ERC Survey: Workplace Misconduct and Recession Trends

Every company is coping with the effects of the recession in a different way. Some companies have been forced to layoff employees, while others are doing everything in their power to keep the staff they have and make sacrifices elsewhere.

Posted by Joe Gerard in Corruption, Ethics, Ethics & Compliance, Fraud, Hotlines, Human Resources, Whistleblower on March 3rd, 2010

Every company is coping with the effects of the recession in a different way. Some companies have been forced to layoff employees, while others are doing everything in their power to keep the staff they have and make sacrifices elsewhere. The 2009 National Business Ethics Survey conducted by the Ethics Resource Centre (ERC) was released in December. This week, the ERC published supplemental findings to the 2009 NBES- particularly regarding the effects of money saving tools used by companies during the recession and their impact on workplace misconduct. You can take a look at the results by clicking here- it’s a free download, you simply have to provide them with some basic contact information.

Money Saving Tactics:

The money saving tactics used in the survey consisted of:

  • Layoffs
  • Adjusted Work Schedules
  • Pay/ Benefit Cuts
  • Hiring Freezes
  • Plant Closures
  • Early Buyouts
  • Production Slowdowns

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Questions Answered:

The survey was used to answer questions such as:

  • Which money saving techniques result in the largest number of observed workplace misconducts?
  • Do the effects differ based on the size of the company?
  • Do the effects differ for private vs. publicly held companies?
  • Do managers at different levels face different effects from the actions?
  • Do the effects differ based on different groups/ ages of employees?

Overall Conclusions:

A reduction in compensation/ benefits is associated with a 43% increase in the percentage of observed workplace misconduct.

Compensation and benefit reductions, along with adjusted work schedules are all money saving methods that directly impact the personal finances and lives of employees. These three methods are linked to the more dramatic increases in misconduct when compared to the levels of misconduct reported from companies that used plant closures and layoffs to save money.  While employees were forced to sacrifice pay in order to a keep their jobs, many believe that the rise in misconduct is due to employees trying to “reclaim” what they feel they deserve.

Small businesses that have experienced layoffs soar to a 62% rate of observed misconduct, while large companies are at 59% .

The increase in misconduct levels is more dramatic in small businesses as opposed to large ones. Misconduct in small companies that have not yet faced layoffs is reported at 41%, compared to 56% in large companies that have not yet faced layoffs.

Rates of observed misconduct by first line supervisors is 74% or higher if any of the money savings tactics are implemented.

2/3 first line managers observe misconduct, a rate that is double that of companies that have not enabled any of these money saving methods. First line managers require proper training and support in order to effectively deal with the growing reports of misconduct that they are directly faced with.

Rates of observed misconduct among employees under the age of 29 is 66% when any of the money saving tactics are implemented.

Many younger employees lack loyalty to the companies that they work for, due to the fact that they still have many working years ahead of them and expect to move around to a few different companies before settling down.

Publicly traded companies are exposed to higher levels of observed misconduct, 58%, compared to 49% in privately held companies, when these money saving tactics are implemented.

When plant closures take place, employees in private companies are actually significantly more likely to observe misconduct, with a rate of 69% compared to 60% in public companies.


Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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