New research finds that a quarter of employees around the world said it was “OK to break the rules if needed to get the job done”, and Gen Z 2.5 times more likely than Boomers to be rule breakers.
A just-released report by ethics and compliance solutions provider LRN Corporation has found that nearly a quarter (23%) of employees around the world agreed that “it is OK to break the rules if needed to get the job done,” and 14% said they had actually themselves “engaged in behaviour that violated their company’s Code of Conduct or standards” in the past year.
Interestingly, 22% of Gen Z respondents said they engaged in unethical conduct in the past year in the workplace, compared with just 9% of Baby Boomers. The results suggest an inverse trend between this mindset and age, with Gen Z 2.5 times more likely to agree with breaking the rules than Boomers.
The findings are included in LRN’s latest Benchmark of Ethical Culture Report, which is based on a comprehensive survey of more than 8,500 employees at major organisations and corporations in 15 different countries, and from 13 different industries.
The research found that companies with strong ethical cultures have lower rates of observed misconduct and report their observation at a rate 1.5 times higher than those in companies with weak cultures (93% compared to 63%). As companies can only address that which they are aware of, this higher level of reporting represents a significant reduction in risk.
“Companies with strong ethical cultures outperform, by an average of around 50% percentage points more than companies with weak ethical cultures, on a variety of traditional business metrics including customer satisfaction, employee loyalty, competitiveness, innovation, and adaptability. “
Globally, one-third (33%) of respondents said they had observed misconduct or unethical behavior in the past year, with harassment, discrimination, conflicts of interest, and employee health and safety violations cited most frequently.
Of those, one-fifth (21%) didn’t report their observation because they didn’t think their company would do anything about their concern (36%) or handle it effectively (30%), or because they feared retaliation (36%). These trends overwhelmingly signal a lack of trust in the system of procedural justice within the organisation.
The research also probed employees’ perceptions of Artificial Intelligence and its place in work and on careers. While a slight majority believe AI will have a positive impact, employees who view their companies as adaptive and resilient are nearly 2 times more receptive to the potential benefits of Artificial Intelligence on their workplace and career opportunities.
Culture gap
It is generally accepted that culture impacts business results. Companies with strong ethical cultures outperform, by an average of around 50% percentage points more than companies with weak ethical cultures, on a variety of traditional business metrics including customer satisfaction, employee loyalty, competitiveness, innovation, and adaptability.
Not only is this gap significant in its size, it represents a meaningful increase from similar research conducted in 2021, which identified a 30% performance gap.
The performance gap is most pronounced when it comes to a company’s ability to adapt quickly to internal and external change (a critical determinant of resilience): the adaptability of companies with strong ethical cultures is rated 2.6 times higher than those from weak ethical cultures. These companies also outperform on business results and innovation at a rate 2.3 and 2.2 times higher.
A company’s ethical culture explained a significant proportion (41%) of the variation in an employees’ willingness to stay at their organisation, outside of other factors such as compensation, title, or job responsibilities.
Other findings
A large majority (79%) of employees who observed misconduct reported their observation, with most raising their concern to either their direct manager or another manager in the company (77% combined).
Of all ethical culture measures, psychological safety was the greatest predictor of whether employees would report misconduct they had observed.
Perhaps unsurprisingly, executive and senior leaders are 2.6 times more likely to indicate their company has a strong ethical culture than individual contributors and front-line employees, illustrating a stark leadership disconnect with the realities on the ground.
Hybrid employees have more positive perceptions of their company’s ethical culture than their fully in-office peers; they also observe misconduct at a lower rate, and report their observations at a higher rate.
