Young employees are more likely to be corrupt

Many of the employees surveyed at all levels of the hierarchy are prepared to resort to unfair means for the sake of their careers and the supposed good of the company. This is the result of a study by the consulting firm EY stand out. 21% say they would act unethically for their own career advancement and higher pay, compared with 14% in Western Europe. 5% of all respondents can imagine giving false information to company management to improve their own career or pay, compared with 4% in Western Europe. 10% of all respondents would intentionally misrepresent financial figures to achieve predetermined goals (Western Europe 6%). A total of 17% (Western Europe 10%) of respondents would be tempted to make cash payments in order to obtain orders.

Distrust widespread

If the company is in great danger, many managers lose their inhibitions: 77% of managers would then justify unethical behavior. One in five would even falsify the business results if it meant the company could continue to exist. And one in three would justify cash payments to win or keep business.

Michael Faske, Head of Fraud Investigation & Dispute Services at EY, comments on the results: "The diesel affair, the Libor scandal, illegal price fixing or deliberately misdeclared meat; compliance breaches make the headlines time and again. The results of our survey show that unethical behavior and high levels of mistrust among colleagues are typical of today's workforce in large companies. This is especially true for executives and the youngest generation. It is true that the requirements of the regulatory authorities have grown steadily in the past, and companies themselves have also adopted strict compliance rules. However, in the perception within the companies and also externally, these rules do not change anything if they are circumvented by individual employees or even by the management."

Kickback: Young are more willing

Young professionals prefer collaborative work, don't dwell on details, pay attention to work-life balance, and also seem to engage in unethical behavior much more often: within the 25-34 age group, a much higher proportion than in any other age group is willing to justify unethical behavior to save the company or give their career a boost. One in four of the young respondents would justify offering bribes to win a new contract or continue existing ones. Of those over 45, only one in ten would do so.

In addition to a higher propensity to bribe, the younger generation also has little trust in their colleagues. They believe more strongly than any other age group that they would behave unethically for faster career advancement or more pay. And over two-thirds of young employees also believe their management would engage in unethical behavior in order for the company to continue to exist.

Companies and trainers challenged

"The results are worrisome. These young people are the bosses of tomorrow. If measures are not taken to set high ethical standards and address problematic behavior at all levels, unethical behavior will increase in the future. Companies need programs to motivate all employees to do the right thing. Intergenerational divides must be identified and overcome. Training and targeted awareness-raising are also important to encourage employees with concerns to speak up. But universities and training companies are also called upon to respond to these results in their training," says Faske.

The existing prevention programs at the companies do not seem to be working as desired: There is a marked difference between the hierarchical levels in the assessment of whether prevention programs are working. Almost half of the managers believe that the importance of ethical standards has been communicated frequently in the past two years. However, only 32% of the employees are of this opinion.

Respondents support punishment of those responsible

The business conduct of major international companies is under more intense scrutiny than ever before. The public is increasingly demanding that companies be held accountable. At the forefront of this development are the G20 countries, the OECD and the World Bank. Internationally networked regulatory authorities are doing their part.

The majority of respondents appear to be satisfied with this approach. For example, 77% support holding executives specifically accountable for misconduct. The survey also shows that 28% of respondents - 8 percentage points more than in 2015 - believe that regulations have a positive impact on ethical standards in their company. This is particularly true in emerging markets.

Whistleblowing not effectively anchored

Employees often do not know where to point out a suspicious person or are reluctant to report. More than half of the respondents said they were concerned about unethical behavior in their company. Nearly half of respondents have even considered resigning because of it.

However, whistleblowing is not effectively anchored: Only 21% of all respondents know how to contact their company's hotline. On the other hand, 73% said they would provide information to a third party such as a regulator or other authority if necessary, instead of reporting possible violations internally first and thus sparing their own company public criticism and a loss of trust.

Using technology in the fight against corruption

"Organizations need to leverage new technologies to identify and defend against internal and external threats of fraud and corruption. Insider threats are difficult to detect without collecting and analyzing various data. Companies can look for patterns of employee behavior that pose a potential risk. These might include irregularities in work schedules, attempted access to restricted work areas or the use of unauthorized external storage devices. In addition, digital technologies will also be used to detect and reduce fraud and corruption," Michael Faske continues.

However, the study reveals conflicting goals between privacy protection and security needs: 75% of the respondents stated that their company should monitor data sources such as e-mails or telephones. At the same time, 89% of respondents consider monitoring these data sources to be a violation of privacy.

"Around the world, many countries are reverting to protectionism, growth in once-hopeful emerging markets is falling short of expectations, military conflicts are slowing many companies down, and uncertainty is generally on the rise. Some managers are apparently tempted by this to resort to unfair means. But this is a very dangerous and by no means sustainable strategy. Violations can have financial consequences that threaten a company's existence and cause lasting damage to its reputation. On the contrary, the goal of a modern company that is successful in the long term must be to build trust and invest in loyal employees and stable customer relationships over the long term," concludes Michael Faske, commenting on the study results.

About the study

Between November 2016 and January 2017, a total of 4,100 interviews were conducted with employees in 41 countries in Western Europe (1,500, including 100 in Switzerland), Eastern Europe (1,700), the Middle East (500), India (100) and Africa (300). A selection of the largest companies in each country was included. Employees interviewed included senior executives, middle managers and other employees. Interviews were conducted anonymously in the local language.

Source: EY Switzerland