Only 4 in 10 Employees Report Unethical Behavior -- Here's How to Fix It

A recent Gallup analysis shows that only 40% of employees with knowledge of unethical behavior actually report it -- a rate seven percentage points lower than it was before the COVID-19 pandemic.

Historically, our research shows that employees overwhelmingly plan to report unethical behavior. In fact, a 2020 survey revealed that nine in 10 employees said they would report unethical behavior at work if they saw it in the future. But right now, only four in 10 actually do.

The gap between employees who say they will report and those who actually report is largest among individual contributors, but it holds true across people and project managers and even executive leaders.

Why it matters: Your organization may have its values on the wall or in the employee handbook, but that's no guarantee against unethical behavior and the silent observers who let it go unchallenged. Employees may be holding back information that could affect your brand, your likelihood of litigation and your employees' trust.

How Leaders Can Boost Ethics Reporting

Gallup has found one critical thing leaders can do to increase the rate that employees report unethical behavior: Build employees' confidence that leaders will do the right thing.

When employees strongly agree that, if they raised a concern about ethics or integrity, their employer would do what is right, their rate of reporting is 24 points higher than that of employees who do not strongly agree their employer would do what is right if they raised a concern.

What might explain this substantial increase in reporting? People are motivated to act when they are confident their actions will make a difference. Employees may be aware of improper behavior, but if they don't believe their voice matters or if they fear retribution, they are unlikely to speak up. Leaders can't just rely on rare "heroes" who are willing to speak up against the odds; they need to create an environment and culture that assures people that speaking up will lead to leadership action.

How Can Leaders Build Employee Confidence in Ethics?

To build ethical corporate cultures, leaders must make a serious commitment to building trust:

• Measure it. Ask your employees about their confidence that leaders will do what is right when presented with an ethics concern by including Gallup's GS5 on your next employee survey. Use these data as a baseline to define what's next for your organization's ethics and compliance strategy.
• Lead by example. What makes an employee strongly agree that they know you will do the right thing? They've seen you do it. Over and over again. They've witnessed firsthand your character through your long-term habit of ethical behavior. And be sure to share examples of decisions that were tough for leaders to make -- along with context, including how those decisions affected the organization long term.
• Bring ethics into the conversation. Followers pick up on what's important to you when you talk about it. Ethics shouldn't be implied or assumed -- they should be part of everyday business conversations. And accountability for ethics needs to be "the way we do business" up and down the leadership chain so that important concerns make it to top leaders.
• Prevent retaliation. You can't assure your employees enough when it comes to reporting unethical behavior. People have to know that somebody with authority -- a supervisor, a manager, an executive -- has their back. And they need to know there are also institutional processes and procedures to protect them.
• Define and communicate reporting procedures. Every employee needs to know reporting procedures by heart so that speaking up is seamless and intuitive. If you don't have procedures in place, now is the time to define them. If you already have procedures in place, now is the time to encourage all employees -- including leaders and managers -- to use them.