America”

“The Sarbanes-Oxley Act and related regulatory measures were an overreaction to the ethical failures of a handful of companies and have proven to be burdensome and unnecessary for most good companies”


Agree 51.8% 53.6%



Agree 47.4% 44.6%


CEOs who agreed that the ethical performance of corporate America has improved over the last 4 years were significantly* more positive about regulation, than those who felt it had not improved.

“The Sarbanes-Oxley Act and related regulatory measures have improved the standard of ethical performance of corporate America”

* Significant p<.01

Agreed improved

Disagreed not improved

Agree 51.8% 53.6%


“The Sarbanes-Oxley Act and related regulatory measures have improved the standard of ethical performance of my business”

* Significant p<.01

Agreed improved


Agree 26.3% 11.1%


“The Sarbanes-Oxley Act and related regulatory measures have strengthened public and investor trust in corporate America”

* Significant p<.01

Agreed improved


Agree 61.9% 24.1%


“The Sarbanes-Oxley Act and related regulatory measures were an overreaction to the ethical failures of a handful of companies and have proven to be burdensome and unnecessary for most good companies”

* Not statistically significant

Agreed improved


Agree 67.7% 75.6%


CEOs who thought high ethical standards strengthened a company’s position were not significantly less likely to think that internal corporate pressures lead to unethical conduct, than those who thought high standards weakened or had no effect.

* Not statistically Significant


Not important 35.1% 39.2%

Neutral 31.9% 31.6%

Very important 33.0% 29.1%

“How important is pressure to meet deadlines and schedules for explaining unethical conduct among employees at most organizations?”

“How important is pressure to meet unrealistic performance or financial goals for explaining unethical conduct among employees at most organizations?”

* Not statistically Significant


Not important 49.2% 50.6%

Neutral 23.8% 18.5%

Very important 26.9% 30.9%

CEOs who thought high ethical standards strengthened a company’s position were significantly less likely to think that broad economic pressures lead to unethical conduct, than those who thought high standards weakened or had no effect.

“Business executives are more likely to make ethical compromises during economic downturns”

* Significant p<.05


Agree 52.8% 65.8%


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CEOs’ Roles and Compensation:

Differences* between CEOs in publicly held and private firms• CEOs in privately held organizations more likely to agree: Public companies' responsibilities to employees frequently conflict with their need to maximize shareholder returns.• CEOs in privately held organizations more likely to agree: My standard of business ethics has improved over the course of my career.• CEOs in privately held organizations more likely to agree: CEO compensation in most large public companies is excessive.• CEOs in privately held organizations more likely to disagree: CEO compensation in most large public companies is properly aligned with corporate performance.

Differences* by number of employees (small under 100, medium 101 to 1000, large 1001 or more) • CEOs in mall and medium sized (under 1000 employees) more likely to agree: Public companies' responsibilities to employees frequently conflict with their need to maximize • CEOs in small and medium sized (under 1000 employees) more likely to agree: My standard of business ethics has improved over the course of my career.

Difference* by annual sales (small under $50 million, medium $50 million to $250 million, large over $250 million)• Difference between small, medium and large—smaller more like to agree: Public companies' responsibilities to employees frequently conflict with their need to maximize • Difference between small, medium and large—smaller more like to agree: My standard of business ethics has improved over the course of my career.• Difference between small, medium and large—smaller more like to agree: CEO compensation in most large public companies is excessive.

* statistically significant with p < .05

Do you agree or disagree with the following statements?Strongly

agreeAgree Disagree Strongly

disagree

Q11a The CEO should be the moral leader of the organization 85.8% 11.3% 0.3% 0.0%

q11b Public companies' responsibilities to employees frequently conflict with their need to maximize shareholder returns. 5.3% 37.0% 37.4% 20.4%

q11e My standard of business ethics has improved over the course of my career. 26.5% 38.1% 24.4% 11.0%

q11f It can be appropriate for CEOs' religious beliefs to influence their business decisions. 20.6% 37.5% 19.5% 22.4%

q11g There is a generally accepted ethical standard that most businesspeople agree and act upon. 8.5% 61.3% 25.0% 5.3%

Q11h CEO compensation in most large public companies is excessive. 23.8% 39.1% 30.1% 7.0%

q11i CEO compensation in most large public companies is properly aligned with corporate performance. 1.2% 28.3% 48.2% 22.3%

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1) What are the top 5 ethical issues facing the general business community?2) What are the top 5 ethical issues facing your industry?

1) Ranked by concern in general business community One of 5 top concerns for…

general business

community

your industry

Improper accounting practices 44.0% 24.5%

Lying on reports/falsifying records 35.4% 31.8%

Conflicts of interest 35.4% 45.0%

Exorbitant executive compensation 33.8% 2.6%

Dishonesty with customers 30.5% 31.1%

Misleading the public or the media 29.8% 18.9%

Deceptive sales practices 28.8% 33.4%

Violating environmental regulations 27.8% 19.5%

Stealing/theft 24.2% 31.1%

Producing low quality or unsafe products 22.2% 19.5%

Bribes and kickbacks 21.2% 15.2%

Drug/alcohol abuse 20.2% 24.5%

Discrimination 19.5% 15.2%

Unfair treatment of employees 18.9% 18.2%

Sex harassment 12.6% 15.9%

Violations of privacy 11.9% 24.5%

Unfair treatment of suppliers 10.9% 13.6%

Lying/exaggerating on resumes or job applications 10.6% 16.6%

Economic espionage/divulging trade secrets 7.6% 9.9%

Predatory employment practices 2.6% 9.9%

Workplace violence 1.7% 3.3%

Other 1.7% 3.3%

2) Ranked by concern in own industry One of 5 top concerns for…

your industry general business community

Conflicts of interest 45.0% 35.4%

Deceptive sales practices 33.4% 28.8%

Lying on reports/falsifying records 31.8% 35.4%

Dishonesty with customers 31.1% 30.5%

Stealing/theft 31.1% 24.2%

Improper accounting practices 24.5% 44.0%

Drug/alcohol abuse 24.5% 20.2%

Violations of privacy 24.5% 11.9%

Violating environmental regulations 19.5% 27.8%

Producing low quality or unsafe products 19.5% 22.2%

Misleading the public or the media 18.9% 29.8%

Unfair treatment of employees 18.2% 18.9%

Lying/exaggerating on resumes or job applications 16.6% 10.6%

Sex harassment 15.9% 12.6%

Bribes and kickbacks 15.2% 21.2%

Discrimination 15.2% 19.5%

Unfair treatment of suppliers 13.6% 10.9%

Economic espionage/divulging trade secrets 9.9% 7.6%

Predatory employment practices 9.9% 2.6%

Workplace violence 3.3% 1.7%

Other 3.3% 1.7%

Exorbitant executive compensation 2.6% 33.8%

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Do you agree or disagree? The criminal convictions of Kenneth Lay, Jeffrey Skilling, Bernard Ebbers and other corporate leaders…..

Percent agree

...show that the system works. 65.6%

...make corporate leaders more attentive to ethics. 88.0%

...further erode public trusts and confidence in business leaders. 66.0%

...help restore public trusts and confidence in the financial markets. 44.5%

...reinforce a negative and unfair stereotype of CEOs. 65.1%

...encourage even more legal scrutiny and regulation of business. 88.6%

No statistically significant differences by number of employees, annual sales or whether organization is publicly or privately held. Some differences, however, by industry:

• 76.8% of manufacturing CEOs agreed “it showed the system works.”• 82.1% of healthcare and non-profit CEOs agreed “further erodes public trust and confidence in business leaders”• only 76.9% of banking, finance and insurance CEOs agreed “makes corporate leaders more attentive to ethics”• only 34.5% of healthcare and non-profit CEOs agreed “helps restore public trust and confidence in the financial markets.”• 76.5% of information technology CEOs agreed “reinforces a negative and unfair stereotype of CEOs.”• only 72.7% of professional and technical service CEOs agreed “encourages even more legal scrutiny and regulation of business.”

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To what extent do you agree or disagree?

“University business schools should require courses in business ethics and/or ethics components in other business courses.”

43%

53%

4% 0%

Strongly agree

Agree

Disagree

Strongly disagree

However, CEOs who believe that business schools have a greater role to play are not doing all that much more in their own organizations in terms of ethics management. Comparing CEOs who “strongly agreed” that university business schools should require ethics courses and/or ethics components to all other CEOs the differences in the ethics policies, practices and procedures are slight.

“University business schools should require courses in business ethics and/or ethics components in other business courses.”

Strongly agreeAll other

responses

A board-level committee responsible for ethics and compliance?

Yes 41.3% 33.5%

No 58.7% 66.5%

An ethics and compliance training program?

Yes 55.7% 51.6%

No 44.3% 48.4%

A company ethics "help line" (e.g., where employees may report ethical concerns or seek guidance on ethical questions)?

Yes 59.2% 48.8%

No 40.8% 51.3%

A stated ethics policy (e.g., Code of Ethical Conduct)?*

Yes 88.6% 79.4%

No 11.4% 20.6%

A statement of values to guide corporate conduct?

Yes 86.2% 82.4%

No 13.8% 17.6%

An assigned ethics and/or compliance officer?

Yes 55.4% 43.5%

No 44.6% 56.5%

A department that is primarily responsible for ethics and compliance (i.e., education, investigations and monitoring)?

Yes 48.8% 39.4%

No 51.2% 60.6%

* p < .05

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Demographics of the National Survey of CEOs sample

Frequency Percent

Manufacturing 58 19.7

Healthcare and social assistance58 19.7

Banking, finance and insurance40 13.6

Construction 27 9.2

Professional and technical services22 7.5

Information services and technology18 6.1

Utilities 17 5.8

Wholesale trade 13 4.4

Retail trade 12 4.1

Transportation and arehousing7 2.4

Hotel, entertainment and food services 6 2.0

Real estate, rental and leasing5 1.7

Other, non services5 1.7

Agriculture, forestry and fishing3 1.0

Other services 3 1.0

Total 302 100.0%

Industry

Number of Employees

Annual Sales

100 or fewer employees

101 to 1000 employees

more than 1000

Under $50 million

$50 million to $250 million

$250 million or more

none

1 - 25%

26-50%

51-75%

76-99%

all 100%

Percent publicly owned

Manufacturing

Healthcare and social assistance

Banking, finance and insurance

Construction

Professional and technical services

Information services and technology

Utilities

Wholesale trade

Retail trade

Transportation and arehousing

Hotel, entertainment and food services

Real estate, rental and leasing

Other, non services

Agriculture, forestry and fishing

Other services

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ROBERT J. RUTLANDINSTITUTE FOR ETHICS

…The programs and activities of the Rutland Institute for Ethics are multidisciplinary and are intended to benefit both the campus and the community. Campus activities focus on three groups: students, faculty and staff. Community programs are designed to reach as much of the community as possible, with special attention directed to the business, education and professional sectors.The principal academic partner of the Rutland Institute is the Clemson University Department of Philosophy & Religion….

“From it’s inception as a military institution, Clemson has been recognized widely for the strong sense of character developed in its graduates. The Rutland Ethics Across the Campus program compliments and formalizes this long-standing Clemson commitment.”

~James F. Barker, FAIA--President, Clemson University

Main OfficePhone: 864.656.5379 ~ Fax: 864.656.2858

The Robert J. Rutland Institute for Ethics 126D Hardin Hall ~ Clemson University ~ Clemson, SC 29634-5138

Dr. Daniel E. Wueste , Director

[email protected]

Linda Gallicchio, Associate [email protected]

www.clemson.edu/ethics

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Mailing Address The Center for Ethics and Corporate Responsibility P.O. Box 3994Atlanta, GA 30303-3994

Physical Address The Center for Ethics and Corporate Responsibility 34 Broad St., 14th floorAtlanta, Georgia 30303Phone 404.413.7420 Dr. John Knapp, Director [email protected] Dr. Steven Olson, Associate [email protected] http://robinson.gsu.edu/ethics/index.html

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In keeping with Clemson University’s core values and aspiration to be a Top-20 public university, the Clemson Renaissance Center in downtown Greenville — a unit of Clemson’s College of Business and Behavioral Science — will be the center for entrepreneurship, experience-based graduate education and a portal to the dynamic Greenville business community. The Center will enable graduate students and faculty to work directly with area firms, entrepreneurs and leaders in innovative ways that will both enrich and accelerate the learning experience of all.By 2015, the Renaissance Center will be recognized nationally as a model for total immersion graduate education based on its innovative programs, the students it attracts, the graduates it produces and its interaction with the business world. By then, the Center’s entrepreneurship-enriched MBA will be emerging as one of the nation’s leading entrepreneurship degree programs.

135 South Main Street, Ste 600 Greenville, SC 29601. Phone (864) 370-3038 ~ Fax (864) 370-1522

Caron St. John, Associate Dean for Graduate Programs & [email protected]

Pris Foster, Administrative Coordinator

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Robert J. Rutland Institute for Ethics

The Center for Academic Integrity provides a forum to identify, affirm, and promote the values of academic integrity among students, faculty, teachers and administrators.The Center for Academic Integrity is affiliated with the Robert J. Rutland Institute for Ethics at Clemson University in Clemson, South Carolina. CAI is a consortium of over 360 institutions who share with peers and colleagues the Center's collective experience, expertise, and creative energy.

Main OfficePhone: 864.656.1293

Fax: 864.656.2858 [email protected]

Mailing Address:The Center For Academic Integrity

126 Hardin Hall ~ Clemson UniversityClemson, SC 29634-5138

Dr. Stephen Satris, Director

[email protected]

www.academicintegrity.org

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