Robert J. Rutland Center for Ethics

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)


Top Issues by Industry: Top Issues by Industry: Health Care and Social AssistanceHealth Care and Social Assistance



3.3. (tie)(tie) Violations of privacy Violations of privacy (9)(9)


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)


Top Issues by Industry: Top Issues by Industry: Banking, Finance and InsuranceBanking, Finance and Insurance



2.2. Lying on reports/falsifying records Lying on reports/falsifying records (3)(3)


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



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)


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


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


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

4060

80100

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 6.930.2

59.6

020406080

100


Perc

ent

Mean = 4.50

In general, the ethical performance of corporate America has improved over

the last year

5 13.9

46.132.5

2.50

20406080

100

1 2 3 4 5

1 = Strongly Disagree 5 = Strongly Agree

Perc

ent

Mean = 3.14

The Sarbanes-Oxley Act and related regulatory measures have improved the

standard of ethical performance of corporate America

8.8 17.641.2

26.95.5

020406080

100

1 2 3 4 5


Perc

ent

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


Perc

ent

Mean = 3.00

Have recent changes in law and regulations affected how your company manages ethics and

compliance?

67.20%32.80%

NoYes

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

1.713.3 15 18.3

51.7

8.719

28.7 27.316.3

0

20

40

60

80

100


Perc

ent

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


Perc

ent

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


Those that have, or are planning, an ethics training program. . .

5.6 15.4 23.536.8

66.7

020406080

100

Perc

ent

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%


No

Yes

Those that have, or are planning, an employee "help line". . .

11.1 23.2 33.6

65.893.8

020406080

100

Perc

ent

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%

NoYes


Those that have, or are planning, a stated ethics policy. . .

27.853.6 60.5

81.693.9

020406080

100

Perc

ent

$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%


YesNo

Those that have, or are planning, a statement of values. . .

44.458.3 59.7

76.387.5

020406080

100

Perc

ent

$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

20406080

100

1 2 3 4 5


Perc

ent

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

020406080

100

1 2 3 4 5


Perc

ent

Mean = 3.66

It is appropriate for people's religious beliefs to influence

their business decisions

10.725.2 20.3 28.2

15.6

020406080

100

1 2 3 4 5


Perc

ent

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

Perc

ent

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

http://www.southerninstitute.org/

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Robert J. Rutland Center for Ethics