Many business leaders are failing to provide adequately for ethics compliance in their organizations, and small-business owners, are doing little -- in some cases, nothing at all -- to promote an ethical corporate culture, according to a recent survey of CEOs.
"There is a clear pattern where smaller firms are less likely to have ethics governance programs. The larger the firms are, the more likely they are to have a governance structure for ethics and diversity," says Bill Ross, Jr., associate professor of marketing in the Penn State Smeal College of Business. Ross was an adviser and interpreter of the 2002 Survey of Georgia CEOs on Business Ethics, conducted by The Southern Institute for Business and Professional Ethics. The Georgia Power Company, the Penn State Smeal College of Business, Lee Hecht Harrison, and The Atlanta Business Chronicle were sponsors of the survey. Ross also participated in an expert panel on the survey that took place on June 14 in Atlanta. Ross points out that CEOs of small companies may not be simply shirking their leadership duties. "Small firms may feel like they don't need a formal ethics program, or that they don't have the resources to provide it. A third explanation is that they feel like they can provide it informally," Ross said.
The survey sample consisted of 173 CEOs of large Georgia organizations (by revenue) who completed a 93-item, written questionnaire. The respondents represented a mix of industries. Among the findings: Eighty-seven of the 173 respondents agreed or strongly agreed with the statement "the primary social responsibility of business is to make a profit." And 82 agreed or strongly agreed "businesses are more likely to make ethical compromises during economic downturns." A resounding 99 percent of them said high ethical standards strengthen a company's competitive position in the long run; and 150 of the respondents strongly agreed with the statement, "The CEO should be the moral leader of the organization."
And when asked what were the most important causes of unethical conduct among employees in most organizations, 91 of the respondents said "failure of the organization's leadership in establishing ethical standards and culture" was a "very important reason." However, the second, third, and fourth most important causes were believed to be issues of greed, character flaws, and a desire for promotion. Organizational issues, such as performance or time pressures came in lower. This might suggest that organizations are not comfortable acknowledging the degree to which their policies encourage or do not suppress unethical behavior.
Only 10 percent of the respondents indicated their firm has a board-level ethics committee; and only 28 percent have an assigned ethics officer. Out of those respondents who indicated their firm has an ethics officer, 22 respondents indicated it was the CEO. The survey also gathered information on diversity issues. Only 16 percent of the 173 respondents indicated that their firms have an assigned diversity officer, despite the fact that 88 of the respondents noted they believed diversity in an employee group contributes positively to the bottom line. The pattern with respect to diversity is similar to the pattern with respect to ethics, acknowledgement of the importance of the issue but limited investment or non-investment in developing formal programs to respond to the issue.
The Southern Institute for Business and Professional Ethics provides timely programs and services that address the issues business, professional and community leaders face every day. Since 1993, it has been a resource for organizations and individuals seeking to enhance ethical performance and meet the difficult challenges of today's business world. Its mission is to raise awareness and understanding of ethics in business and professional life, to stimulate a productive community dialogue about ethical issues, values and responsibilities, and, in so doing, to contribute to the betterment of business and society.
Ross' research interests involve the application of behavioral decision theory and cognitive psychology to the examination of how individuals make decisions. His research specializes in the areas of ethical decision making, sales force management, and their intersection. He is also interested in buyer decision-making and behavior.
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