Large Companies Reap Returns From Effective Compliance, Study Finds

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By Yin Wilczek

March 26 — When the largest U.S. corporations invest in ethics and compliance, their returns include improvements in key measures of workplace behavior, a new study finds.

According to the study, “The State of Ethics in Large Companies,” unethical behavior—including pressure to compromise standards and retaliation for reporting workplace misconduct—is extremely rare in large companies that implement strong compliance and ethics programs.

Using data from a survey of thousands of U.S. workers, it found that in large companies with effective compliance programs, only 3 percent of workers say they feel pressure to compromise standards, compared to 23 percent in large companies without effective compliance programs.

The study also found that in large companies with effective compliance, only 4 percent of employees said they were retaliated against for reporting wrongdoing, compared to 59 percent in comparably sized companies without effective compliance.

Released March 26, the study defines “large” companies as those with 90,000 or more employees. It drew on data from the Ethics Research Center's biennial National Business Ethics Survey and was sponsored by the Center for Audit Quality.

‘Enormous' Returns 

“Companies that invest in ethics reap an enormous return,” ERC Chief Executive Officer Patricia Harned said in a release. “Better workplace ethics cuts business risks by reducing the chance that serious ethics problems will throw companies off course and distract them from their core business.”

Among other findings, the study also reported that in large companies with effective compliance programs, 33 percent of workers observed misconduct and 87 percent reported it. In comparison, 62 percent of employees in large companies without effective compliance programs observed misconduct, but only 32 percent reported it.

The study is the first to be released by the ERC as part of its new Ethics & Compliance Initiative.

The ERC's latest National Business Ethics Survey—released in February 2014—polled 6,400 U.S. employees.

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

An executive summary of the study is available for download at http://www.ethics.org/nbes/large-companies/.

The ERC release is available at http://www.ethics.org/?q=news/large-companies-can-boost-ethical-performance-cut-business-risks.