Ethisphere Vice President of Data Strategy Doug Allen discusses the data behind the key takeaways from the 2023 Ethical Culture Report, which includes how bullying claims skyrocketed over the course of the pandemic, how ethical culture trends vary by age cohort, how team reputation factors into employees’ decisions to report misconduct, and the critical role that data and measurement play in building a thriving workplace culture.
I love to hear you talk about the size of the respondent pool we’re talking about here that inform this report. Exactly how big is the Sphere’s culture dataset? And how does the Sphere get all that terrific data?
The data that underpins our 2023 Insights report on culture comes from our universe of more than two million individual employee data responses that we have collected since about 2016. These are data points from organizations around the world, representing industries of all shapes and sizes. The data itself comes from a proprietary survey and engagement process that came about at the behest of the Business Ethics Leadership Alliance community.
We developed this survey methodology in 2015, through conversations we had with the BELA membership, which at the time was a fledgling community. Now, it’s much larger, but back then, BELA members came to us and said that a pain point for them was that nobody was measuring the ways in which their compliance programs were actually producing results. That’s when Ethisphere stepped to the plate and came up with something that could help ethics and compliance officers measure the efficacy of their programs, what their employees are thinking about these programs, and what the workforce’s overall take is on the culture of ethics within their organization.
With the BELA community’s collaboration and partnership, and with our own internal experts, we developed what we call the Ethical Culture Solution Set. The survey is now in its eighth year, and we have collected more than two million responses from hundreds of organizations around the world. That unique breadth and depth is what we are bringing to bear in this report.
We have released previous versions of the Ethical Culture Survey that have delved into other insights, but in the 2023 version, things are a little different. Our audience today has been through some pretty tumultuous times of change. The COVID-19 pandemic is not yet over, but we felt that we are at a point now where we could collect enough data at this point to really dig into trends that arose during the pandemic, both from a time period perspective, but also involving various demographic dimensions as well. We are hoping that this survey will just be the first in a regular series of great insights that we can pull from our data and share with our wonderful community on what we’re seeing regarding compliance and ethics topics.
A major aspect of this report is its focus on how ethical cultures in general fared over the course of the pandemic. How did ethical cultures do when put to the test?
We are looking at ethical culture pre-and post-pandemic—and we are calling our present moment “post-pandemic,” even though we fully realize that we are still in an ongoing COVID-19 situation. But when looking at our data, we were able to segment all of the results we collected prior to March 2020 versus everything after that. Then we looked at trends in how employees are perceiving the culture of integrity within their own organizations during those two different time periods.
Now, before we get into the findings, a quick primer on what we’ve looked at as part of our process. The way we’ve approached measuring ethical culture is defined by what we call our Eight Pillars of Ethical Culture. Many of our audience members today, and devotees of Ethisphere in general, know of these pillars. But for those who do not, the Eight Pillars cover what we consider to be the foundational elements of an effective and sustainable culture. For example, what is the awareness of the employees of the compliance and ethics program? What are their perceptions on whether or not that program is working? What is their overall sense of willingness to speak up? Are they, in fact, speaking up? What are they seeing that falls within observed and reported misconduct? To what extent are employees feeling pressure to achieve their business goals at the expense of potentially compromising the policies of their code of conduct? We review the law, we look at dimensions of organizational justice, we look at perceptions of one’s immediate manager, and how are employees thinking about their senior leadership team? And finally, how do they employees perceive their co-workers and their immediate environment? These constitute the Eight Pillars of Ethical Culture.
When we compare our survey data to the Eight Pillars, one of the first things that stood out to us is that when you look at the data after March 2020—which for a lot of people is when the pandemic timeframe really begins—many of the results we measure increased in terms of their overall perception. Employees really put more trust in their employers across just about every dimension that we looked at, in terms of the pre- and post-pandemic landscape. That is at a broad thematic level.
There is, of course, a lot of nuance in the details. If we really focus on one of our hotbed areas—the pillar observing and reporting misconduct—we see some really interesting results when we compare pre- and post-pandemic data. After the pandemic, the volume of misconduct that employees said they observed went down. However, when we asked those individuals who did in fact see something, if they raised their hand to say something, that proportion is also decreasing. So, we are seeing a decrease, at least from the eyes of the employees that we survey, that there is less misconduct that they believe is taking place, but those who are seeing something are also less are willing to come forward than they might have been before the pandemic. The questions remains, why? What is driving some of these different types of behavior in this environment?
Before we get to that, however, it is worth noting that when we looked at what types of misconduct folks are observing, just about every one of the different classifications of misconduct we measure all went down over the course of the pandemic. There is one category, however, that really skyrocketed over the last few years, and that is bullying. As the pre- and post-pandemic data showed, we saw a 13 percent jump in bullying misconduct claims. So that was one of the findings that really jumped out to us.
Let’s focus on the bullying piece for a moment. Can you talk about the rise in bullying claims, especially compared to how other forms of misconduct rose or fell during the pandemic? How much of an outlier is the bullying situation?
When you look at the 27 different types of misconduct that we measure, I believe 20 of them actually went down over the pandemic. Of the seven categories that increased, bullying was far and away the biggest one, at 13 points. The next highest category was “violations of health and safety policies,” and that only increased by a little more than a single percentage point. Within the margin of error, really. So that helps to put the bullying statistic into perspective, I think. Bullying went through the roof, and really is an outlier here. It’s pretty impressive.
Another interesting thing about this survey is the degree to which it breaks down data by generational cohorts—specifically, Boomers, Gen X, Millennials, Gen Z. What findings did that particular approach yield?
Some pretty exciting results came from looking at this data from a generational perspective. As a caveat to the audience, the age categories we group data into use generational terms that are very U.S.- centric, but the data itself comes from around the world. When organizations administer the survey and collaborate with us to measure their own culture, a lot of times they will indicate age ranges or age values, and those all get grouped under the similar classification. And then as part of our analysis, we apply more U.S.-centric terms, such as Gen X, Gen Z, Millennials, Boomers, and so on.
With that being said, what was interesting in the data is that several different dimensions jumped out. The one I will touch on one for now, and let folks dig into the report for some more information, is Generation Z, or employees among the youngest class of survey respondents by our definition, which is 25 years of age or younger. When looking at trends around an overall willingness to speak up, Generation Z employees are actually less likely to report than those in their older generational peer groups. They are 10 points less likely to report than their Generation X colleagues. Those who are just entering the workforce now are showing some reluctance to report misconduct, so we really dug into the data to figure out what is driving this.
What we are seeing is that Generation Z employees broadly seem to have a very good awareness of the concept of non retaliation, and there is decent faith behind how they feel their organization supports that policy. But when you look at the why behind Gen Z, and what they are thinking through in terms of not reporting misconduct, the same two responses that we see across other generations also come to the top. The first is the concern that if they raise their hand, they don’t think anything is really going to happen as a result. It is a lack of faith that something will be done about what has been reported. And the second is that there is an underlying fear of retaliation among those who say they observed misconduct but did not report it. There are some differences between generations around those two reasons, but they do represent a common thread across all generational classifications.
We also noticed that the younger an employee is within their organization, the stronger their perception is of their own reputation within their team. With Generation Z employees, reputation matters significantly more than any other generational classification. As a result, Generation Z employees are saying they are concerned about the reputational harm that reporting misconduct will cause to themselves, and to their team if they raise their hand and say something. That was one dimension of our findings that really jumped out. Those were some of the key generational differences that we saw, among others, when specifically examining the lens of speaking up and reporting misconduct.
This is the crux of it. To be candid, the way in which we measure these survey results within Ethisphere, we are blessed with the opportunity to work with some of the most forward-thinking, most developed, most integrity-focused companies in the world, including those who partner with us to measure their culture specifically.
The first recommendation is fairly obvious, but you’ve got to measure ethical culture. That expectation is coming down from the regulators themselves as something they are putting an increased focus on. In the Monaco memo, and some of Ken Polite’s comments in some of his speeches, making a culture of compliance is top of mind for these regulators. Measuring culture is something you need to be doing. You’ve got to put forward the resources. This has to become a priority as an ethics and compliance professional, to figure out what your employees thinking. These are your internal customers, right? Are they satisfied with the service you’re providing as part of the compliance team? Are they engaging with materials you’re providing? What is really their take on the services you are delivering as a compliance function across the organization?
The second recommendation is to look at the generational trends we are seeing come out of this report. To my mind, this data and some of the research we are seeing elsewhere suggests that this is really the tip of the proverbial iceberg. We are already seeing articles in The Wall Street Journal, and John Haight at NYU, Stern saying, “Look, there’s a crisis among Gen Z. They’ve been awash in this victimhood mentality. Social media has played a significant role in their general mental health and well-being. These Gen Z individuals are now transitioning out of college to the workforce, and as they do, that is bringing significant ramifications to compliance and ethics teams, as well as to businesses in general around the world. So I think the data that we are seeing today is only just starting to allude to what these changes could be. The research on generational culture that we are seeing from other sectors and from other sources is really indicating that what we are seeing in the 2023 Ethical Culture Report is part a much broader piece.
Businesses that have relatively young workforces—especially companies in the retail and food service industries—are probably seeing a lot of this already. If they are not taking this opportunity to speak with some of their compliance peers who are already having this experience, then they are not exactly preparing themselves for what is to come, potentially. This is a big change, culturally speaking. The data alludes to it, and we are seeing it in other research. So, be proactive and prepare your teams, your organization, and your compliance programs for this new generation of young folks coming into the workplace and be the change requires to communicate effectively with them.
The 2023 Ethical Culture Report— Lessons from the Pandemic: Accountability Reigns and Gen Z Refrains can be downloaded here. This interview originally appeared in video form as an episode of the Ethicast. To watch that episode, please click here.
This article is from the Winter 2023 issue of Ethisphere Magazine. To download a full PDF of the issue, click here.
Doug Allen is the Vice President of Data Strategy at Ethisphere, where he leads benchmarking, certification, and partnership efforts. Previously, Douglas spent six years providing compliance-and ethics-related advisory services, including developing compliance and ethics risk assessments, codes of conduct, corporate policies and procedures, and communication and training curriculum plans.