SINGAPORE — A new report by ethics and compliance (E&C) company LRN Corporation has found that nearly a quarter (23%) of employees around the world agreed that “it is okay to break the rules if needed to get the job done,” and 14% said they had actually themselves “engaged in behavior that violated their company’s Code of Conduct or standards” in the past year.
Further, 22% of Gen Z respondents said they engaged in unethical conduct in the past year in the workplace, compared with just 9% of Boomers. The results suggest an inverse trend between this mindset and age, with Gen Z 2.5x more likely to agree with breaking the rules than Boomers.
The findings are included in LRN’s latest Benchmark of Ethical Culture Report, based on a comprehensive survey of over 8,500 employees at major organizations and corporations in 15 countries and from 13 different industries. The research found that Singapore scored relatively highly on ethical culture with a score of 82%, above the global and APAC averages of 80%.
Notably, companies with strong ethical cultures have lower rates of observed misconduct and report their observation at a rate 1.5x higher than those with weak cultures (93% compared to 63%). As companies can only address what they are aware of, this higher level of reporting represents a significant reduction in risk.
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 organization’s procedural justice system.
The research also probed employees’ perceptions of Artificial Intelligence (AI) 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 two times more receptive to the potential benefits of AI on their workplace and career opportunities.
It is generally accepted that culture impacts business results; LRN’s research quantifies that relationship. Companies with strong ethical cultures outperform by an average of 50% percentage points more than companies with weak ethical cultures on various traditional business metrics, including customer satisfaction, employee loyalty, competitiveness, innovation, and adaptability. This gap is significant in size and represents a meaningful increase from similar research conducted in 2021, which identified a 30%-point 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 2.6x higher than those with weak ethical cultures. These companies also outperform on business results and innovation at a rate of 2.3x and 2.2x higher.
Other notable findings from the report include:
- 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 · Executive and senior leaders are 2.6x 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
- A company’s ethical culture explained a significant proportion (41%) of the variation in an employee’s willingness to stay at their organization, outside of other factors such as compensation, title, or job responsibilities
“Our latest Benchmark of Ethical Culture report shows a clear and encouraging emphasis on reducing misconduct, with the majority of respondents able and willing to report instances of wrongdoing,” said Ty Francis, MBE, Chief Advisory Officer at LRN. “Although this result is positive, it’s also clear that there are several realities organizations need to address, from an evident lack of trust in the system of procedural justice and a worrying proportion of individuals, particularly among Gen Z, not adverse to rule-breaking. The generational divide in attitudes towards unethical conduct also needs consideration and attention, with emphasis on the importance of ethical conduct at all levels of an organization, from CEO to trainee.”
“For nearly three decades, LRN has maintained that business performance can only be achieved through the cultivation of an ethical corporate culture,” added Kevin Michielsen, CEO of LRN. “The report findings provide clear evidence of just how true that really is, with the data showing that ethical cultures perform better than those without. Strong ethical cultures also have a big impact on adaptability, a key quality for organizations in a highly complex and increasingly turbulent business environment.”
