Avoiding retaliation for reported workplace misconduct is essential for companies and enforcement officials. Companies are accountable not just for their bad acts, but also for the cover up, including how they respond to allegations. A new survey of conduct in the US workplace by the Ethics and Compliance Initiative (ECI) has some bad news. Employees say that retaliation against whistleblowers is on the rise, doubling in the past four years. These disturbing results should motivate companies to (1) encourage candid internal discussions of what exactly constitutes retaliation (and what does not); (2) train managers to handle retaliation concerns and to avoid unintended acts of retaliation; and (3) ensure anti-retaliation programs are supported by a strong ethical culture.
The ECI Survey
Since 2000, ECI, a leading ethics and research organization for compliance professionals, has surveyed workplace conduct from the employees’ perspective. Their 2017 survey of more than 5,000 employees across the US has good and bad news.
The good news is that fewer employees reported witnessing misconduct that violated the law or their company’s ethical standards, coming close to historic lows. The number of employees observing misconduct fell to 47% in 2017, down from 51% in 2013. Further, reporting of suspected wrongdoing is at an historic high. Sixty-nine percent of employees reported the misconduct they observed. This is a 23% increase since the first ECI survey in 2000 and a 5% increase since 2013.
The bad news is that “more employees feel pressure to cut corners” than ever before; 16% in 2017 versus 13% in 2013 and 8% in 2009. ECI’s research shows that this pressure “creates an environment in which questionable business practices are almost twice as likely to be accepted.”
The “worst news” according to ECI is that little progress has occurred in implementing what they view as the most important strategy for mitigating wrongdoing – building a strong corporate culture. Only 21% of employees responding to the survey said that their company has a “strong ethical culture.” ECI found that “misconduct drops substantially when organizations have strong cultures in place, yet the number of organizations with strong cultures has not changed.”
The most dramatic negative results concern retaliation against employees who speak up. The rate of retaliation against employees for reporting misconduct has doubled since the last survey in 2013, from 22% to 44%. ECI found that the highest rate of retaliation (83%) occurs when the allegation involves corruption, such as accepting gifts or kickbacks or bribing public officials.
What Do The Results Mean?
ECI raises a red flag for companies, warning that “in light of the worsening of two key indicators (pressure and retaliation), along with the status quo of organizational culture, trouble may be ahead.”
The significant increase in experienced retaliation likely results from many factors, which vary company by company. One logical explanation is that the number of cases involving actual retaliation has in fact increased. This is consistent with the increase in “pressure” in organizations where employees feel encouraged to limit voices that raise concerns inconsistent with short-term business objectives. By addressing the pressure to cut corners and tolerate misconduct, companies may also reduce retaliation against those who report misconduct.
Another possible explanation is an increased awareness across society in general that retaliation occurs, that it is wrong, and that workers should feel empowered to complain when they experience retaliation. This is currently seen most significantly in the area of sexual misconduct. Employees may feel more comfortable speaking up and reporting that they experienced retaliation because of the increased prominence of these claims. This is consistent with ECI’s “good news” finding that workers are more comfortable reporting more suspected misconduct than ever before.
An issue related to the increased prominence of retaliation claims is the difficulty of finding a common understanding of what constitutes retaliation for reporting misconduct. Compliance professionals are aware of the difficulty some employees have distinguishing concerns relating to work performance from feelings of retaliation for speaking up about wrongdoing. Some of the increase reported by ECI may be due to the lack of a clearer definition of what constitutes retaliation.
A portion of the increase may result from unintended retaliation by managers. For example, a manager may not know how to interact with a subordinate who has raised a serious allegation. He may choose to ignore the employee, believing that will avoid the appearance of retaliation. The employee may experience the manager’s actions as exclusion from normal business activities, and therefore retaliation.
What Should Companies Do?
In light of these results, ECI suggests that even companies with established ethics and compliance programs should not take the status quo for granted. They urge companies to:
- Regularly ask employees about the pressure they feel and reinforce that performance without integrity is unacceptable;
- Raise the bar for their ethics and compliance programs, integrating them across all aspects of the business; and
- Reinforce the importance of culture among managers and provide additional support to areas where employees perceive cultural weaknesses.
Encouraging employees to avoid retaliation against their subordinates or peers who come forward with disturbing concerns is a difficult and complex task. Companies must have clear “no tolerance” policies prohibiting retaliation in any form. But this is not enough. Programs to avoid retaliation must recognize the realities of human behavior, including that retaliation often results from inadequate training of managers and unintended discrimination. Pressure to cut corners and the absence of a strong ethical culture in a company also undermine written policies on retaliation.
Here are some steps companies can take to address the increase in retaliation experienced by workers who speak up.
- Encourage internal discussions in work teams about what constitutes retaliation for speaking up. This is too important to leave to written policies alone. The interaction between a manager and his subordinates can reinforce the manager’s commitment to the company’s no tolerance for retaliation policy and allow employees to communicate how they might experience retaliation.
- Provide training to managers to interact with employees who have raised compliance concerns. The training should include a focus on avoiding unintended retaliation.
- Also, train managers to respond to retaliation complaints. Managers should communicate to employees in words and actions that these complaints are treated seriously, and quickly refer the matter to those authorized to investigate further.
- Understand how critical “employee voice” is in strengthening employees’ belief that their company has a strong ethical culture. The extent to which employees feel free to communicate upward about problems and issues, as well as business suggestions and ideas, has enormous implications for a company ethics and compliance program, and the company’s overall performance.
ECI’s suggestion based on historical findings and current indicators that “leaders brace for employee conduct to worsen in the days ahead” should be disturbing to corporate leaders and enforcement officials. Companies should understand these trends, and respond quickly.
 Ethics and Compliance Initiative, “The State of Ethics & Compliance in the Workplace,” March 2018 (see www.ethics.org/GBES).
 See generally Elizabeth W. Morrison, “Employee Voice Behavior: Integration and Directions for Future Research,” The Academy of Management Annals, June 2011.
Timothy J. Lindon is a Senior Fellow with the Program on Corporate Compliance and Enforcement. Previously, he was Vice President and Chief Compliance Officer for Philip Morris International Inc.
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