Robert J. Rutland Center for Ethics

Ethics, Leadership and the CEO

Ethical Issues

Top 10 ethical issues facing the general business community 1.Improper accounting practices 2.Deceptive sales practices 3.Misleading the public or the media 4.Lying on reports/falsifying records 5.Dishonesty with customers 6.Conflicts of interest 7.Stealing/theft 8.Drug/alcohol abuse 9.Producing low quality or unsafe products 10.Unfair treatment of employees

Top 10 ethical issues facing your industry 1.Conflicts of interest(6) * 2.Stealing/theft(7) 3.Lying on reports/falsifying records(4) 4.Dishonesty with customers(5) 5.Drug/alcohol abuse(8) 6.Deceptive sales practices(2) 7.Improper accounting practices(1) 8.Lying/exaggerating on resumes and job applications(12) 9.Violations of privacy(18) 10.Bribes and kickbacks(11) * Compared to general business community rankings

Top Issues by Industry: Manufacturing * Compared to your industry rankings 1.Stealing/theft(2) * 2.Drug/alcohol abuse(5) 3.(tie) Conflicts of interest (1) (tie) Unfair treatment of suppliers(12) 4.(tie) Dishonesty with customers (4) (tie) Lying on reports/falsifying records(3) 5.Violating environmental regulations(17)

* Compared to your industry rankings 1.Conflicts of interest(1) * 2.Violations of privacy(9) 3.Lying on reports/falsifying records(3) 4.Stealing/theft(2) 5.Improper accounting practices(7) Top Issues by Industry: Health Care and Social Assistance

1.Conflicts of interest(1) * 2.Improper accounting practices(7) 3.(tie) Violations of privacy(9) (tie) Lying on reports/falsifying records (3) 4.(tie) Stealing/theft (2) (tie) Lying/exaggerating on resumes or job applications(8) 5.Dishonesty with customers(4) Top Issues by Industry: Banking, Finance and Insurance * Compared to your industry rankings

1.Conflicts of interest(1) * 2.Lying on reports/falsifying records (3) 3.Dishonesty with customers(4) 4.(tie) Deceptive sales practices(6) (tie) Predatory employment practices(18) Top Issues by Industry: Professional and Technical Services * Compared to your industry rankings

1.Conflicts of interest(1) * 2.(tie) Deceptive sales practices (6) (tie) Dishonesty with customers(4) 3.(tie) Misleading the public or the media (13) (tie) Lying/exaggerative on resumes and job applications(8) 4.(tie) Economic espionage/divulging trade secrets (19) (tie) Lying on reports/falsifying records(3) 5.Unfair treatment of suppliers(12) Top Issues by Industry: Information Services and Technology * Compared to your industry rankings

1.Stealing/theft(2) * 2.Drug and alcohol abuse(5) 3.Unfair treatment of suppliers(12) 4.(tie) Deceptive sales practices (6) (tie) Bribes and kickbacks(10) (tie) Dishonesty with customers(4) 5.Producing low quality or unsafe products(14) Top Issues by Industry: Construction * Compared to your industry rankings

The State of Ethics in Business

Mean = 3.42

Mean = 4.50

Mean = 3.14

Mean = 3.03

Mean = 3.00

No Yes All Companies

Yes No Public Companies Private Companies Affected by Sarbanes-Oxley, other recent regulations?

If YES, what have companies done since 2002: 1.Updated ethics or compliance policies33.0% 2.Created or strengthened ethics and compliance training Developed new communication strategies for managing conduct Hired new staff or restructured organization responsible for ethics Revised mission, vision or values statements Increased budget for ethics and compliance management 9.3

Of CEOs who say the new rules have affected how their companies manage ethics and compliance...  46 percent think Sarbanes-Oxley has improved the standard of ethical performance in corporate America.  BUT only 25 percent say it has improved the standard of ethical performance in their own business.  Almost 40 percent say it has not improved the standard of ethical performance in their own business.

Public Companies Private Companies

Public Companies Private Companies

Managing Ethics

What are the principal causes of unethical conduct among employees? 6. Inadequate training and communication 7. Indifference or low morale 8. Pressure to meet deadlines and schedules 9. Failure of the organization to establish an effective compliance program 10. Not understanding the company’s ethics policies

What are the principal causes of unethical conduct among employees? 1. Failure of the organization’s leadership in establishing ethical standards and culture 2. Personal greed 3. Weakness of personal character 4. Pressure to meet unrealistic performance or financial goals 5. Desire to advance career

No Yes All Companies

Under $10 million $10 - $50 million$50 - $250 million$250 - $1 billion Over $1 billion

All Companies No Yes

Under $10 million $10 - $50 million$50 - $250 million$250 - $1 billion Over $1 billion

No Yes All Companies

$10 - $50 million$50 - $250 million$250 - $1 billion Over $1 billion Under $10 million

All Companies Yes No

$10 - $50 million$50 - $250 million$250 - $1 billion Over $1 billion Under $10 million

What do CEOs say was the most important motivation for implementing a corporate ethics initiative? 1.Provide guidance for employee conduct 2.Ensure legal compliance 3.Improve/protect reputation 4.Be socially responsible 5. (tie) Improve profits/shareholder value (tie) Retain/motivate employees

CEO Ethics and Leadership

Mean = 4.87

Mean = 3.66

Mean = 3.35

Generally Higher Generally Lower About the Same

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