SINGAPORE’s middle managers need to step up. In the past year, they were the least responsive among the leaders in their organisations in dealing with their companies’ compliance risks and challenges, a study by ethics and compliance advisory firm LRN has found.
LRN came to the conclusion from interviewing 112 Singapore-based ethics, compliance and legal professionals – mostly those working in corporations with more than 1,000 employees – last November. The results of this annual global survey were published on Wednesday (Feb 14).
Among senior and executive managers in Singapore who were asked if they had made difficult decisions consistent with their company’s values and purpose, as many as nine in 10 said they had done so.
But when middle managers here were posed the same question, only a third reported having made those difficult decisions – lower than the global average of 39 per cent among middle managers.
The middle managers also lag behind senior and executive managers in identifying ethics and compliance risks and challenges, integrating ethics and compliance into decision-making, and ensuring that high performers are held accountable for misconduct, LRN highlighted.
The study, however, found that organisations in Singapore were more proactive in modifying and abandoning business initiatives on the grounds of ethics and compliance concerns. This proactive behaviour included walking away from business deals with customers or business partners with questionable ethical practices.
Some 72 per cent of Singapore respondents said that they had substantially modified or abandoned a business initiative in the past year, versus 52 per cent globally.
This could be because more organisations in Singapore dole out rewards for ethical behaviour, by considering it as a significant factor in performance management, the hiring for key roles, making promotion decisions and deciding bonus awards.
Calling the incorporation of ethical behaviour into executive and employee evaluations a “major step” in the setting up of an impactful ethics and compliance programme, LRN noted that Singapore leads globally, with an average 80 per cent adoption of such requirements. The average is 65 per cent in Europe and 72 per cent in North America, the study found.
The study also uncovered that Singapore organisations more readily reported the disciplining or termination of executives or higher performers who engaged in unethical behaviour, compared to their global counterparts. Six in 10 companies in the city-state disciplined or terminated a senior executive or excellent performer for unethical behaviour in the past year. The global average for this was 45 per cent.
Discipline is instilled by clawing back bonuses, severance, or other forms of compensation, the study also found.
Of those surveyed, 73 per cent said their organisations had policies that provided for such clawbacks in dealing with board members, executives, or employees found to have committed serious misconduct in the course of work. Only 19 per cent noted the lack of such policies in Singapore companies; 8 per cent said they had only gone as far as to consider implementing such clawbacks.
Another part of the study sought to determine the extent to which the board of directors were involved in setting the tone for compliance and ethics within an organisation.
It found that boards in Singapore tended to be more active than those in other parts of the world in ensuring that misconduct by senior executives or excellent performers was effectively addressed – 82 per cent of Singapore boards took such action in the past year, versus 63 per cent globally.
