THE MT ETHICS SURVEY: The Workplace Ethic - Is it a crime? Two out of three employees say they lie to their boss. And many managers say they know this and accept it. An MT/KPMG survey puts the moral grey areas of the workplace into black and white. Matthe

THE MT ETHICS SURVEY: The Workplace Ethic - Is it a crime? Two out of three employees say they lie to their boss. And many managers say they know this and accept it. An MT/KPMG survey puts the moral grey areas of the workplace into black and white. Matthe

by MATTHEW WEAIT
Last Updated: 31 Oct 2014

Waiter, can we have two receipts, please? That's OK, driver - just leave it blank. I can't come in today - I think I've got food poisoning.

And so it goes ... A fiddle on expenses is technically unlawful. A little white lie to your boss is naughty. But do you see either as a crime? Sure, say some, but many find it hard to draw the line. There's no black and white, they say, merely awkward shades of grey. As Groucho Marx once said: 'Those are my principles. If you don't like them, I have others.'

The fact is that 'unethical behaviour' - from pilfering pens and surfing the net while at work to outright fraud - remains endemic in the British workplace. And it runs from the boardroom to the shop floor. Although most managers have a fundamentally ethical approach to business, a majority are aware of dishonest conduct in the workplace but accept it as inevitable.

They simply cost it into operations and don't blow the whistle on offenders.

These are some of the key findings of a major new survey conducted recently by MT and KPMG Forensic Accounting, which took in responses from more than 800 directors, managers and partners. About half were women, who intriguingly appear to be more liberal/lax in their ethical views than men. People over 40 are more scrupulous than their younger counterparts, and public-sector workers are more disapproving of unethical behaviour than those in the private sector. More than two in three (including six out of 10 board directors) say that everyone lies to the boss on occasion, and less than half consider the people at the top of their organisations to be strong ethical role models.

To assess their attitudes, the participating managers were given a hypothetical scenario (shown opposite) and asked a number of questions. The results were collated and analysed, along with any comments the respondents offered.

A number who took part were subsequently interviewed by telephone. Generally, respondents were disapproving of conduct that on the face of it might be considered unethical. Over 90% disapproved of taking a 'sick day' after the Christmas party, of charging personal entertainment to expenses, of favouring family and friends when awarding contracts, and of posting Christmas cards from work. More than 80% disapproved of taking home software and using company petrol for personal mileage, and more than 70% disapproved of surfing the net for pleasure on company time. Even taking pens from work was condemned by just over half. More people disagreed than agreed with the statement that there is no need to worry about a bit of petty fiddling so long as you come in on time and within budget, or that it is acceptable to artificially inflate profits so long as no money is stolen.

However, this glowing show of ethics is not the whole story. More disturbing is the finding that a significant number of people in senior positions are prepared to condone conduct that amounts to theft, false accounting and fraud and have a 'relaxed' approach to workplace ethics. Over 20% thought it was OK to surf the net for pleasure during work time. Using company petrol for personal mileage was deemed acceptable by 16%. One in four would not say that favouring friends and family in awarding contracts was totally unacceptable. And 7% agreed that it is acceptable to artificially increase profits, so long as no money is stolen (for board directors, the proportion was just under one in seven).

Some of these figures may seem low, but they are not insignificant.

They tell us that some people, many in senior positions, are comfortable with conduct that may reduce profitability and, in some cases, amount to serious crimes. Take expenses claims. Under the Theft Act 1968, dishonest falsification of any document used for accounting purposes amounts to false accounting, an offence that can carry a sentence of up to seven years' imprisonment.

Yet fewer than one in five respondents were prepared to say that charging personal entertainment to expenses was totally unacceptable (among board directors it was even less at 15%). Similarly, only six out of 10 were prepared to say that minor fiddling of business expenses was totally unacceptable.

These shocking figures did not square with the almost sanctimonious responses to our hypothetical case in which an employee turns a profit on his taxi receipt. Only 1% condone it on the basis that it was a small amount and everybody does it. Half thought it acceptable to tip 50p and claim it as a legitimate business expense, but one in 10 thought he shouldn't claim the tip and more than a third thought he should take public transport and save his employer money. Survey results varied according to the size of the organisation represented by the respondent. For example, one female board director, Jo Brown of Ojwatch Service, commented: 'We are a small company and so it's easy to see how people's conduct impacts on others.

It's also easier to maintain standards. Everyone has to be responsible for their own actions. It's also important to be flexible. Take time management - it's fine to take time out from work for a personal appointment, so long as you make up that time. In large firms it is all too easy for people to think, why should I bother, who's going to notice?'

The relative ethics of women and men was just one of the surprising results of the survey. Just as interesting were the findings that respondents over 40, people in financial positions and those in the public sector take a more judgmental approach to unethical conduct. We can only speculate as to why. The over-40s may have had a stronger sense of responsibility; or, with senior positions under their belt, they may now be less forgiving than their juniors; or do they believe they are more likely to be found out?

As for those in the public sector, three explanations spring to mind. First, public duty may attract those who take ethical matters more seriously. Second, it may be an awareness that they are dealing with taxpayers' money. And third, controls on resources may be tighter in the public sector.

For those in financial positions, it may be a case of 'the cost buck stops here'. An accounting background is supposed to include professional ethical training, so it is unsurprising that they take a harder line than others - not that every accountant is as pure as the driven snow.

In the survey we did not ask about the behaviour of the respondents themselves. We tested ethical attitudes and people do not always practise what they preach. But how common is such misconduct? There is little statistical information on the incidence of workplace theft and fraud, but what there is paints a worrying picture. The most recent crime statistics published by the Home Office show that there were some 18,000 recorded offences of theft by employees nationally in the 1998-99 financial year, and more than 1,300 of false accounting. Employee theft accounted for 13% of all crimes against business premises in Scotland in '98.

However, the official figures provide only a partial picture of dishonesty in the workplace. Much of it never comes to light, and even if it does, many employers choose not to report it. A survey published this year by the British Retail Consortium reported 25,000 incidents of theft by staff in that sector alone in 1999 - an increase of 32% on the previous year - while thefts by customers rose by only 3%. And the value of such thefts increased from pounds 364 million in 1998 to pounds 519 million in 1999, a rise of 43%.

Although our survey did not ask specifically about theft, half of those who responded said they were aware of dishonest or fraudulent practices at work. Of these, nearly two-thirds considered that this was unchanged from five years ago.

Some of the comments from participants reflected the view that there are two sides to the question of ethical standards. Nick Burns, a former senior manager and director of a manufacturing company, observes: 'The work relationship is reciprocal, so there is a mutual ethical obligation.

Most jobs depend on a degree of goodwill and trust. If the company becomes concerned about people making personal phone calls etc, then it should adopt similar values for itself. For example, should it require extra work or time outside the terms defined by a contract of employment? Overall, it is swings and balances - but it is very easy to damage the relationship. The goodwill of the personnel is worth a lot.'

If the incidence of workplace misconduct is as commonplace as our survey indicates, there is clearly a problem. How is it best tackled? One of the most obvious ways is for people to blow the whistle on those they know to be engaged in unethical practices. This rarely occurs. Although just under a third of respondents said they had reported on colleagues, most had not - one in 10 had not even considered doing so. The main reason for restraint was a fear of being alienated from colleagues, followed closely by the attitude that 'other people's conduct is none of my business'.

This indicates first that many people sense a lack of support from those to whom they might turn; second, that their own organisational culture doesn't foster a sense of collective responsibility and integrity.

If these are indeed the reasons, they are disturbing. But it is important to recognise that blowing the whistle does not address the fundamental issue of prevention. It is all very well to deal with problems after the event, but such an approach fails to address their cause. Such is the view of Alex Plavsic, fraud investigation partner in KPMG's Forensic Accounting group. 'If people are unsure about what conduct is and is not acceptable, they inevitably rely on their own - usually flawed - judgment.'

KPMG, which for 10 years has published a leading trend indicator in its Fraud Barometer, reported a marked decrease in the value of fraud cases - from pounds 500 million in the first nine months of 1999 to pounds 174 million for the same period in 2000 - but no decline in the number of offences. Jeremy Outen, KPMG Forensic Accounting partner, warned that if minor fraud goes undetected, fraudsters may become more ambitious, and 'the cumulative effect may be just as devastating to a company's reputation'. Firms should keep their security systems under constant review.

Ethics in the workplace are a matter of considerable complexity and importance, and yet eight out of 10 respondents said their organisation provided no training on the subject. But the overwhelming majority thought such training should be provided. It is hoped that if this survey achieves anything, it will at least encourage those who have the power and authority to effect change in workplace culture to answer the call. l

For the full version of the MT/KPMG survey clickMT.com

WHERE DO YOU DRAW THE LINE?

'Forty per cent of people believe there is no real difference between fraud and a bit of expense fiddling'

WHAT WOULD YOU DO?

Jim takes a taxi to a business meeting. He has plenty of time and he could have gone by public transport, which is reliable where he lives, for pounds 1.40. At the end of the cab journey - which costs pounds 4.50, to which Jim adds a 50p tip - the cab driver offers him a receipt for pounds 4.50, excluding tip, or a receipt for pounds 5.00, which covers the fare and the tip, or a blank receipt. Jim accepts the blank receipt, fills it in for pounds 6.50 and claims it on expenses.

Just over 50% saw the tip as a legitimate expense. A more prudent 35% thought Jim should have used public transport instead . Only a tiny minority were prepared to exploit the situation and make a fraudulent claim.

< WHICH SIDE OF THE LINE DO YOU PUT THESE ACTIVITIES? Acceptable charging personal entertainment to expenses 2% Taking a sicky after the office party 6% Minor fiddling of travel expenses 6% Favouring family or friends when awarding contracts 6% Taking software home 15% Using company petrol for personal mileage 17% Surfing the net for pleasure in worktime 22% Taking pens and pencils from work 48% Making personal phone calls from work 75%

ARE MEN MORE ETHICAL THAN WOMEN?

'The most ethical person is likely to be a male director who is over 40 and has a financial role in the public sector'

'35% of men said that once they knew about a fraud they reported it. For women the figure was only 25%'

'The least ethical person is likely to be a female manager, under 40, who has a sales or marketing role in a service-industry company'

ETHICS MAN - ETHICS WOMAN

In six out of the 10 examples of unethical conduct, a higher percentage of women than men considered them to be acceptable or totally acceptable.

More women than men were comfortable with making personal phone calls from work, and although three out of four men were not prepared to give a clean reference to someone who had been involved in some sort of fraud, the proportion of women was only two-thirds.

One should, however, be careful before leaping to the conclusion that women are more dishonest than men. Perhaps women are less willing to condemn in the absence of information about the context of and reasons for 'unethical' conduct. Or it may be simply that women are more honest in their responses to the questionnaire.

< WHY WOULDN'T YOU BLOW THE WHISTLE? MEN WOMEN Alienate myself from my colleagues 21% 26% None of my business 49% 40% Jeopardise my job 13% 18% Everybody's doing it 30% 42% It's fair game 5% 5% Some people had other reasons.

DO YOU LIE TO THE BOSS? - AND WHO DOES HE LIE TO?

'Two in three say they lie to their boss at some time or another'

'Nearly one in 10 board directors say it is acceptable to massage their profit figures as long as no money is stolen'

'Fewer than 50% feel that people at the top are strong ethical role models'.

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