Values trump rules when it comes to corporate ethics and compliance

With economic and geopolitical headwinds looming large, companies and organizations need to pay even more – not less – attention to their ethics and compliance (E&C) efforts to ensure company resilience and optimal performance, indicates a new report from LRN Corporation.

What were the findings of the LRN Corporation research?

Stronger ethical cultures

The 2023 edition of LRN Corporation’s E&C Program Effectiveness Report is based on survey responses from more than 1,850 ethics and compliance professionals at companies and organizations around the world with at least 1,000 employees, across 26 industries and in 10 different countries – making it the largest and most comprehensive research of its kind.

According to the research, 85% of respondents report that their ethical cultures were stronger as a result of their experiences meeting the challenges of last year, with more than half of respondents giving their executives high marks for taking ethical considerations into account in decision-making. More widely, a majority of respondents (84%) said their organizations relied on values, rather than rules, to motivate their employees to “do the right thing.”

Other notable findings

• Only a quarter (25%) of respondents said that they plan to enhance their trade controls and sanctions training and just under half (45%) have strengthened risk controls in this area
• Most respondents (60%) felt that their board of directors actively ensures that executive misconduct is effectively addressed, with three-fifths reporting that their organization has formal requirements to take into account executives’ and employees’ ethical behavior in performance evaluations, promotion decisions, bonus awards and hiring for key control functions
• More than two-fifths (44%) of respondents say that their organization has disciplined or terminated the employment of a senior executive or top performer for unethical behavior in the past year – with three quarters (76%) of those respondents saying that the individual was subject to financial “claw back”