Are we really more ethical during a recession?

Developing a code of ethics and a stronger commitment to fostering an ethical business culture makes it easier for employees to make ethical decisions.

Posted by Joe Gerard in Ethics, Ethics & Compliance on February 2nd, 2010

In the 2009 Ethics Resource Centre National Business Ethics Survey (the report is free, but you’ll need to provide an email address), respondent results showed an increase in ethical culture strength from 53% to 62% since 2007.  Observations of misconduct have decreased and the ERC warns that we’re experiencing an “Ethics Bubble”.

We’re more ethical during tough times
During the recession and its slow recovery many have speculated that these trying times would bring out the worst in businesses and their employees as they struggle to meet unattainable targets.  It seems counter-intuitive that for the most part, the tough times have actually brought out the best in companies and their employees.  The ERC Survey noticed a trend between the current recession we’re starting to recover from and the time surrounding Enron’s collapse and 9/11.  The pattern observed was that during these hardships, ethics improved.  Conversely, when business was going well, the emphasis on ethics tended to be pushed aside.


Whistleblowing on the rise – but so is retaliation
The ERC Survey also noticed that reports of whistle-blowing had increased. When the employees of a company are encouraged to speak up about wrongdoings within the workplace, it makes it easier to report their findings because the feeling of being singled out by peers or being reprimanded by superiors is lessened.  The rise in whistle-blowing reports could also be due to the higher adoption rate of hotline services and other tools that have been integrated into the workplace to allow employees to report these problems anonymously.

However, even with the increase in whistle-blowing and internal reporting of problems, the survey noted that there has been a slight increase in the backlash against those who speak up.

Executives Can Set the Tone
In the drive to meet quarterly expectations, establishing a workplace that values ethical behavior from the CEO’s office to the mail room can be difficult.  Developing strong ethical conduct within an organization must be stressed as  crucial for the long-term success of the business.  Robert Noyce, the inventor of the silicon chip summed it up nicely when he said, “If ethics are poor at the top, that behavior is copied throughout the organization.”


Developing a code of ethics and a stronger commitment to fostering an ethical business culture makes it easier for employees to make ethical decisions.  When employees witness their peers acting in unethical ways, it makes their decisions more difficult because there’s no clear definition of what’s right and wrong, since it appears that any action is acceptable.

Sticking to the trend of being more ethical during tough times, a significant number of employees that participated in the 2009 ERC Survey reported that they felt that their workplace leaders were transparent about information regarding the position of the company, business decisions and employee well-being. With the recession conditions, leaders have been held to higher levels of accountability when making decisions, and their ethical actions have indeed been noticed by their employees.

Ongoing Training
Ethical practices need to be taught.  Every employee needs to gain a better understanding of expectations and be informed that senior management welcomes reports or misconduct so that the issues can be dealt with before they put the organization at risk. When all employees understand that they are held accountable for their actions, it makes it easier for them to think  harder about their actions and decisions, because they know questions will arise if a wrong decision is made.

When the bubble bursts…
Ethical practices should always be a focal point for management and employees.  It’s critical to understand where complaints are coming from and to identify if the same complaint keeps reoccurring so that you can take corrective action.  Having a centralized case management system where your team can collaborate makes it easier for your organization remain ethical regardless of the state of the economy. Many reports suggest that once the economy bounces back and businesses are back in action, the ethical progress that was made by many companies during the recession will be pushed aside.

Hopefully those who have made that assumption will be disappointed and will realize that business leaders and their employees have made a lasting commitment to a strong ethical culture… regardless of the state of the economy.

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.

Visit Website