Supplier Companies Are More Vulnerable to Integrity Challenges, ECI Study Shows
December 13 2016 - 7:30AM
Businesses that rely on extensive webs of third-party suppliers and
contractors face a heightened risk of ethics and compliance
breakdowns, which can damage reputation and create legal and
financial consequences, the Ethics & Compliance Initiative
(ECI) and FTI Consulting (NYSE:FCN) found in a new survey of
employees in 13 major global economies.
According to ECI’s Global Business Ethics Survey® (GBES®), 42
percent of supplier firm employees said they had witnessed
misconduct on the job, compared to 28 percent who observed
wrongdoing at non-supplier companies. Of the supplier company
employees surveyed, nearly one-third said they felt pressure to
compromise standards, compared to 18 percent at non-supplier
companies.
“The findings show that employees in supplier organizations are
far more likely than workers employed by non-suppliers to face
integrity challenges, including pressure to violate standards,”
said Neal Hochberg, Global Leader of the Forensic & Litigation
Consulting segment at FTI Consulting, which supported the report
and worked with ECI on the study. “These workers are also more
likely to witness rules violations and experience retaliation if
they blow the whistle on misconduct. The impact of integrity
breaches is ultimately passed on to the buyers that contract for
the suppliers’ goods and services, so it is imperative that
organizations pay close attention to their suppliers’ ethics and
compliance policies.”
The data showed significant variation among the 13 countries.
Half of employees at U.S. suppliers said they saw misconduct, the
highest level in the survey, compared to a low of 17 percent in
Japan. Feelings of pressure were highest in Brazil (50 percent),
compared to 17 percent in Mexico and Spain, and 18 percent in
Japan. On the positive side, employees of supplier organizations
were far more likely than their counterparts at non-suppliers (68
percent to 51 percent) to report misconduct so that management can
intervene.
“Outsourcing portions of the supply chain is necessary to enable
goods to get to market faster and more cheaply,” ECI Chief
Executive Officer Patricia J. Harned said. “But the price of this
benefit means buyer organizations give up a degree of control and
oversight, and that can create a variety of business risks.”
The report also noted that misconduct is more likely at
organizations that are experiencing internal upheaval such as
layoffs, restructurings and mergers, and that such events are more
common among supplier companies.
Harned added, “A supplier’s commitment to ethics and compliance
should be a key consideration when assembling a supply chain. Among
other things, business organizations should ask whether potential
suppliers expect their employees to honor rules and adhere to high
standards, and also provide employees the training to do so.”
The full report, “Ethics Risks in the Supply Chain”, and a link
to register for a webcast examining the report findings on Tuesday,
December 13th at 2 p.m. EST are available here.
About the Ethics & Compliance Initiative
The Ethics & Compliance Initiative (ECI) empowers organizations
to create and sustain high quality ethics and compliance programs.
With a history dating back to 1922, ECI brings together ethics and
compliance professionals and academics from all over the world to
share techniques, research and, most of all, exciting new ideas.
www.ethics.org
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organizations
manage change, mitigate risk and resolve disputes: financial,
legal, operational, political & regulatory, reputational and
transactional. With more than 4,600 employees located in 29
countries, FTI Consulting professionals work closely with clients
to anticipate, illuminate and overcome complex business challenges
and make the most of opportunities. The Company generated $1.78
billion in revenues during fiscal year 2015. For more information,
visit www.fticonsulting.com and connect with us on Twitter
(@FTIConsulting), Facebook and LinkedIn.
Media Contacts:
Rachael Gass
Ethics & Compliance Initiative (ECI)
+1.571.480.4405
rachael@ethics.org
Matthew Bashalany
FTI Consulting, Inc.
+1.617.897.1545
matthew.bashalany@fticonsulting.com
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