Based on interviews with over 3,000 employees and managers nationwide, the survey disclosed that despite the increase in the number of ethics and compliance program elements being implemented, desired outcomes, such as reduced levels of observed misconduct, have not changed since 1994. Even more striking is the revelation that while formal ethics and compliance programs have some impact, it is the organizational culture that has greater influence in determining program outcomes.

Only lagging companies still measure the success of their ethics and compliance programs only by tallying the percentage of employees that have certified reading the Code and attended ethics and compliance training. The true indicator of success is whether the company has made significant progress in achieving key program outcomes. The NBES listed several key outcomes that can be used to determine the success of a program:

• Reduced misconduct observed by employees;
• Reduction of pressure to engage in unethical conduct;
• Increased willingness of employees to report misconduct;
• Greater satisfaction with organizational response to reports of misconduct.

What's going to move these outcomes in the right direction? Not the mere presence of codes of conduct, reporting systems, and compliance training.

What the NBES uncovered is that only by influencing key elements of the culture will the organization see positive movement in program outcomes.

What are these key elements? The NBES calls them "Ethics-Related Actions" and they relate to key behaviors demonstrated by Top Management, Middle Management, Supervisors and Coworkers. These "ERAs" include:

• Communicates ethics as a priority
• Sets a good example of ethical conduct
• Keeps commitments
• Provides information about what is going on
• Considers ethics in decision-making
• Talks about ethics in the work we do

What's the significance of culture? According to the NBES, "where top management displays certain ethics-related actions, employees are 50 percentage points less likely to observe misconduct." There is no other factor in any ethics survey that can demonstrate such a drastic influence.

So what are the key take-aways we learn from the 2005 NBES?

1. The criteria for success of your ethics program must be outcomes-based. Merely checking off program elements, even from the seven steps of the Federal Sentencing Guidelines, is not enough to change behavior.
   
   
2. Each organization must identify its own key indicators of its culture. Only by assessing its own ethical culture can a company know what behaviors are the most influential in effecting change.
   
   
3. The organization must gauge how all levels of employees perceive adherence to values by others within the company. One of the surprising findings of the NBES was that managers, especially senior managers, were out of touch with how non-management employees perceived their adherence to ethical behaviors. Non-managers are 27 percentage points less likely than senior managers to indicate that executives engage in all of the ethics-related actions outlined in the Survey.
   
   
4. Formal programs are guides to shape the culture, and not vice-versa. People who are inclined to follow the rules appreciate the rules as a guide to behavior. Formal program elements need to reflect the culture in which they are deployed if they are going to be most effective in driving the company to the desired outcomes.

The 2005 NBES is a loud wake-up call to companies that have been hoping that the expensive deployment of updated internal controls and compliance program elements will make them "ethical." The work is not yet done. Companies must take the time to assess their culture and know which "ethics-related actions" will have the most impact in moving their ethics and compliance program in the right direction.

DAVID GEBLER is the President of Working Values, Ltd., a Boston-based business ethics consulting and training development firm. More articles by David Gebler

WORKING VALUES LTD. is a business ethics and training company. Through a variety of products and services, including Web-based compliance and ethics programs, on-site training, video and award-winning ethics games for employees, Working Values aims to align employee behavior with company values. For more information as to how Working Values can narrow your company's Behavior-Standards Gap, visit www.workingvalues.com or contact cgebler@workingvalues.com. For news on ethics in the workplace, visit SmartPros Ethics & Compliance.