Library of Congress Cataloging-in-Publication Data
ISBN 978-0-916152-22-2
This report is published by the Ethics Resource Center (ERC). All content contained in
this report is for informational purposes only. The Ethics Resource Center cannot accept
responsibility for any errors or omissions or any liability resulting from the use or misuse
of any information presented in this report.
©2013 Ethics Resource Center.
All rights reserved. Printed in the United States of America.
The Ethics Resource Center (ERC) is America’s oldest nonprofit organization
devoted to independent research and the advancement of high ethical standards
and practices in public and private institutions. Since 1922, ERC has been a
resource for institutions committed to a strong ethical culture. ERC’s expertise
also informs the public dialogue on ethics and ethical behavior. ERC researchers
analyze current and emerging issues and produce new ideas and benchmarks
that matter – for the public trust.
For more information, please contact:
Ethics Resource Center
2345 Crystal Drive, Suite 201
Arlington, VA 22202
USA
Telephone: 703.647.2185
FAX: 703.647.2180
Website: http://www.ethics.org
Email: ethics@ethics.org
Sponsors
The National Business Ethics Survey®
of the U.S. Construction Industry
was conducted with the generous support of:
Sponsors
Construction Industry Ethics and Compliance Initiative
Reed Construction Data
American Society of Civil Engineers
American Road and Transportation Builders Association
The Associated General Contractors of America
The Travelers Indemnity Company
Bechtel Corporation
The findings and conclusions of this report are those of the Ethics Resource Center alone and do not represent the
views of the corporate and individual sponsors of this research project.
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Advisory Group
John P. Carpenter
Assistant General Counsel, Kiewit Corporation
George J. Fadool, P.E.
Chief Ethics and Compliance Officer, Skanska USA Inc.
Steven Ritchie
Vice President – Strategy and Business Development, Reed Construction Data
James M.F. Rohrbach
Vice President, F.A. Rohrbach, Inc.
Richard Schrader
President, RASchraderLLC
Chairman, (Retired) Parsons, Brinkerhoff, LLC
Member, Ethics Resource Center Board of Directors
Tom Smith
Deputy Executive Director & General Counsel, American Society of Civil Engineers
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About this Study
This study has been undertaken as a part of the National Business Ethics Survey® (NBES) body of
research, conducted by the Ethics Resource Center (ERC). NBES generates the U.S. benchmark on
ethical behavior in corporations. Findings represent the American workforce in the private sector.
ERC has fielded the biennial NBES since 1994, providing business leaders a snapshot of trends in
workplace ethics and an identification of the drivers that improve ethical workforce behavior. With
every report, ERC researchers identify the strategies that business leaders can adopt to strengthen the
ethics cultures of their businesses.
In this version of the study, ERC expanded its NBES research to include a look into the construction
industry. The survey is a representative sample of employees working in the non-residential construction
industry within the United States. Responses reflect the views of employees in organizations that serve
as general contractors, subcontractors and program managers in the industry. For more information
about sampling and resources, please see the methodology section.
To view past issues of the NBES and other related reports, please visit our website at
www.ethics.org/nbes.
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Foreword
The purpose of this survey is to establish a baseline for the state of ethics within the construction
industry, by gauging the extent to which employees report that the current practices of their employers
reflect a strong commitment to integrity.
Importantly, this survey has been undertaken with the input of leading construction companies and
related associations in the industry. ERC’s past research has shown that when industry leaders seek
to identify their emerging ethics and compliance issues, and when they work together to leverage the
findings to identify priorities and develop benchmarks by which to measure progress, they can and do
improve their conduct.
Based on our experience in working with the construction industry on this survey project, and given the
conversations we have witnessed among industry leaders about their plans to address the challenges
identified herein, ERC looks forward to seeing similar improvement in the construction industry in the
days ahead.
CASE EXAMPLE: COLLECTIVE EFFORTS IMPROVE CONDUCT
When a group of companies come together to identify and address their ethics issues, they can and do
make a difference. For example, in 2005 a group of 17 companies within a single industry agreed to
use ERC’s metrics to identify their ethics/compliance challenges. Once data was collected, the group
regularly met to compare results and discuss best practices. They continued to collect data within their
individual organizations and benchmarked against each other. Each company learned from their peers,
and together they raised the bar for their industry.
Over time, the industry was able to reduce perceived misconduct by 24 percent.
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Methodology
Since 1994, the Ethics Resource Center (ERC) has fielded the National Business Ethics Survey® (NBES), a
nationally representative survey of employees at all levels, to understand how they view ethics and compliance at work. The survey of the U.S. construction industry employees is a focused NBES study of general
contractors, subcontractors, and program managers who work in the non-residential construction industry.
The awareness and opinions of employees at all levels and in all functions within companies were captured
to reveal real-life views of what is happening within these businesses and the ethics risks they face.
Over the years, ERC has polled and reported findings on more than 23,000 employees through our National
Business Ethics Survey research. Between May 4 and September 15, 2012, individuals from the Reed Construction website were invited to participate in the study. Between September 4 and September 20, 2012,
individuals from panels managed by Precision Sample, LLC were invited. In total, 6,041 invitees arrived at
the survey welcome page. Review of the data revealed that 3,849 respondents did not answer all questions
or else did not meet the qualifying criteria for participation, leaving 2,192 cases for consideration. Of these
cases, nine responses lacked sufficient, useable data to be included in the analysis. These cases were removed from all analysis, meaning that 2,183 responsesa were from employees who met the following criteria.
Participants in the NBES of the Non-residential U.S. Construction Industry were 18 years of age or older; currently employed at least 20 hours per week for their primary employer; and working for a U.S.-based, nonresidential, construction company. Self-employed general contractors, project managers, and self-employed
sub-contractors working in an office were screened out from the survey. This was done in order to ensure
that data were reflective of individuals who were in organizations that potentially could have an ethics and
compliance program, or individuals who would be expected to behave according to ethics and compliance
programs maintained by an organization hiring or contracting with them.
Data were weighted according to three factors: Age, Education and Sex, according to methods established
by ERC in 2007, and per their representation in the civilian labor force defined by the US Census: Bureau of
Labor Statistics.
Additionally the data were weighted by Occupation (Subcontractor and General Contractor/ Project Manager).
Using information from the Standard Occupational Code, data were weighted by Subcontractors (comprising
73.1 percent of the construction Population) and General Contractors/Project Managers (Managers/First-line
Supervisors and Inspectors comprising 26.9 percent of the construction population). Individuals self-identified as members of these groups based on the following definitions:
a. After weighting to adjust for sex, age, education, and general contractor, subcontractor, program manager; this
number adjusted to 2,180 valid responses. Results for the survey are reported according to these weighting factors.
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Methodology
General Contractor or Prime Contractor: Responsible for the day-to-day oversight of the construction project and
management of vendors and trades. May or may not self-perform some portion of the work and may subcontract some
portion of the work.
Subcontractor: An individual or business that performs part or all of the obligations of another’s contract. Most often
contract with a General Contractor or Prime Contractor to perform a portion of the work.
Program Manager: Overall management of the conceptual, pre-construction, and post-construction phases of a project.
Based on the input of our Advisory Group, the survey sample consists of 43 percent who were identified as “craft” and
57 percent who self-identified as “non-craftb”; 78 percent of the sample identified as being part of a union, guild, or a
collective bargaining agreement. Among General Contractors, Subcontractors and Program Managers, craft and noncraft employees were distributed in the following ways.
Craft
Non-Craft
General Contractors
54%
46%
Subcontractors
60%
40%
Program Managers
20%
80%
In addition, 50 percent of the overall sample is employed by organizations with 2-24 employees, 35 percent by organizations with 25-499 employees, 9 percent by organizations with 500 or more employees, and 6 percent were selfemployed individuals.
Invitees participated via an online survey (using online panels and communities). All were assured that their individual
responses to survey questions would be confidential.
The sampling error of the findings presented in this report is +/- 2.1% at the 95 percent confidence level.
Survey questions and sampling methodology were established by ERC; data collection was managed by Reed Construction and Precision Sample, LLC, and Lock Media Services, Inc. Analysis by ERC was based upon a framework provided
by the Federal Sentencing Guidelines for Organizations, the Sarbanes-Oxley Act of 2002, and professional experience in
defining elements of formal programs, ethics culture, risk, and outcomes.
For a detailed explanation of methodology and the methodological limitations of this report and demographic information on survey participants, visit www.ethics.org.
b. “Craft” employees are those who work in trades such as Builder, Electrician, Painter, Remodeler, etc.; and “non-craft” are those who work
in functions such as Administration, Engineer, Program Manager, Superintendent etc. For a list of craft functions, please see the Appendix.
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Table of Contents
Section 1
Executive Summary
2
Section 2
Why Care About Business Ethics?
6
Blueprints for Success: Model of an Ethically Healthy Organization
10
Section 3
Overall Industry Findings
12
Section 4
Analysis by Company Type & Employee Group
20
Company Characteristics: How Company Size, Ownership, and Type of Work
Influence Ethics
20
Employee Characteristics: Exploring How Perceptions Differ Between Groups
28
Impact of Management Level
32
Section 5
Recommendations
36
Appendices
40
.. EXECUTIVE SUMMARY
1.
No industry in America is immune to ethics challenges. In truth, certain industries are
just inherently more “at risk” for facing ethics issues depending on the kind of work
they do. The construction industry is one such industry, especially given the contexts
in which companies conduct business, the safety risks that are inherent to their work,
and the performance pressures they face.
This risk is evident in the feedback provided by employees in the construction industry,
especially when compared to the U.S. national average. More construction employees
indicated that they feel pressure to compromise standards; they see more misconduct; and when they report wrongdoing to management, they are far more likely to
experience retaliation for having done so. At the same time, however, the construction
industry set a new standard for Corporate America with regard to employee reporting.
Employees in the construction industry reported wrongdoing more frequently than any
other group of employees in the 19 year history of the ERC’s National Business Ethics
Survey® research.
CONSTRUCTION INDUSTRY COMPARED TO U.S. AVERAGE*
* Pressure refers to the employees’ perceptions that they need to compromise the standards of their organization
or the law in order to do their job. Misconduct includes violations of the law or company standards that employees
have personally observed in their workplace within the past 12 months. Reporting refers to the percentage of
incidents of misconduct that were reported to management. Retaliation is retribution exacted by co-workers or
managers against an employee who has reported workplace misconduct.
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EXECUTIVE SUMMARY
One explanation for these findings is the nature of construction work itself. Given high expectations to finish a project on time and under budget, pressure is inherent to the work that
construction companies undertake. Not surprisingly, then, when employees say they feel pressured to compromise standards at work, the reasons are most often directly related to the job
itself (e.g., adhering to a project timeline, or keeping a project within budget). And 94 percent
of construction employees who felt pressure to compromise standards also observed misconduct in the past 12 months. This is an area for further investigation for industry leaders.
It is also the case that the ethics and compliance issues of the industry were not limited to work
in the construction company office. In fact, the “home office” was often a source of support.
Employees were more likely to observe misconduct on a project site than in their company’s
offices, but when workers reported the wrongdoing they witnessed, they were more likely to
report it to their supervisor at their company, not their manager on the job site. Not surprisingly,
then, when retaliation took place against the employee who reported, it tended to occur in the
company office where the report of misconduct was received.
Noticeable Efforts Being Made
Despite the challenges facing them, the construction industry has taken steps to encourage
ethical conduct – and their efforts have made a difference.
ERC’s research has shown that, regardless of the industry, when business leaders take steps
to encourage ethical conduct, positive outcomes result (see page 10). This is certainly true
of the construction industry; when asked about their companies’ efforts to encourage ethical
conduct, more than three out of four employees (80 percent) working in the industry deemed
it successful. This is higher than the U.S. average, where only 70 percent of employees had
such positive impressions.
Several important benefits stood out as a result of the efforts taken by these companies to
encourage ethical conduct. A predominance (85 percent) of employees say they consult their
company code when they need guidance regarding an ethics issue, and nearly eight in ten (78
percent) feel prepared to address ethics issues when they arise. Additionally, a similar percentage of employees in the industry say that their supervisors provide them feedback on their
conduct, and nearly eight in ten say that they can raise concerns to their managers without
fear of retaliation.
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EXECUTIVE SUMMARY
82%
85%
77%
78%
71%
77%
65%
80%
Culture in business,
which essentially
refers to “the way
things are done
around here,”
Consult company
standards and policies
when necessary
Feel prepared to address
ethics
issues that arise
Agree supervisor gives
positive feedback for
ethical behavior
n US Average
n Construction
is comprised of
everything from how
employees dress to
how they approach
customers and
interact with their
bosses.
Can raise concerns to
mgmt. without fear of
retaliation
Employees in the construction industry also have positive views of their companies’
ethics cultures, particularly with regard to the examples set by top management and
supervisors.
CONSTRUCTION EMPLOYEES ARE MORE POSITIVE ABOUT CULTURE & MANAGEMENT
80%
72%
60%
61%
62%
69%
61%
53%
55% 56%
40%
20%
Culture
Top
Management
Commitment
Supervisor
Commitment
Nonmanagement
Commitment
n US Average
n Construction
Employees’ views about ethics also varied based on the characteristics of their com-
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EXECUTIVE SUMMARY
pany, the context in which they work, and their own personal backgrounds. In most
cases, these groups displayed patterns that were different from the norm. Some key
insights from the survey included the following:
„„ The larger the company, the more likely employees were to face pressures to
compromise standards, observe misconduct, and experience retaliation for
reporting wrongdoing; yet
„„ In
the largest organizations, ethics and compliance programs were more
likely to be viewed as effective, and employees were more willing to report
wrongdoing.
„„ Employees
of general contracting companies were similarly more likely to
experience pressure to compromise standards, and they were also more
likely to experience retaliation than employees in other companies; yet
„„ Employees
in general contracting companies were also more likely to say
that their company has a strong ethics culture and an effective ethics and
compliance program in place.
„„ Three
types of employee groups stood out as being more at risk from an
ethics perspective. Union members, craft employees and middle managers experienced a heightened amount of pressure to compromise standards,
and they were also more likely to feel they had been retaliated against for
reporting wrongdoing. Yet all three groups were more likely to step forward
to report misconduct when they observed it.
Finally, consistent with other companies and industries throughout the United States,
there are steps that construction companies can take to improve the conduct of employees in their organizations. The results of this survey revealed that when construction companies build strong ethics cultures and they implement effective ethics and
compliance programs (based on the elements outlined in the US Federal Sentencing
Guidelines for Organizations), they have far better ethics outcomes than their peers.
Employees felt less pressure, observed less misconduct, engaged more on the job, and
they expressed more positive views of their company’s commitment to ethics.
Top managers and immediate supervisors are critical to the success of these ethics
and compliance efforts. When leaders make a concerted commitment to ethics in their
organization – beyond compliance – employees take notice and follow suit.
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..
2 . WHY CARE ABOUT BUSINESS ETHICS?
As many leaders in the construction industry already know, a commitment to workplace integrity is not only the right thing to do – it makes good business sense. But just
how do ethics and compliance efforts make a difference? This section is dedicated to
making the “business case” for ethics and compliance programs in the construction
industry.
The Risk
New ethics and compliance issues emerge every day for corporations, especially when
the nature of their work is both high-risk and highly-regulated. The construction industry is certainly no exception. Often tasked with complex projects with limited timelines and budgets, construction companies operate in a high-pressure environment.
Compliance with environmental, safety, and quality standards are constant demands.
And the project sites for construction work are carefully orchestrated symphonies of
general contractors, subcontractors, project managers and local tradespersons who
are sometimes collaborators, and sometimes competitors. Each is concerned about
the integrity of their work on the task at hand, but also concerned for the protection of
the business interests of their company. Given this complexity, watchdog groups have
observed that the construction industry is high risk for corruption, particularly because
they often are called upon to operate in unstable economic environments with difficult
regulatory oversight by sometimes unpredictable public officials.
Not surprisingly, given the tenuous environments in which they work, ethics and compliance issues do sometimes occur. Depending on the exact nature and frequency of
the misconduct, employees who break the rules hurt morale, reduce efficiency and
profitability, and expose the company to legal liability. Under U.S. law1, companies are
responsible for their employees’ actions. If the misconduct is serious enough, such
as a major fraud or rule-breaking that damages public safety, a construction company
can suffer significant reputational damage once problems become publicly known. In
some instances, significant misconduct can affect access to capital markets, drive
down stock price, and/or force a company to pay a premium for loans and debt financing. There is much to lose when wrongdoing takes place.
1. Per chapter 8 of the 2011 Federal Sentencing Guidelines Manual: “Organizations can act only
through agents and, under federal criminal law, generally are vicariously liable for offenses committee by their agents.” For additional information, see http://www.ussc.gov/Guidelines/2011_guidelines/Manual_HTML/8a1_1.htm
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WHY CARE ABOUT BUSINESS ETHICS?
WHY CARE ABOUT BUSINESS ETHICS?
Mitigating Risks
Fortunately, there are steps that companies can take to reduce the likelihood that
misconduct will occur.
In 1991, the U.S. Sentencing Commission presented the Federal Sentencing Guidelines for Organizations (FSGO), establishing for the first time a uniform framework for
punishing corporations that broke the law. It also offered incentives for companies to
establish effective ethics and compliance programs (and encouraged self-policing) at
every level of the organization.
According to the FSGO, in order for a company’s compliance and ethics program to be
considered effective, they must show an effort to implement seven steps recommended in the Guidelines. These seven steps have become the fundamental framework for
U.S. corporations.
OUTLINED IN CHAPTER EIGHT OF THE FSGO ARE SEVEN VITAL CRITERIA
FOR CREATING AN EFFECTIVE COMPLIANCE PROGRAM:
1
3
5
Compliance standards and procedures reasonably capable of reducing the prospect of criminal activity
Oversight by high-level personnel
Due care in delegating substantial discretionary authority
Effective communication and training to all levels of employees
Reasonable steps to achieve compliance, which include systems for monitoring, auditing, and
reporting suspected wrongdoing without fear of reprisal
Consistent enforcement of compliance standards including disciplinary mechanisms
7
2
4
6
Reasonable steps to respond to and prevent further similar offenses upon detection of a violation
These criteria are meant to be a guide, and do not provide specific details about implementation of these elements. The U.S. Sentencing
Commission explains they hope this will allow more flexibility for organizations, in that they can tailor their programs to fit their particular
situations. For more information, please see www.ussc.gov.
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WHY CARE ABOUT BUSINESS ETHICS?
Importantly, not only do the FSGO provide incentives for companies to establish ethics
and compliance programs, they actually make a difference. ERC’s research has shown
that when an organization follows the FSGO in implementing a program, they enjoy
several very positive outcomes.
BETTER OUTCOMES FOR THOSE WITH WELL-IMPLEMENTED PROGRAMS2
Pressure
25%
16%
62%
52%
Observed
Misconduct
Did NOT Report
DID Report
Experienced
Retaliation
56%
17%
44%
83%
36%
37%
n No Well-Implemented Program
n Well-Implemented Program
In other words, not only do the FSGO mitigate penalties if wrongdoing should
occur, an effective program based on the FSGO actually reduces the likelihood that
wrongdoing will take place at all.
2. Based on data from ERC’s 2011 National Business Ethics Survey® (NBES). Please see
www.ethics.org/nbes.
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WHY CARE ABOUT BUSINESS ETHICS?
State of Programs in the Construction Industry
Unfortunately, in the construction industry, fewer than half (45 percent) of employees in
this study indicated that their company has a strong, effective ethics and compliance
program that is in alignment with the FSGO.
FEWER THAN HALF BELIEVE THEIR COMPANY HAS A WELL-IMPLEMENTED
ETHICS & COMPLIANCE PROGRAM3
45%
50%
5%
n All four program elements
n Some program elements
n No program elements
Clearly, there is room for companies in the construction industry to strengthen their
ethics and compliance efforts. The business case is clear: an effective program not
only mitigates the consequences for wrongdoing that may occur, it reduces the likelihood that wrongdoing will take place.
Further evidence of the business case for ethics/compliance can be found in the Blueprints for Success section on the next pages.
3. ERC inquired about the presence of a limited number of program elements (e.g. supervisor
provides positive feedback for ethical behavior, employee feels prepared to handle ethics issues,
employee would not look the other way if witnessed questionable behavior by employer, employee
can raise concerns to management without fear of retaliation) that are generally accepted as a part
of the FSGO. Had ERC inquired about all of the metrics associated with an FSGO-based program, this
number would likely have been lower.
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BLUEPRINTS FOR SUCCESS:
Model of an Ethically Healthy Organization
Like every industry, America’s construction companies have been confronted with an array of ethics challenges, but their fate is not
carved in stone. By implementing effective, comprehensive ethics and compliance programs, companies can reduce their ethics risk
and prevent future issues, as well as resolve current issues they may be faced with.
A clear model for building an ethically healthy organization can be found in data from the 2011 NBES and past ERC research. If industry
leaders take the initiative to implement effective ethics and compliance programs, they will be on their way to a healthier place of
work. This means: fewer employees will feel pressure to compromise the standards of the organization, and even less will witness
misconduct at work. Environments that foster strong ethical cultures have also been shown to have lower rates of retaliation against
those who do report.
DRIVER 1
Well-Implemented
Program
DRIVER 2
Strong Ethical
Culture
OUTCOMES
Reduced Pressure
for Misconduct
Decrease in
Observed
Misconduct
Increased
Reporting of
Misconduct
Reduced
Retaliation for
Reporting
Where it fits
GOAL
Reduced
Ethics Risk
Reduced E
Where Effective Ethics & Compliance Programs Exist, Strong Ethical Culture Will Follow
Where it fits in the model
The message is not necessarily a new one from ERC, but it continues to be one of the most pressing – a
well-implemented ethics program is vital when a company is looking to promote a strong culture. Research4
shows that when employees feel their organizations have strong programs in place, they are more likely to
view their workplace as having a strong ethics culture.
A strong culture can be identified by many characteristics, including:
„„Employees feel comfortable approaching
management without fear
Drivers 1 - 2
„„Employees view management as trustworthy
„„Peers are committed to supporting one
another in doing right.
„„Supervisors reinforce ethical behavior
4. 2011 NBES® data show a significant difference in employee perception of strong culture based on the effectiveness of the program in place
at their company.
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As previously mentioned, employee behavior improves when a company’s culture is strong. There are fewer instances of observed
misconduct, as well. Where a company had strong ethical cultures, only 42 percent of employees observed one of the 34 types of
misconduct asked about in the survey. In stark contrast, companies with weak cultures, 94 percent of construction employees said
they witnessed misconduct. What truly drives an ethical culture is tone at the top, when ethical leadership is in place and commitment
to ethics and integrity is part of the normal dialogue.
FEWER OBSERVE MISCONDUCT IN STRONG ETHICAL CULTURES
Employees Who Observed at Least One of the 34 Types of Misconduct
94%
60%
54%
Weak
Weak Leaning
42%
Strong Leaning
Strong
Culture Strength
Programs + Culture = Reduced Ethics Risk
Where it fits in the model
It is a fairly simple equation, with results backed by research. Strong ethics programs paired with strong
ethics cultures produce substantially better outcomes than in weaker ethics environments. With the prospect to boast a more engaged workforce, less pressure and misconduct, higher employee reporting, and
fewer instances of retaliation, it’s clear why the industry wants to work toward this goal.
in the model
Ethics Risk
STRONG FSGO-BASED PROGRAMS IMPROVE WORKPLACE ETHICS5
39%
Pressure to
compromise standards
22%
89%
Observed misconduct
43%
31%
Observe retaliation
against reporters
Did NOT report
misconduct
All Drivers
17%
50%
3%
n Weak Program and Culture
n Strong Program and Culture
5. Based on data from ERC’s 2011 National Business Ethics Survey® (NBES). Please see www.ethics.org/nbes.
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.. OVERALL CONSTRUCTION INDUSTRY FINDINGS
3.
Employees in the construction industry see both positive signs and areas for growth
when it comes to ethics and compliance in their workplaces. In this survey, ERC
gathered information around several key metrics that our research has historically
45
shown as being critical metrics for the ethics of workplaces:
„„ Pressure to compromise standards or the law in order to do one’s job;
„„ Observed
misconduct – either a violation of company standards or the law
within the past 12 months at work (either in a corporate office or on a job site);
„„ Reporting misconduct that has been observed to management or another source;
„„ Retaliation for having reported misconduct to management.
In this section, each of these metrics will be considered in turn, providing results for
the overall construction industry.
Pressure to Compromise Standards
ERC’s NBES research has consistently shown a strong relationship between pressure
and observed misconduct6. In our studies of employees across the U.S., more than
nine out of ten (93 percent) of those who perceived pressure also said that they witnessed misconduct where they worked.
The same finding was true for the construction industry. Of the construction employees who reported feeling pressure, 94 percent claimed to have observed some form
of misconduct. Of those who did not feel pressure, 45 percent observed misconduct.
6. Based on data from ERC’s 2005, 2007, 2009 and 2011 National Business Ethics Survey® (NBES).
Please see www.ethics.org/nbes.
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
EMPLOYEES WHO FEEL PRESSURE ARE FAR MORE LIKELY TO
OBSERVE MISCONDUCT
55%
6%
Did NOT Feel
Pressure
Felt Pressure to
Compromise
Standards
45%
94%
n Did NOT Observe Misconduct in the Past 12 Months
n Observed Misconduct in the Past 12 Months
What’s concerning about this metric for the industry is that the pressure rate for employees in construction is much higher than the average for U.S. workers. In the U.S.
overall, 13 percent of employees report feeling some type of pressure to compromise
standards. Among construction employees, the number rose to 18 percent.
Pressure comes from a variety of sources. Among the U.S. population of employees,
sources of pressure are most often internal, either to the employee or to circumstances
taking place within an organization (e.g. a desire for personal financial success, or efforts to save one’s job). Construction employees, however, were most likely to indicate
that their sources of pressure were the very nature of the job itself (e.g. adherence to a
project timeline, or pressure to stay within budget). This is perhaps an indicator of the
significant pressure that is characteristic of the work undertaken by the construction
industry.
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
RANKING OF SOURCES OF PRESSURE BY INTENSITY
Most to least
1
Adhering to a project timeline
2
Trying to keep a project on budget
3
Meeting your personal financial obligations
4
Ensuring the financial stability & success of your
company
5
Keeping your job*
6
Wanting to make your boss look good
7
Advancing your career*
8
Committing safety violations
9
Ignoring wrongdoing you witness
10
Violating the law
The list above shows specific sources of pressure felt by employees in the construction
industry. The items marked with the asterisk “*” were asked about in three surveys
conducted by ERC: both the NBES of the Construction Industry (NBES-CI) and NBES
of Fortune 500® companies (NBES-F500), as well as the main report, NBES 2011. If
one were to compare these specific sources of pressure, in every case the NBES-CI
pressure was deemed to be more intense than for the US overall (NBES 2011), but less
intense than the Fortune 500® companies.
Importantly, these are not merely pressures to perform – which can arguably be good
motivators for employee engagement and high quality. Rather, employees indicated
that the above were pressures to compromise their company’s standards or the law
in order to do the job. In other words, it may well be that the highly-pressurized environment that is inherent to the construction industry may be so intense that it leads
employees to consider compromising standards.
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
Observed Misconduct
As noted in Section 2 of this report, a construction company’s greatest ethics risk is
misconduct (violations of the law or company standards) that actually take place in the
office or on the job site. Unfortunately, employees in this study revealed that observed
misconduct is more commonplace in the construction industry than it is in other corporations across the U.S.
More than half of employees in the construction industry (53 percent) observed some
form of misconduct in the past 12 months. Most of the employees who witnessed
misconduct witnessed one of the types on a project site.
MORE MISCONDUCT IS WITNESSED AT PROJECT SITES
43%
Project Site
31%
Company Office
26%
Project Site &
Company Office
The three most common forms of misconduct that employees said they observed were
abusive or intimidating behavior (29 percent), conflicts of interest (23 percent), and
failure to correct health and safety violations (24 percent). Please see the Appendix for
the complete list of misconduct observed by employees in the industry.
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
Employee Reporting
Nearly
1/3
of those who
observed misconduct
and
chose to report only
reported once.
Despite the fact that levels of misconduct are higher in the construction industry, it is
noteworthy that so too are rates of employee reporting of wrongdoing that is observed.
In fact, the construction industry sets a new standard for employee reporting – an impressive 74 percent of construction employees reported observed misconduct, compared to the U.S. average of 65 percent. All of the 34 types of misconduct measured
in this study were reported by at least two out of three employees who observed them.
Importantly, some of the more frequently observed types of misconduct were also
some of the least-often reported incidents. Accepting inappropriate gifts or kickbacks
from suppliers or vendors, improper hiring practices, and discrimination against employees were least likely to be reported to management (each with 69 percent of
employees reporting their observation). For a complete list of reported misconduct,
please see the Appendix.
As to where employees report, supervisors are “the first line of defense.” More than
four out of ten employees (44 percent) reported observed wrongdoing directly to their
supervisor. Nearly one in three reporters (32 percent) only reported misconduct one
time, but among those who did seek to report again, one in four (25 percent) went to
their immediate supervisor to do so.
EMPLOYEES REPORT TO SUPERVISORS FIRST
12%
8%
30%
8%
9%
14%
9%
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11%
n
n
n
n
n
n
n
n
Your supervisor at your company
Your supervisor from the GC at the job site
Foreman at the job site
Hotline for the General Contractor
Site Superintendent
Higher management at your company
Hotline at my company
All Others Combined (individually less than 5%)
OVERALL CONSTRUCTION INDUSTRY FINDINGS
Interestingly, employees in the construction industry said that they rarely take their
concerns outside their own company. Only one percent of reports were made to someone outside the organization, even lower than the national external reporting rate of
three percent. This is good news; it means that management is given the first opportunity to handle concerns. It also speaks to employees’ confidence in their company’s
reporting systems.
Retaliation Against Employees Who Report Wrongdoing
The very positive trend in employee reporting could very well be in jeopardy in the future. Unfortunately, after construction employees report misconduct, they indicate that
they are very likely to experience retaliation for having done so. ERC’s research has
shown that when employees experience retaliation (or perceive that they could be retaliated against) for reporting, they are far less likely to report wrongdoing again in the
future7. For that reason, the construction rates of retaliation are an important concern.
Overall, 37 percent of construction employees said that they experienced retaliation
for having report misconduct, compared to 22 percent of employees across the U.S.
overall. The retaliation that takes place is equally likely to take place on a job site or
in company offices.
RETALIATION IS ABOUT AS LIKELY TO HAPPEN AT
COMPANY OFFICES AS ON PROJECT SITES
17%
40%
Both on a project
site and at or from
company offices
By workers or
management at or from
company offices
43%
By workers or
management on a
project site
7. See Retaliation: When Whistleblowers Become Victims, published by Ethics Resource Center,
available at www.ethics.org.
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
Retaliation against reporters has a profound impact on both the victim and the company, whether it is simply an errant perception (like being passed over for a promotion
that one would not have received anyway), or an experience of explicit victimization
(like receiving harassing calls or emails).
When retaliation occurs, companies have several new problems. First, a new form of
misconduct has been observed and a new victim emerges – the whistleblower. Second, retribution against the reporter can create an environment that is detrimental to
the organization.
In the construction industry, employees who experienced retaliation were far more
likely to say that they would look the other way if they saw their employer doing something questionable.
RETALIATION ERODES EMPLOYEE CONCERN FOR THE COMPANY
22%
29%
17%
49%
30%
53%
I WOULD look the other way
Indifferent
I would NOT look the other way
n Did NOT Experience Retaliation
n Experienced Retaliation
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OVERALL CONSTRUCTION INDUSTRY FINDINGS
Retaliation also causes a decline in long-term commitment to the company. Almost
one in three construction employees who experienced retaliation said that they plan to
leave their company within two years. By comparison, 71 percent of those who did not
experience retaliation plan to stay with their employer for more than five years.
RETALIATION WEAKENS LONG-TERM COMMITMENT
80%
80%
60%
71%
44%
24%
40%
12%
20%
More than 5 Years
3 to 5 Years
19%
7%
1 to 2 Years
10% 13%
Less than 1 Year
n Did NOT Experience Retaliation
n Experienced Retaliation
For a list of specific types of retaliation experienced by construction employees, please
see the Appendix.
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..
4.
ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Employees’ views about ethics often vary based on the characteristics of their company, the context in which they work, and their own personal backgrounds. This is
certainly true in the construction industry. In this section, we highlight the company
types and employee groups that stood out in terms of their unique views about workplace conduct.
Company Characteristics: How Company Size, Ownership, and Type of Work
Influence Ethics
Certainly, not all construction companies are alike. In fact, company size and their status as either publicly-traded or privately-held were linked to the views that employees
expressed.
Company Size Makes a Difference
In the construction industry, ethics challenges increase along with company size. For
instance, pressure to compromise standards becomes more prevalent as organization
size increases. In the largest companies, 40 percent of employees reported feeling this
pressure, compared to only 12 percent at the smallest companies. Misconduct rates
and retaliation against reporters also followed this pattern. Furthermore, employee
engagement (job satisfaction and contribution) declines as company size increases.
40%
22%
12%
Pressure to
Compromise Standsards
75%
57%
51%
Observed
Misconduct
(1 of 34)
62%
42%
25%
Retaliation
Against Reporters
83%
86%
89%
Employee
Engagement
n 2 - 24 Employees
n 25 - 499 Employees
n 500+ Employees
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
What is surprising, given these trends in larger construction companies, is the fact that
despite their greater exposure to pressure and misconduct, employees in larger organizations were also slightly more likely to say positive things about their employer’s
efforts to implement an effective ethics and compliance program. And despite their
lessened levels of engagement with their jobs, employees in larger organizations were
more likely to step forward to report wrongdoing when they saw it. This is a trend that
is opposite from the normal pattern; with increased misconduct, higher retaliation and
decreased engagement, the average U.S. employee is generally less likely to say positive things about their employers’ ethics program, and they are far less likely to report
misconduct.
PROGRAM EFFECTIVENESS AND REPORTING INCREASE WITH COMPANY SIZE
100%
80%
60%
79%
81%
72%
69% 70%
78%
40%
20%
n 2 - 24 Employees
n 25 - 499 Employees
n 500+ Employees
Program
Effectiveness
Reporting of
Observed Misconduct
Another indicator of the effectiveness of their programs is the positive view of culture
in large organizations. Almost three out of four (73 percent) have a positive opinion of
top management’s commitment to acting with integrity and encouraging adherence to
company standards of conduct. Additionally, two out of three construction employees
(66 percent) in the largest companies believe that their company as a whole is committed to promoting ethical conduct. These findings mirror smaller construction organizations, where perceptions of leadership are also strong (65 percent and 75 percent
respectively).
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Publicly-Traded Companies Face Elevated Ethics Risk
Publicly-traded companies in the construction industry follow a pattern that is similar
to that of larger organizations. Employees in public construction companies are significantly more likely than their peers in privately-held organizations to feel pressure
to compromise standards, to observe misconduct, and to experience retaliation for
reporting wrongdoing.
EMPLOYEES FACE GREATER ETHICS CHALLENGES IN PUBLIC
CONSTRUCTION COMPANIES
80%
69%
68%
60%
53%
44%
40%
28%
20%
14%
Pressure to
Compromise
Standards
Observed
Misconduct
(1 of 34)
Retaliation
Against
Reporters
n Privately-Held Company
n Publicly-Traded Company
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Also similar to patterns displayed by employees in larger organizations, employees at
publicly-traded organizations are more likely than their private counterparts to indicate
that employees at all levels are committed to ethics and workplace integrity.
PUBLIC COMPANY EMPLOYEES MORE POSITIVE ABOUT COLLEAGUES’ ETHICS
80%
60%
71%
71%
79%
62%
69%
76%
56%
64%
40%
20%
Overall
Ethics
Culture
Top
Management
Commitment
Supervisor
Commitment
Coworker
Commitment
n Privately-Held Company
n Publicly-Traded Company
Additionally, more than four of five employees (81 percent) in publicly-traded companies report misconduct they observe, compared to 67 percent of employees who
observe wrongdoing in private companies.
Employees in public construction companies also stood out in that they tended to
express a greater tolerance for conduct that could be considered questionable, based
on typical company standards and other regulations. When asked about 12 different
situations that are considered “grey areas” with regard to corporate standards, employees in public companies were more likely to indicate that questionable behaviors
were acceptable.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
NBES-CI
OVERALL
Publiclytraded
company
Privatelyheld
company
Buy personal items with your company
credit card as long as you pay it back
18%
32%
16%
Call in sick when you are not
12%
26%
9%
Fudge your time sheet if you leave a
few minutes early
9%
19%
8%
Borrow tools or equipment from a
jobsite or your company
29%
19%
32%
Take leftover materials from a jobsite
19%
22%
19%
Take on smaller construction jobs on
the side for pay
41%
36%
41%
Adjust time records to stay within
contract requirements
7%
21%
5%
Claim up to expense report caps
although you did not spend the money
5%
13%
4%
Badmouth (talk inappropriately about)
a competitor in a bidding situation
8%
19%
7%
Share project blueprints or details
with a third party (someone who is not
affiliated with the company or project)
11%
28%
8%
Moonlight for non-company
construction projects
27%
32%
26%
Select higher cost options (e.g. travel
or lodging) if the company is paying for
them
12%
27%
10%
Acceptable Behaviors
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Finally, a staggering 93 percent of publicly-traded construction industry workers indicated that they feel engaged in their work; even higher than the impressive 87 percent
of employees in private organizations who say that they are engaged on the job.
General Contractors Have More Challenging Experiences, But Feel Better
Prepared
Employees differed in their views based on the type of contracts their company undertakes. These contract roles included:
„„ General contractor or prime contractor:
responsible for the day-to-day oversight of the construction project and management of vendors and trades.
May or may not self-perform some portion of the work and may subcontract
some portion of the work.
„„ Subcontractor:
An individual or business that performs part or all of the obligations of another’s contract. Most often contract with a General Contractor
of Prime Contractor to perform a portion of the work.
„„ Program Manager:
Overall management of the conceptual, pre-construction,
and post-construction phases of a project.
When it comes to pressure to compromise standards and retaliation, employees in
general contracting organizations were most likely to indicate that they experienced
challenge.
PRESSURE & RETALIATION HIGHER AMONG GENERAL CONTRACTORS
Pressure
25%
17%
13%
49%
Retaliation
34%
29%
n General Contractor
n Subcontractor
n Program Manager
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Additionally, employees in general contracting companies are slightly more likely to
say that their companies have strong ethics cultures and effective ethics and compliance programs.
MORE GCS THAN SUBCONTRACTORS BELIEVE THEY HAVE
STRONG CULTURES AND EFFECTIVE PROGRAMS
62% General Contractor or Prime Contractor
57% Subcontractor
59% Program Manager
Strong Program Effectiveness & Strong Culture
Challenges were not limited to general contracting organizations, however. Employees in subcontracting companies tended to express more negative views about their
managers, particularly when it comes to the extent to which their supervisors and top
managers talk about the importance of ethics and encourage ethical conduct within
the organization. Fewer subcontractors also believe that their coworkers model and
promote ethics than employees in general contracting organizations and among program managers.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
SUBCONTRACTORS ARE LESS LIKELY TO PERCEIVE SPECIFIC ETHICAL ACTIONS
80%
60%
75%
72%
59%
73%
73%
68%
72%
60%
54%
40%
20%
Talking About Ethics
Encouragement
of Ethical Conduct
Modeling Ethical
Conduct
n General Contractor
n Subcontractor
n Program Manager
What made Program Managers distinct is that they are less likely to feel engaged on
the job, and they do not feel valued within their organizations. This group is also most
likely to indicate that they are fearful about raising concerns to management.
SIGNIFICANTLY FEWER PROGRAM MANAGERS ARE ENGAGED, FEEL VALUED,
AND FEEL THEY CAN APPROACH MANAGEMENT WITHOUT FEAR
100%
80%
88% 88%
77%
60%
81% 81%
75% 77%
73%
64%
40%
20%
Engaged
Feel Valued
No Fear of Approaching
Management
n General Contractor
n Subcontractor
n Program Manager
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Employee Characteristics: Exploring How Perceptions Differ Between Groups
Trends among employee groups are also important to explore. Certain groups stand
out as being at-risk with regard to pressure and noncompliance. Others display exemplary commitments to integrity despite challenging circumstances.
Many Union Members Report Misconduct, Despite Negative Experiences
REPORTED
MISCONDUCT &
EXPERIENCED
RETALIATION
Union
78% 55%
Non-Union
68% 29%
n Reporting
n Retaliation
Unions emerged as another important employee work group in this study. Unionized
construction employees indicated that they have significantly less positive workplace
ethics experiences. By comparison to their non-union peers, unionized employees are
almost three times more likely to experience pressure to compromise workplace standards (35 percent vs. 12 percent). Union members were also significantly more likely
than non-union members to observe misconduct (69 percent vs. 50 percent).
Nonetheless, the vast majority of union employees report misconduct when they observe it. Nearly four out of five (78 percent) of union members reported wrongdoing;
10 percentage points higher than the non-union rate.8
Unfortunately, union employees are not rewarded for their good acts when they report misconduct. A startling 55 percent of union members who reported misconduct
indicated that they experienced retaliation as a result; far higher than the non-union
retaliation rate of 29 percent.
The differences in specific forms of retaliation union members experienced were also
disconcerting. Employees in unions experienced more forms of retaliation than nonunion employees, and they reported experiencing more extreme types of retaliation as
well. For instance, 26 percent of non-union employees reported being verbally abused
by management after reporting misconduct, compared to over half of union employees
(52 percent). Only nine percent of non-union workers said that they were physically
harmed for making a report, whereas 41 percent of union workers said that they had
been harmed physically.
8. Percentage points = the difference between the union and non-union results. In this case regarding reporting misconduct, 78 percent minus 68 percent equals a ten percentage point difference.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
NON-UNION
UNION
Experienced Retaliation
29%
55%
Cold Shoulder
70%
61%
Excluded
31%
59%
Not Advanced
31%
55%
Verbal Abuse by Management
26%
52%
Unfavorable Work Assignments
30%
49%
Job Threatened
12%
49%
Verbal Abuse by Peers
27%
49%
Demoted
18%
45%
Job Shifted
16%
44%
Lost Job
24%
43%
Physical Harm
9%
41%
Verbal Abuse by Workers at
Another Company
19%
40%
Other Form of Retaliation
12%
34%
Craft/Non-Craft Work Type Plays a Role in Employees’ Ethics Experiences
Another factor impacting the ethics experiences of employees is craft/non-craft status.
In this study, participants were identified as “craft” or “non-craft” based upon the type
of work that they do. Craft employees were defined as those who work in trades such
as Builder, Electrician, Painter, Remodeler, etc. Non-craft employees are those who in
work in functions such as Administration, Engineer, Project Manager, Superintendent,
etc. Based on this definition, craft employees are employed in all sizes and types of
organizations, including General Contractors, Sub-contractors, and Project Management firms. For a list of job functions of craft employees, please see the Appendix.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Overall, craft employees have less positive views of the state of ethics in their workplaces. They deem their companies’ programs to be less effective, and they are less
likely to believe that top managers and their co-workers are truly committed to ethical
conduct and workplace integrity.
CRAFT EMPLOYEES EXPRESS MORE NEGATIVE VIEWS
80%
60%
69%
75%
60%
66%
69%
73%
53%
60%
40%
20%
Program
Effectiveness
Culture
Top
Management
Commitment
Co-worker
Commitment
n Craft
n Non-craft
What is surprising, given their more pessimistic view of workplace ethics, is the fact
that craft employees are also less likely to observe misconduct. Less than fifty percent
(48 percent) of craft employees indicated that they observed wrongdoing in the past
year; lower than the almost two out of three (63 percent) non-craft employees who
witnessed wrongdoing. Non-craft employees also observed more distinct types of
misconduct than their craft coworkers.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Observed
Craft
Non-Craft
Abusing substances, such as drugs or alcohol, at work
18%
21%
Abusive behavior
25%
33%
Accepting inappropriate gifts or kickbacks from suppliers or
vendors
16%
19%
Behavior that places an employee’s own personal interests
over the company’s interests (a conflict of interest)
21%
26%
Bid shopping, e.g. revealing bid amounts to undercut or
match another bid
12%
23%
Creating fictitious vendors, invoices or business deals
9%
14%
E-mail and/or Internet abuse
11%
19%
Engaging in anti-competitive practices, e.g. agreement
among competitors to artificially increase bid prices or divide
business
10%
16%
Failing to correct environmental issues
11%
16%
Falsifying and/or manipulating financial reporting information
10%
15%
Improper disclosure of customers’ private information
9%
15%
Improper disclosure of employees’ personal or private
information
11%
14%
Improper use of competitors’ inside information
11%
16%
Inappropriate alteration of documents or records
12%
18%
Intentionally being untruthful on certification forms
10%
15%
Lying to owners, clients or customers
16%
23%
Lying to subcontractors, vendors, or suppliers
16%
24%
Making improper payments or inappropriate gifts to public
officials
12%
15%
Making improper political contributions to officials
9%
13%
Reporting time not worked on timesheets
15%
20%
Sexual harassment
14%
19%
Sharing your company’s confidential information without
permission
11%
14%
Wasting, mismanaging, or abusing the company’s resources
18%
28%
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Impact of Management Level
ERC’s NBES research over the years has consistently shown that management level
makes a difference in employees’ perceptions of ethics in their workplace. The higher
the level, the “rosier” the view.9 This finding was borne out in the construction industry.
Top Managers Have a Rosier View
Top managers in construction companies have a more positive impression of the state
of ethics in their workplaces, compared to employees at lower levels. More top managers believe that their companies’ ethics and compliance programs are effective.
They are also more likely to characterize their workplace as having a strong ethics
culture and to believe that employees at all levels share a commitment to workplace
ethics and integrity. And, compared to other managers, fewer top managers experience pressure to compromise standards or observe misconduct. They are more likely
to report wrongdoing if/when they see it, and they are less likely to experience retaliation for having reported.
TOP MANAGERS HAVE A MORE POSITIVE PERSPECTIVE
80%
79% 77% 77%
73%
60%
80%
79% 78%
64%
40%
64% 62%
36%
26%
20%
15%
Program
Effectiveness
46% 43%
21%
Pressure
Reporting
Retaliation
Culture
n Top Management
n Middle Management
n First Line Supervisor
9. Based on data from ERC’s 2011 National Business Ethics Survey® (NBES).
Please see www.ethics.org/nbes.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
By comparison, middle managers have a less positive view. More than one in four (26
percent) of middle managers felt pressure to compromise organizational standards
of conduct, and two out of three (67 percent) observed some form of misconduct in
the previous year. Of those who observed misconduct, 78 percent chose to report.
Almost half (46 percent) of employees in this group who reported the misconduct they
observed experienced retaliation for having done so.
Supervisors Confront More Challenges, But Feel More Prepared to Resolve
Them
Supervisors have enormous influence in a company. ERC’s research has shown that
employees who manage at least one direct report are influential in reinforcing the tone
from the top; they are most likely to receive reports of misconduct that are brought
forward within an organization10, and they are one of the driving forces in the development of a strong ethical culture.
Employees in the construction industry indicated that supervisors and non-supervisors
have distinctly different perceptions of workplace ethics. For example, supervisors are
more likely to encounter situations that they believe invite misconduct, but they feel
more prepared to address them when they do arise.
SUPERVISORS FEEL BETTER PREPARED TO ADDRESS ETHICS ISSUES
86%
73%
Supervisor
Non-supervisor
10. Based on data from ERC’s 2011 National Business Ethics Survey® (NBES).
Please see www.ethics.org/nbes.
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
This feeling of preparedness is important, as supervisors in construction companies
indicate that they feel more pressure to compromise standards in order to do their jobs.
Similarly, they observe misconduct more frequently, and while they are also more likely
to report their observations, they are more likely to experience retaliation for having
done so.
SUPERVISORS HAVE MORE NEGATIVE EXPERIENCES, BUT REPORT MORE
80%
76%
60%
48%
40%
20%
22%
10%
Pressure to
Compromise
Standards
58%
60%
43%
19%
Observed
Misconduct
(1 of 34)
Reporting
Retaliation
Against
Reporters
n Non-Supervisors
n Supervisors (All)
Supervisors also expressed more positive views of their company’s ethics culture, particularly with regard to the commitment of leaders at all levels of the organization
(top management, supervisors, and co-workers). They also express more favorable
perspectives of the effectiveness of their employer’s ethics and compliance program
effectiveness, and they are more likely to be engaged on the job.
SUPERVISORS MORE POSITIVE ABOUT COMPANY ETHICS
100%
91%
80%
60%
78%
68%
58%
40%
51%
76%
60%
80%
74%
59%
52%
58%
20%
Program
Effectiveness
Culture
Top
Supervisor
Coworker
Engagement
Management Commitment Commitment
Commitment
n Non-Supervisors
n Supervisors (All)
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ANALYSIS BY COMPANY TYPE & EMPLOYEE GROUP
Supervisors as a group also show some distinct differences based on their responsibilities in the company office, or on a job site. Overall, supervisors who work exclusively
in the company office have more ethics and compliance challenges; they feel more
pressure, observe more misconduct, and are more likely to not report wrongdoing
when they observe it.
SUPERVISORS IN THE COMPANY OFFICE EXPERIENCE GREATER CHALLENGES
80%
„„Buy personal items with your
company credit card as long
as you pay it back
77%
60%
63%
53%
„„Call in sick when you are not
40%
23%
20%
14%
Pressure
„„Fudge your time sheet if you
leave a few minutes early
38%
38%
20%
Misconduct
(1 of 34)
Construction industry
employees were
introduced to 12
specific “grey area”
behaviors. They were
asked whether or not
they personally felt
the following were
acceptable:
27%
„„Borrow tools or equipment
from a jobsite or your
company
Did NOT Report
Misconduct When
Observed
„„Take leftover materials from
a jobsite
n Supervisor on Project Site
n Supervisor Both on Project Site & Company Office
n Supervisor in the Company Office
„„Take on smaller construction
jobs on the side for pay
Supervisors working in company offices are also more open to questionable conduct.
Office supervisors indicated that they found nine of the 12 “grey area” behaviors to be
acceptable (see sidebar), suggesting a greater openness to bending the rules.
„„Adjust time records to stay
within contract requirements
„„Claim maximum amount on
expense reports even though
you did not spend all of the
money
„„Badmouth (talk inappropriately
about) a competitor in a
bidding situation
„„Share project blueprints or
details with a third party
(someone who is not affiliated
with the company or project)
„„Moonlight for non-company
construction projects
„„Select higher cost options
(e.g., travel or lodging) if the
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.. RECOMMENDATIONS
5.
Data from the National Business Ethics Survey® of the U.S. Construction Industry
(NBES-CI) reveal several key findings:
1. The industry, by its very nature, is characterized by significant pressure
to compromise standards of conduct and integrity. In past studies conducted by ERC (NBES 2007, 2009, and 2011; NBES-F500), the most significant sources of pressure were internal, e.g., a desire for personal financial
success or efforts to save one’s job. In the construction industry, the most
profound pressure came from the work itself (i.e. pressure to stay on time
and on budget).
2. Furthermore, the challenging nature of the industry can be seen in the incidence of pressure to compromise standards as well as rates of misconduct and retaliation against whistleblowers—all of which are dramatically
higher than in U.S. companies overall.
3. Many companies within the industry are intentionally focusing on ethics
and compliance in order to combat this pressure and encourage workplace integrity. These efforts include E/C programs at the individual company level as well as industry-wide efforts to establish best practices in ethics
and compliance.
4. Where they have been implemented, ethics and compliance efforts have
been successful in two keys areas: the high rate of reporting of observed
misconduct and a widespread belief among employees that workers at
all levels are committed to workplace integrity. In terms of both reporting
rates and strength of ethics culture, the construction industry performs better than U.S. companies overall.
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RECOMMENDATIONS
In order to build on existing strengths and address areas of heightened risk, we offer
the following recommendations to the industry:
Individual Companies
1. Prioritize and invest in well-implemented ethics and compliance programs. Use the seven basic program elements defined by the Federal Sentencing Guidelines for Organizations (FSGO) as a foundation for a program
that emphasizes both ethics and compliance. Intentionally promote integrity
and values as well as adherence to legal standards. Focus efforts on helping employees handle the inherent stress of the industry without succumbing to unethical means to achieve objectives. Also, put in place systems to
protect reporters from retaliation and to monitor its occurrence.
2. Measure the effectiveness of your program. Construction companies should not assume that their existing ethics and compliance program is achieving its intended objectives. Assessment is a critical tool
for identifying specific areas of need, e.g., locations or employee groups
that pose particular risk. Regular measurement also serves as a tool to
track progress over time and to make continual improvement. Finally,
the process of evaluation serves as a communications vehicle, publicizing your E/C program and promoting it as an organizational priority.
A comprehensive assessment of an ethics and compliance program should
include investigation of:
a. Tone at the top and support of that tone by management
b. Culture of the organization, particularly in communicating a set of ethical values and holding employees accountable to the standards of the
organizations
c. Key outcomes:
i. Pressure to compromise standards
ii. Observed misconduct
© 2013 ETHICS RESOURCE CENTER
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RECOMMENDATIONS
iii. Reporting behaviors
iv. Retaliation against whistleblowers
3. Recognizing that resources are limited, focus your energy on key areas revealed by the NBES-CI:
a. On the job response to misconduct, since more types of misconduct
occur on the project site and are reported to supervisors.
b. Supervisors as the first line of defense in terms of setting the tone
that ethics are a priority on par with budgets and timelines. Furthermore, supervisors are the primary recipients of reports of misconduct
and need to be adequately prepared to address reports and to protect
reporters from retaliation.
c. Union employees. Given the widespread pressure and retaliation experienced by union workers, this group merits additional support.
d. Middle managers. Middle management’s vulnerability to negative ethics experiences at work, e.g., high retaliation rates and pressure, warrants further heedfulness as well.
e. Program managers. With lower rates of engagement, and fewer program managers feeling valued by their company, this specific group of
employees also requires diligent attention.
4. Provide information and resources to on-site employees, especially those
who are not supervisors and/or who work in craft fields. On the whole,
these groups were less likely to be aware of ethics resources and to feel prepared to address ethics issues. Given that they are a sizable percentage of
those working in the industry, they are a critical piece of an effort to elevate
the standards of integrity and conduct.
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RECOMMENDATIONS
Industry Groups
1. Combat pressure inherent to the industry. The industry should be applauded for taking the lead by establishing forums for promoting ethics/
compliance and sharing best practices, and undertaking the NBES-CI, a rigorous, third-party examination of the industry as a whole. The next step is to
publicly state and confirm the behaviors/standards that are as important as
meeting time/budget expectations.
2. Establish benchmarks for self-regulation and accountability. As has been
successful in other industries, industry groups should implement a benchmarking initiative to encourage companies in the industry to assess their
own organizations, and to identify priorities for their ethics and compliance
programs. Doing so would further communicate that ethics is an industrywide priority.
3. Conduct further inquiry into on-site management of misconduct. Misconduct is more commonplace on job-sites than in company offices. Furthermore employees who see misconduct go to their own companies, more often
than to on-site management. Having a better understanding of the situations
that lead to misconduct and how it is handled on-site will provide the industry with specific and focused information about this area of risk.
© 2013 ETHICS RESOURCE CENTER
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.. APPENDIX
6.
CHARACTERISTICS OF CRAFT AND NON-CRAFT EMPLOYEES
Craft
Builders
Electricians
HVAC
Laborers
Painters
Remodelers
Plumbers/Pipefitters
Other Craftsman
Driver/Equipment
Operator, Building
Engineer
Administrative
Engineers
Estimators/Schedulers/
Project Controls
Executive Leadership/
Officers
Finance/Accounting/
Audit
Foremen
Human Resources
Inspection
Insurance/Surety
Information Technology/
Information Systems
Legal
Safety/Environmental
Sales/Marketing
Superintendents
Procurement/Contracts
Non-Craft
Project managers
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APPENDIX
TYPES OF MISCONDUCT OBSERVED AND REPORTED BY
CONSTRUCTION INDUSTRY EMPLOYEES
Observed Misconduct
Reported Misconduct
Most to Least Observed
Most to Least Reported
Abusive behavior or behavior
that creates an intimidating,
offensive or hostile work
environment*
29%
Creating fictitious vendors,
invoices or business deals
91%
Conflict of interest*
24%
Engaging in anti-competitive
practices*
85%
Failing to correct conditions to
meet or comply with health and
safety regulations
24%
Improper disclosure
of customers’ private
information*
84%
Wasting, mismanaging,
or abusing the company’s
resources*
22%
Sharing your company’s
confidential information
without permission*
83%
Violating OSHA guidelines
21%
Falsifying and/or manipulating
financial reporting information*
82%
Stealing or theft*
21%
Making improper political
contributions to officials*
82%
Lying to employees*
21%
Sexual harassment*
81%
Lying to subcontractors, vendors,
or suppliers
20%
Reporting expenses not
incurred on expense reports*
81%
Lying to owners, clients or
customers
19%
Failing to correct work which
does not conform to project
specifications
81%
Abusing substances, such as
drugs or alcohol, at work*
19%
Improper use of competitors’
inside information*
80%
Discriminating against
employees*
19%
Failing to correct conditions
to meet or comply with health
and safety regulations
80%
* Also asked about in ERC’s 2011 National Business Ethics Survey® (NBES).
© 2013 ETHICS RESOURCE CENTER
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APPENDIX
Observed Misconduct
Reported Misconduct
Most to Least Observed
Most to Least Reported
Failing to correct work which
does not conform to project
specifications
18%
Failing to correct
environmental issues*
79%
Reporting time not worked on
timesheets*
17%
Intentionally being untruthful
on certification forms
78%
Accepting inappropriate gifts
or kickbacks from suppliers or
vendors*
17%
Reporting time not worked on
timesheets*
78%
Bid shopping, e.g. revealing bid
amounts to undercut or match
another bid
17%
Inappropriate alteration of
documents or records
77%
Sexual harassment*
16%
Bid shopping, e.g. revealing
bid amounts to undercut or
match another bid
77%
Improper hiring practices*
16%
Making improper payments
or inappropriate gifts to public
officials*
76%
Violating employee wage,
overtime, or benefit rules*
16%
Invoicing or billing clients/
owners for time not worked or
materials not used
76%
Inappropriate alteration of
documents or records
15%
Stealing or theft*
75%
E-mail and/or Internet abuse*
14%
Improper substitution of
inferior materials
74%
Improper substitution of inferior
materials
14%
Conflict of interest*
73%
Invoicing or billing clients/owners
for time not worked or materials
not used
14%
Abusing substances, such as
drugs or alcohol, at work*
73%
Failing to correct environmental
issues*
13%
Violating OSHA guidelines
72%
Making improper payments
or inappropriate gifts to public
officials*
13%
Improper disclosure of
employees’ personal or private
information*
71%
* Also asked about in ERC’s 2011 National Business Ethics Survey® (NBES).
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APPENDIX
Observed Misconduct
Reported Misconduct
Most to Least Observed
Most to Least Reported
Improper use of competitors’
inside information*
13%
Abusive behavior or behavior
that creates an intimidating,
offensive or hostile work
environment*
71%
Reporting expenses not incurred
on expense reports*
13%
Wasting, mismanaging,
or abusing the company’s
resources*
70%
Sharing your company’s
confidential information without
permission*
12%
Violating employee wage,
overtime, or benefit rules*
70%
Engaging in anti-competitive
practices*
12%
Discriminating against
employees*
69%
Falsifying and/or manipulating
financial reporting information*
12%
Improper hiring practices*
69%
Improper disclosure of
employees’ personal or private
information*
12%
Accepting inappropriate gifts
or kickbacks from suppliers or
vendors*
69%
Intentionally being untruthful on
certification forms
12%
E-mail and/or Internet abuse†
68%
Improper disclosure of
customers’ private information*
11%
Lying to subcontractors,
vendors, or suppliers
64%
Creating fictitious vendors,
invoices or business deals
11%
Lying to employees*
62%
Making improper political
contributions to officials*
11%
Lying to owners, clients or
customers
61%
* Also asked about in ERC’s 2011 National Business Ethics Survey® (NBES).
© 2013 ETHICS RESOURCE CENTER
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APPENDIX
SPECIFIC TYPES OF RETALIATION EXPERIENCED BY
CONSTRUCTION EMPLOYEES
NBES-CI
NBES 2011
Experienced Retaliation
37%
22%
Given a cold shoulder by other employees
66%
62%
Excluded from decisions and work activity by supervisor
or management
44%
Not given promotions or raises
41%
Verbal abuse by supervisor or someone else in
management
39%
Verbal abuse by other employees
38%
51%
Given an unfavorable work assignment or assignments
38%
**
You lost your job
34%
**
You were demoted
31%
32%
You were relocated or reassigned
29%
44%
Almost lost job
29%
56%
You were verbally abused by workers employed by
another company
28%
You experienced physical harm to your person or
property
25%
Other
24%
** Not asked about in ERC’s 2011 National Business Ethics Survey® (NBES).
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© 2013 ETHICS RESOURCE CENTER
64%
55%
62%
**
31%
**
INDUSTRY BENCHMARKS
The Ethics Resource Center (ERC) is a leader in providing industry-specific benchmarks
on ethical culture and ethics and compliance program effectiveness. ERC can provide
unparalleled insight into how your company compares to industry peers.
ERC will provide participating companies with:
„„ A
cost-effective means to measure the effectiveness of
their ethics and compliance programs;
„„ Benchmarks peers to one another in a confidential manner;
„„ Gauge
the ethical culture and overall ethical health of the
company.
Ethics Resource Center
www.ethics.org | ethics@ethics.org
If You Are Interested
in Participating or
For More Information
Please Contact:
Nick Fetzer
Assistant Director,
Program Development
571-480-4406
Nick@ethics.org
The NBES-CI Team
The NBES-CI is the result of a collaborative effort by the staff of the Ethics Resource Center:
Patricia J. Harned, Ph.D.
ERC President
Paula Bongino
Senior Director of Interactive Media
Nichole Brooks
Data Analyst
Katie Lang
Senior Researcher
Mara Lindokken
Project Manager / Researcher
Skip Lowney
Senior Director of Benchmarking Services
Jenny Smolinsky
Communications Coordinator
Contributors
ERC contracted with the following organizations to provide support to this project:
Gelb Strategies
Lock Media Services, Inc.
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List of Charts and Tables
Construction Industry Compared to U.S. Average
2
Construction Employees Are More Positive About Culture & Management
4
Outlined in Chapter Eight of the FSGO are Seven Vital Criteria for Creating an Effective Compliance Program
7
Better Outcomes for Those with Well-Implemented Programs
8
Many Believe Their Company has a Well-Implemented Ethics & Compliance Program
9
Fewer Observe Misconduct in Strong Ethical Cultures
11
Strong FSGO-based Programs Improve Workplace Ethics
11
Employees Who Feel Pressure Are Far More Likely to Observe Misconduct
13
Ranking of Sources of Pressure by Intensity
14
The Majority of Misconduct is Witnessed at Project Sites
15
Employees Report to Supervisors First
16
Retaliation is About as Likely to Happen at Company Offices as on Project Sites
17
Retaliation Erodes Employee Concern for the Company
18
Retaliation Weakens Long-Term Commitment
19
Company Size Makes a Difference
20
Program Effectiveness and Reporting Increase with Company Size
21
Employees Face Greater Ethics Challenges in Public Construction Companies
22
Public Company Employees More Positive About Colleagues’s Ethics
23
Pressure & Retaliation Higher Among General Contractors
25
More GCs than Subcontractors Believe They Have Strong Cultures and Effective Programs
26
Subcontractors Are Less Likely to Perceive Specific Ethical Actions
27
Significantly Fewer Program Managers Are Engaged, Feel Valued, and Feel They Can Approach Management Without Fear
27
Craft Employees Express More Negative Views
30
Top Managers Have a More Positive Perspective
32
Supervisors Feel Better Prepared to Address Ethics Issues
33
Supervisors Have More Negative Experiences, But Report More
34
Supervisors More Positive About Company Ethics
34
Supervisors in the Company Office Experience Greater Challenges
35
Characteristics of Craft and Non-craft Employees
40
Types of Misconduct Observed and Reported by Construction Industry Employees
41
Specific Types of Retaliation Experienced by Construction Employees
44
© 2012 ETHICS RESOURCE CENTER
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The report was made possible in part by generous contributions from our sponsors:
Construction Industry Ethics and Compliance Initiative
Reed Construction Data
American Society of Civil Engineers
American Road and Transportation Builders Association
The Associated General Contractors of America
The Travelers Indemnity Company
Bechtel Corporation
For more information, visit www.ethics.org