VideoAnother day, another scandal. Or so it seems since the Enron debacle broke. However, it's not over yet, say top corporate ethics officers, who anticipate many more scandals.
A majority of ethics officers expect that at least a half dozen more "major" business ethics scandals will emerge during the next 12 months; and some expect more than 20 such cases, according to a poll of nearly 100 senior ethics executives attending The Conference Board's annual Business Ethics Conference in May. "Major" is defined as events causing more than $200 million in lost shareholder value.
The majority of executives polled work in ethics/compliance, human resources and legal departments of their respective companies. More than 80 percent work for major for-profit companies; 18 percent in non-profit organizations.
What's more, a majority of the corporate ethics officers say that even ethics training would not have prevented the collapse of Enron. About 54 percent of those surveyed say that even if Enron's senior management had received extensive ethics training, it would have made little or no difference in preventing the scandal laden bankruptcy.
What most contributed to Enron collapse? The ethics officers most cited management's ethical lapses and collapse, followed by Enron's auditor Andersen, Enron's outside law firm, investment analysts, and government regulators, in that order.
"These findings show that an absence of ethical leadership and a culture of 'anything goes as long as it makes a buck' will prevail over even the best training, code of conduct or hotline, " said Steve Priest of Ethical Leadership Group, who conducted the survey, in a statement. "This emphasizes the critical importance of building integrity into the essence of the corporation."
Other survey findings:
- Fifty-four percent say that if Enron senior management had received ethics training, it would have made little or no difference in the outcome. Forty-five percent say that if they had received such training, "their practices probably would not have gone on for so long." Only 1 percent believes that if Enron senior management had received ethics training, "the whole rotten scandal would never have happened."
- Nearly 60 percent say their own board of directors is not engaged enough in ethics/compliance issues.
- When asked what happens to great performers who don't live up to their organization's ethics values, 23 percent say "we tolerate them. "Nearly 30 percent respond: "we coach them." Eighteen percent say: "we fire them." Eight percent say: "we promote them."
- Nearly 60 percent believe that their ethics/compliance program reduces the likelihood "quite a bit," or "a lot" that a major ethics scandal will place at their company.
- Fifty-seven percent say they have never engaged their board of directors in ethics/compliance training. Twenty-two percent say they engage their board of directors in such training once every few years. Seventeen percent say once a year.
- More than 60 percent say they engage their senior management in ethics/compliance training once a year or every few years. Twenty-three percent say they have never engaged their senior management in ethics/compliance training.
- More than 80 percent say they have a helpline/hotline to report concerns about ethics issues.
- But 56 percent say they never survey their employees to assess the effectiveness of ethics programs. Only 20 percent survey their employees once a year on the effectiveness of the programs.
- Fifty-four percent do not have ethics/compliance measurements in their performance appraisal systems.
Shifting the Health Care Burden
As health care premiums continue to rise, employers will increasingly shift the burden of costs to their employees. This is the overriding conclusion of a health care survey conducted by the UCLA Anderson Forecast that polled executives from 460 companies across the US.
A whopping 85 percent of those surveyed said their health care premiums rose by at least as much as 10 percent over the past plan year, according to Dr. Christopher Thornberg, senior economist with the UCLA Anderson Forecast. Twenty-five percent of the respondents saw their premiums rise by more than 20 percent.
"What's interesting about these results is that companies believe that the current premium health care increases are just the beginning of a longer trend," Thornberg said in a statement. "Specifically, 80 percent of the companies surveyed anticipate that premiums will continue to rise by another 10 percent, while one quarter believe that increases next year will be more than 20 percent."
Other findings from the survey:
- 27 percent of the companies reduced the level of benefits coverage.
- 41 percent increased premiums on coverage for dependents.
- 65.5 percent raised employee contributions to personal premiums.
- 75.5 percent raised co-payments or deductibles.
"The difference between the situation now compared to that in the late 1980s and early 1990s is that many employers are now simply passing on the increased healthcare costs to their employees," Thornberg commented. In fact, the companies that altered their plans this year are more likely to transfer rising health care costs to their employees in the future, he noted in the report. Forty-two percent of respondents from companies that did alter their plans believe it is likely that the company will revise its plan again in the future if premiums continue to rise.
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