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The unwillingness of employees to report misconduct, even anonymously to corporate ethics offices or external hotlines, poses a continuing risk to companies, as I observed in my posting in January, "Dangerous Silence"

Some time afterwards, I had lunch with Norm Augustine, the retired chairman and CEO of Lockheed Martin, and we discussed that topic. He brought up a salient point, and I asked him to post it on our blog.

The Ethisphere Institute (http://ethisphere.com/influential/ ) recently compiled a list of the 100 Most Influential People in Business Ethics ranking executives' “influence” based upon their involvement in government rulemaking, company practices, corporate responsibility and sustainability efforts and many other things. The final list, released last month, is notable primarily because it includes a number of privacy protection advocates including Ethisphere’s top honoree, Neelie Kroes, the European Commissioner For Competition

This week, IBM released a study on Businesses Seeking Growth through Social Responsibility available at: www.ibm.com/gbs/csrstudy.

IBM surveyed more than 250 business leaders globally to gauge how deeply Corporate Social Responsibility (CSR) has penetrated the core of corporate strategies and operations to discover that two-thirds of them are focusing on CSR activities to create new revenue streams. However, IBM found fewer than one-quarter of those surveyed believe they understand their customers' and other stakeholders CSR expectations well. This should be an alarming finding in today’s economic environment when customer expectations - and clout - are an increasingly important business dynamic.

Law and Ethics

Many organizations have turned to their lawyers to ensure proper conduct by employees, only to have the U. S. Sentencing Commission redress the focus on law with a call to take into account the influence of the ethics and culture of an organization on its employees’ decision-making and conduct. It may be useful to ask, just what is the relationship between ethics and the law?

Prevent Misconduct? First, understand the causes: Why do companies spend so much time and money teaching their employees about laws, regulations and company policies? Is it because executives believe that serious misconduct is the result of ignorance of the rules? Or, is it because they want evidence with which to absolve themselves when employee misconduct occurs—it’s not their fault, they told employees the rules. Why do employees break the rules, anyway?

Employees won’t tell you about the misconduct they observe, because they don’t believe corrective action will happen, they don't trust the company to keep their report confidential, and they fear retaliation from management and other employees. Most companies respond to this by outsourcing the hotline service, in the hopes that employees, knowing that their identity is protected, will tell all. Unfortunately, this is the wrong answer to the wrong question.....

Why do employees continue to remain silent in the face of corporate ethical lapses?