Common wisdom says managers set their firm’s ethical tone. But new research finds that employees are more likely to report wrongdoing in the workplace if they believe the entire firm has a zero-tolerance policy on misconduct.
"It takes a village– to create and sustain an ethical organizational culture," says Debra Shapiro, the Clarice Smith Professor of Management and Organization. By this she means the weighty decision to internally report unethical conduct is a social process and not simply a decision carried out inside one’s own head. “Employees who perceive managers–not co-workers–as their company’s ethical actors are likely to believe wrongdoing is tolerated in the organization and internally reporting it would be futile.”
This conclusion is drawn from a series of three studies by Shapiro and co-authors David Mayer and Samir Nurmohameda (University of Michigan), Linda Klebe Treviño (Pennsylvania State University), and Marshall Schminke (University of Central Florida).
About 200 new hires of a U.S.-based multinational indicated a greater likelihood of reporting internal misconduct if they perceived their supervisors as ethical, and even more so if they perceived their co-workers similarly.
The trend repeats in responses based on actual experiences of 6,500-plus employees from U.S.-based technology and management consulting firms. Moreover, “fear of retaliation” factored significantly among respondents perceiving their supervisors and/or colleagues as unethical.
Similar motivational dynamics for whistleblowing emerged from test subjects (working students at a Midwestern university) led to believe they were competing in virtual teams alongside cheating colleagues for status- and cash-based incentives.
The findings, Shapiro says, are significant for organizations looking to make employees feel secure in reporting wrongdoing internally instead of externally and risking the firm’s public image.
Organizations can establish a “village of ethical support” targeting employees at all levels and built on ethics training plus a zero-tolerance policy for misconduct. Non-supervisory employees should learn the importance of, and embrace, their role in supporting each other's ethical behavior.
Managers, meanwhile, need to protect whistleblowers from retaliation and reward them discreetly. Reporting channels via outside vendors, for example, can be instituted to protect anonymity.
A credible and effective zero-tolerance policy should clearly link wrongdoing and consequences — but not expose the reporter or wrongdoer. “Instead, draw attention to subsequent organization-wide improvements such as more accountability-enhancing procedures, reduced rates of budget overruns or reduced errors,” Shapiro says. “Celebrate these collectively and in ways that employees value.”