Survey finds pandemic disruption poses risk to business ethics

90% of respondents surveyed during the crisis believe that disruption poses a risk to ethical business conduct.

As businesses start to look beyond the COVID-19 crisis, the EY Global Integrity Report 2020 reveals divisions on the repercussions for company ethics as a result of the pandemic.  The majority (90%) of respondents surveyed during the crisis believe that disruption, as a result of COVID-19, poses a risk to ethical business conduct, but there is a concerning disparity between boards, senior management and employees on the implications for compliance. 

While 43% of board members and 37% of senior managers surveyed believe the pandemic could lead to change and better business ethics, only 21% of junior employees appear to agree.

The survey highlights that signs of an integrity disconnect at different levels within organizations were evident even before the pandemic with more than half of board members (55%) believing management demonstrate professional integrity, but only 37% of junior employees sharing the same sentiment. 

In addition, over half of board members (55%) believe there are managers in their organization who would sacrifice integrity for short term gain.

Andrew Gordon, EY Global Forensic & Integrity Services Leader, says: “We are in the middle of the fastest transformation the global economy has ever experienced.  Extreme pressures can lead to moral and ethical decisions that organizations must respond to at speed and under increased scrutiny. Leaders must have confidence that their employees at all levels will act with integrity. 

“Yet, tone from the top is important, and we can clearly see that some employees do not have faith that their boards and senior leaders will be making the right choices. Now is the time to ensure that leaders act in a way that demonstrates to all their stakeholders a commitment to doing the right thing now, next and beyond.”

Even before the COVID-19 pandemic, the majority (53%) of junior employees were not very confident that their management abides by relevant laws, codes of conduct and industry regulations. 

In addition, 13% of all respondents appeared prepared to ignore ethical misconduct by third parties to boost their career or pay, with the figure rising to 20% among board members.

Four times more board members and senior management (12%) said they would be willing to accept a bribe, compared to junior employees (3%). Furthermore,14% of board directors and 15% of senior managers would be willing to mislead external parties such as regulators.

Some of these challenges have been magnified, as a direct result of the pandemic. Aside from worsening market conditions, 33% of respondents, surveyed at the height of the COVID-19 crisis in April, said that disruption to traditional working patterns and an increase in remote working is the top risk to the ethical conduct of their organization.

28% of respondents thought disruption to supply chains and reductions in employee benefits and compensation (24%) posed heightened risks to their company’s ethics. 

Gordon says: “Lack of trust and integrity was already a challenge before COVID-19, but the pandemic has heightened some of these risks. What is important now is how organizations deal with this risk, what action they take, and what frameworks they put in place.”

Despite these turbulent times, respondents to the main survey believe that operating with corporate integrity can create major benefits for organizations, including strengthening reputation (50%), attracting new customers (41%) and retaining talent (40%).

Gordon says: “As businesses begin to reframe their future, the pandemic must be a catalyst for change. Senior management must take the lead and ensure the right approach against unethical conduct by putting integrity at the center of operations and assessing their corporate culture and strength of compliance programs. Organizations that commit to doing the right thing, even when nobody is watching, will emerge from this pandemic stronger and more united.”

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