There’s No Accounting for Good Ethics…Or is There? Patricia J. Harned, Ph.D. Chief Executive Officer Ethics & Compliance Initiative

| ©2015 Ethics & Compliance Initiative

What Do We Mean by Ethics? Ethics = a decision that impacts another person Most decisions have an ethics component: o Procedures and controls o Accuracy of records o Management of errors o Meeting financial obligations o Transparency of financial statements o Funding or cutting programs o Employee supervision o Treatment of colleagues o Personal use of time & information

Questions?

| ©2015 Ethics & Compliance Initiative Presentation Plan Current State of Workplace Ethics Drivers of Good Conduct in Organizations Telltale Signs

| ©2015 Ethics & Compliance Initiative About ECI Leading the Movement for Responsible Organizations o New ideas grounded in research o Best practice community o Education and certification Comprised of: o Ethics Research Center o Ethics & Compliance Association o Ethics & Compliance Certification Institute

| ©2015 Ethics & Compliance Initiative Longitudinal, cross-sectional study Implemented eight times since 1994 Government data through 2007; 6,420 responses in 2013 Dual mode: Online and phone (including cellular) Oversampling for companies with 90K+ employees Data weighted by: collection mode; age, gender, and education of respondent; company size Sampling error: +/- 1.2 percent at 95% confidence level About the National Business Ethics Survey®

| ©2015 Ethics & Compliance Initiative The Current State of Workplace Ethics

| ©2015 Ethics & Compliance Initiative In 2010, 11% of federal employees observed illegal or wasteful activities in their agency. –35% did not report the activity –35% of incidents cost more than $100,000 “I can disclose a suspected violation…without fear of reprisal.” –20% disagreed/strongly disagreed Source: 2011, US Merit Systems Protection Board, Blowing the Whistle: Barriers to Federal Employees Making Disclosures Fraud, Waste & Abuse in the Public Sector

| ©2015 Ethics & Compliance Initiative 34% of US employees observed fraud, waste or abuse in their workplace during % observed some form of corruption. -Source: ERC’s 2013 National Business Ethics Survey™ Fraud, Waste & Abuse in the Public Sector

| ©2015 Ethics & Compliance Initiative Observed Misconduct -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative Who Commits Misconduct? 53% -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative Who Commits Misconduct? 60% -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative Questions?

| ©2015 Ethics & Compliance Initiative Drivers of Good Conduct

| ©2015 Ethics & Compliance Initiative #1 Awareness of Standards & Resources Industry Benchmark Data -Source: ERC’s National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative #1 Awareness of Standards & Resources -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative Questions?

| ©2015 Ethics & Compliance Initiative #2 Culture Most managers think of themselves as ethical. They are often perceived as ethically neutral or altogether unethical. Trevino, Hartman & Brown. (2000). California Management Review

| ©2015 Ethics & Compliance Initiative #2 Culture -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative #2 Culture -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative #3 Accountability

| ©2015 Ethics & Compliance Initiative Telltale Signs

| ©2015 Ethics & Compliance Initiative Signs of An Unhealthy Workplace Vast Majority of Misconduct Committed by Individual “Bad Apples” Strong Ethics Culture Weak Ethics Culture -Source: ERC’s 2013 National Business Ethics Survey™

| ©2015 Ethics & Compliance Initiative Strong economy Poor management practices Lack of awareness of standards & resources Employee feelings of pressure Rumors of retaliation Indicators of Ethics Risk “Listen to the whispers and you won’t have to hear the screams.” Cherokee Proverb

| ©2015 Ethics & Compliance Initiative Questions?

| ©2015 Ethics & Compliance Initiative Upcoming Resources from ECI National Business Ethics Survey® Reports:  Generational differences & ethics  Employee connection to culture (collective identity)  Gender Differences & Tone at the Top  National Business Ethics Survey® - Contracts Management Industry  National Business Ethics Survey® - Internal Auditors  Global Business Ethics Survey Benchmarking Group Reports:  Conflicts of Interest  Anti-corruption Programs  Working with Monitors  Regulatory Intelligence

| ©2015 Ethics & Compliance Initiative For More Information Pat Harned, Chief Executive Officer