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Robert J. Robert J. RutlandRutland
Center for Center for EthicsEthics
Ethics, LeadershipEthics, Leadershipand the CEOand the CEO
Ethical IssuesEthical Issues
Top 10 ethical issues facing the Top 10 ethical issues facing the general business communitygeneral business community
1.1. Improper accounting practicesImproper accounting practices
2.2. Deceptive sales practicesDeceptive sales practices
3.3. Misleading the public or the mediaMisleading the public or the media
4.4. Lying on reports/falsifying recordsLying on reports/falsifying records
5.5. Dishonesty with customersDishonesty with customers
6.6. Conflicts of interestConflicts of interest
7.7. Stealing/theftStealing/theft
8.8. Drug/alcohol abuseDrug/alcohol abuse
9.9. Producing low quality or unsafe productsProducing low quality or unsafe products
10.10. Unfair treatment of employeesUnfair treatment of employees
Top 10 ethical issues facing Top 10 ethical issues facing youryour industry industry
1.1. Conflicts of interestConflicts of interest (6) *(6) *
2.2. Stealing/theftStealing/theft (7)(7)
3.3. Lying on reports/falsifying recordsLying on reports/falsifying records (4)(4)
4.4. Dishonesty with customersDishonesty with customers (5)(5)
5.5. Drug/alcohol abuseDrug/alcohol abuse (8)(8)
6.6. Deceptive sales practicesDeceptive sales practices (2)(2)
7.7. Improper accounting practicesImproper accounting practices (1)(1)
8.8. Lying/exaggerating on resumes and job applicationsLying/exaggerating on resumes and job applications (12)(12)
9.9. Violations of privacyViolations of privacy (18)(18)
10.10. Bribes and kickbacksBribes and kickbacks (11)(11)
* * Compared to Compared to general business communitygeneral business community rankings rankings
Top Issues by Industry: Top Issues by Industry: ManufacturingManufacturing
* Compared to * Compared to your industryyour industry rankings rankings
1.1. Stealing/theftStealing/theft (2) *(2) *
2.2. Drug/alcohol abuseDrug/alcohol abuse (5)(5)
3.3. (tie)(tie) Conflicts of interest Conflicts of interest (1)(1)
(tie)(tie) Unfair treatment of suppliers Unfair treatment of suppliers(12)(12)
4.4. (tie)(tie) Dishonesty with customers Dishonesty with customers (4)(4)
(tie)(tie) Lying on reports/falsifying records Lying on reports/falsifying records (3)(3)
5.5. Violating environmental regulationsViolating environmental regulations (17)(17)
* * Compared to Compared to your industryyour industry rankings rankings
1.1. Conflicts of interestConflicts of interest (1) (1) **
2.2. Violations of privacyViolations of privacy (9)(9)
3.3. Lying on reports/falsifying recordsLying on reports/falsifying records (3)(3)
4.4. Stealing/theftStealing/theft (2)(2)
5.5. Improper accounting practicesImproper accounting practices (7)(7)
Top Issues by Industry: Top Issues by Industry: Health Care and Social AssistanceHealth Care and Social Assistance
1.1. Conflicts of interestConflicts of interest (1) (1) **
2.2. Improper accounting practicesImproper accounting practices (7)(7)
3.3. (tie)(tie) Violations of privacy Violations of privacy (9)(9)
(tie)(tie) Lying on reports/falsifying records Lying on reports/falsifying records (3)(3)
4.4. (tie)(tie) Stealing/theft Stealing/theft (2)(2)
(tie)(tie) Lying/exaggerating on resumes or job applications Lying/exaggerating on resumes or job applications (8)(8)
5.5. Dishonesty with customersDishonesty with customers (4)(4)
Top Issues by Industry: Top Issues by Industry: Banking, Finance and InsuranceBanking, Finance and Insurance
* * Compared to Compared to your industryyour industry rankings rankings
1.1. Conflicts of interestConflicts of interest (1) (1) **
2.2. Lying on reports/falsifying records Lying on reports/falsifying records (3)(3)
3.3. Dishonesty with customersDishonesty with customers (4)(4)
44.. (tie)(tie) Deceptive sales practices Deceptive sales practices (6)(6)
(tie)(tie) Predatory employment practices Predatory employment practices (18)(18)
Top Issues by Industry: Top Issues by Industry: Professional and Technical ServicesProfessional and Technical Services
* * Compared to Compared to your industryyour industry rankings rankings
1.1. Conflicts of interestConflicts of interest (1) (1) **
2.2. (tie)(tie) Deceptive sales practices Deceptive sales practices (6)(6)
(tie)(tie) Dishonesty with customers Dishonesty with customers (4)(4)
3.3. (tie)(tie) Misleading the public or the media Misleading the public or the media (13)(13)
(tie)(tie) Lying/exaggerative on resumes and job applications Lying/exaggerative on resumes and job applications (8)(8)
4.4. (tie)(tie) Economic espionage/divulging trade secrets Economic espionage/divulging trade secrets (19)(19)
(tie)(tie) Lying on reports/falsifying records Lying on reports/falsifying records (3)(3)
5.5. Unfair treatment of suppliersUnfair treatment of suppliers (12)(12)
Top Issues by Industry: Top Issues by Industry: Information Services and TechnologyInformation Services and Technology
* * Compared to Compared to your industryyour industry rankings rankings
1.1. Stealing/theftStealing/theft (2) *(2) *
2.2. Drug and alcohol abuseDrug and alcohol abuse (5)(5)
3.3. Unfair treatment of suppliersUnfair treatment of suppliers (12)(12)
4.4. (tie)(tie) Deceptive sales practices Deceptive sales practices (6)(6)
(tie)(tie) Bribes and kickbacks Bribes and kickbacks(10)(10)
(tie)(tie) Dishonesty with customers Dishonesty with customers (4)(4)
5.5. Producing low quality or unsafe productsProducing low quality or unsafe products(14)(14)
Top Issues by Industry: Top Issues by Industry: ConstructionConstruction
* * Compared to Compared to your industryyour industry rankings rankings
The State of The State of Ethics in BusinessEthics in Business
There is a generally accepted standard of ethics that most businesspeople
agree and act upon
1427.7
44
10.24.10
20
40
60
80
100
1 2 3 4 51 = Strongly Disagree 5 = Strongly Agree
Per
cent
Mean = 3.42
When I do business with other companies, I expect them to operate by the same
standard of ethics as my firm
1.4 1.9 6.9
30.2
59.6
020406080
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cent
Mean = 4.50
In general, the ethical performance of corporate America has improved over
the last year
513.9
46.132.5
2.50
20
4060
80100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cen
t
Mean = 3.14
The Sarbanes-Oxley Act and related regulatory measures have improved the
standard of ethical performance of corporate America
8.817.6
41.226.9
5.50
20406080
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Pe
rce
nt
Mean = 3.03
The Sarbanes-Oxley Act and related regulatory measures have strengthend public and investor trust in corporate
America
7.521.5
39.126.8
50
20406080
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cen
t
Mean = 3.00
Have recent changes in law and regulations affected how your company manages ethics and
compliance?
67.20%32.80%
No
Yes
All CompaniesAll Companies
YesYes
NoNo
Public CompaniesPublic Companies Private CompaniesPrivate Companies
Affected by Sarbanes-Oxley, Affected by Sarbanes-Oxley, other recent regulations?other recent regulations?
If YES, what have companies done If YES, what have companies done since 2002:since 2002:
1.1. Updated ethics or compliance policiesUpdated ethics or compliance policies33.0%33.0%
2.2. Created or strengthened ethics and Created or strengthened ethics and compliance trainingcompliance training 21.021.0
3.3. Developed new communication strategies Developed new communication strategies for managing conductfor managing conduct 19.319.3
4.4. Hired new staff or restructured organization Hired new staff or restructured organization responsible for ethicsresponsible for ethics 13.713.7
5.5. Revised mission, vision or values statementsRevised mission, vision or values statements 11.711.7
6.6. Increased budget for ethics and compliance Increased budget for ethics and compliance managementmanagement 9.39.3
Of CEOs who say the new rules Of CEOs who say the new rules havehave affected affected how their companies manage ethics and how their companies manage ethics and
compliance. . .compliance. . .
46 percent think Sarbanes-Oxley has improved the 46 percent think Sarbanes-Oxley has improved the standard of ethical performance in standard of ethical performance in corporate corporate AmericaAmerica. .
BUT only 25 percent say it has improved the BUT only 25 percent say it has improved the standard of ethical performance in standard of ethical performance in their own their own businessbusiness..
Almost 40 percent say it has Almost 40 percent say it has notnot improved the improved the standard of ethical performance in standard of ethical performance in their own their own businessbusiness..
The Sarbanes-Oxley Act and related measures are an overreaction to the ethical failures of a handful of companies, and are burdensome and unnecesssary for most
good companies
1.7
13.3 15 18.3
51.7
8.719
28.7 27.316.3
0
20
40
60
80
100
1 2 3 4 51 = Strongly Disagree 5 = Strongly Agree
Pe
rce
nt
Public Companies
Private Companies
It is often easier for a private company to operate by high ethical standards than a
public company which must meet stockholders' short-term expectations
41.731.7
11.7 11.73.3
14.821.8
15.4
29.918.1
0
20
40
60
80
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Pe
rce
nt
Public Companies
Private Companies
Managing EthicsManaging Ethics
What are the principal causes of unethical What are the principal causes of unethical conduct among employees?conduct among employees?
6.6. Inadequate training and communicationInadequate training and communication
7.7. Indifference or low moraleIndifference or low morale
8.8. Pressure to meet deadlines and schedulesPressure to meet deadlines and schedules
9.9. Failure of the organization to establish an Failure of the organization to establish an effective compliance programeffective compliance program
10.10. Not understanding the company’s ethics Not understanding the company’s ethics policiespolicies
What are the principal causes of unethical What are the principal causes of unethical conduct among employees?conduct among employees?
1.1. Failure of the organization’s leadership in Failure of the organization’s leadership in establishing ethical standards and cultureestablishing ethical standards and culture
2.2. Personal greedPersonal greed
3.3. Weakness of personal characterWeakness of personal character
4.4. Pressure to meet unrealistic performance Pressure to meet unrealistic performance or financial goalsor financial goals
5.5. Desire to advance careerDesire to advance career
Do you have, or plan to implement in the next 12 months, an ethics training
program?
77.3%
22.7%
No
Yes
All CompaniesAll Companies
Those that have, or are planning, an ethics training program. . .
5.615.4 23.5
36.8
66.7
020406080
100
Per
cent
Under $10 million
$10 - $50 million
$50 - $250 million
$250 - $1 billion
Over $1 billion
Do you have, or plan to implement in the next 12 months, a "help line" where
employees may report ethical concerns or seek guidance on ethical questions?
34.1%65.9%
All CompaniesAll Companies
No
Yes
Those that have, or are planning, an employee "help line". . .
11.123.2
33.6
65.8
93.8
020406080
100
Per
cent
Under $10 million
$10 - $50 million
$50 - $250 million
$250 - $1 billion
Over $1 billion
Do you have, or plan to implement in the next 12 months, a stated ethics policy?
40.4% 59.6%
No
Yes
All CompaniesAll Companies
Those that have, or are planning, a stated ethics policy. . .
27.8
53.6 60.581.6
93.9
020406080
100
Per
cen
t
$10 - $50 million
$50 - $250 million
$250 - $1 billion
Over $1 billion
Under $10 million
Do you have, or plan to implement in the next 12 months, a statement of values to guide corporate
conduct?
38.2% 61.8%
All CompaniesAll Companies
Yes
No
Those that have, or are planning, a statement of values. . .
44.458.3 59.7
76.387.5
020406080
100
Per
cen
t
$10 - $50 million
$50 - $250 million
$250 - $1 billion
Over $1 billion
Under $10 million
What do CEOs say was the What do CEOs say was the mostmost important important motivation for implementing a corporate motivation for implementing a corporate
ethics initiative?ethics initiative?
1.1. Provide guidance for employee conductProvide guidance for employee conduct
2.2. Ensure legal complianceEnsure legal compliance
3.3. Improve/protect reputationImprove/protect reputation
4.4. Be socially responsibleBe socially responsible
5.5. (tie)(tie) Improve profits/shareholder value Improve profits/shareholder value (tie)(tie) Retain/motivate employees Retain/motivate employees
CEO Ethics CEO Ethics and Leadershipand Leadership
The CEO should be the moral leader of the organization
0.3 0.8 5.8
92
1.10
20
40
60
80
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cen
t
Mean = 4.87
My standard of business ethics has improved over the course of
my career
6.918.2
29.5 33.6
11.8
0
20
40
60
80
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cen
t
Mean = 3.66
It is appropriate for people's religious beliefs to influence
their business decisions
10.725.2 20.3
28.215.6
0
20
40
60
80
100
1 2 3 4 5
1 = Strongly Disagree 5 = Strongly Agree
Per
cen
t
Mean = 3.35
How do the ethical standards of Southeast businesses compare
with those of businesses in other regions of the country?
43.7
4.8
51.5
0
20
40
60
80
100
Pe
rce
nt
Generally Higher
Generally Lower
About the Same
www.southerninstitute.org www.clemson.edu/caah/rutland www.clemson.edu/caah/rutland
Robert J . RutlandRobert J . RutlandCenter for EthicsCenter for Ethics
