Belt Tightening Tactics Linked to Increases in Employee Misconduct


Recently, the Ethics Resource Center released the report, Saving the Company Comes at a Cost: The Relationship Between Belt-Tightening Tactics and Increased Employee Misconduct .  This report focuses on the effects that tactics that companies use to weather the financial struggles affect employee behavior.  Based the National Business Ethics Survey, the study found that tactics such as adjustments to work schedules, layoffs, compensation and benefit reductions, hiring freezes, early buyouts, production slowdowns, and plant closures are all related to significant increases in the number of employees observing misconduct.

Unfortunately, most of us in the sector have first-hand knowledge, if not first-hand experience of nonprofits that have tightened up their finances. Many of us have had salaries frozen, have instituted layoffs and furloughs, and have had other types of reductions in expenses and workforces.  And although this report focuses on employees of for-profit companies, it conveys a message that nonprofit organizations can use.  No longer can we afford to relegate transparency and accountability to the backburner while facing difficult financial times.  Some might even say it is actually more important than ever to ensure that our “houses are in order.”  Committing to implementing policies and practices aimed at reducing employee misconduct, should be a priority now. 

So what can nonprofit organizations do?

  • Commit to the guiding principles of the Standards for Excellence® Code. This is a requirement for all members of the Standards for Excellence Institute® and a step that any nonprofit organization can take. 
  • Institute a strong whistleblower policy and confidential means for employees, board members, and volunteers to report financial improprieties.  
  • Establish your own organization’s code of ethics.
  • Establish and publish instructions on your grievance procedures, both for the programs that you offer and the employees you hire.
  • Establish and carry out an appropriate conflict of interest policy that is applicable to staff, volunteers, and board members.

Now, more than ever, we are faced with intense demands for programs and services, and an even more pronounced competitive atmosphere for raising the resources to get the job done.  Trying to do more with less has not become a temporary mantra, but a new way of operating for the long-term. In short, we must do all that we can in order to foster an organizational culture that addresses ethical dilemmas and issues when they first come up and solves the problems at the outset. Actions such as these are vital to a well functioning nonprofit organization interested in avoiding issues related to employee misconduct.

[1] Supplemental Research Brief 2009 National Business Ethics Survey: Saving the Company Comes at a Cost: The Relationship Between Belt-Tightening Tactics, 2010.  The Ethics Resource Center describes the National Business Ethics Survey as the “most exacting longitudinal research effort examining organizational ethics from the employee perspective.”  This longitudinal survey looks at national trends and tracks views of employees from all levels within organizations.  Responses for this survey included 2,852 employees in for-profit organizations.


About Amy Coates Madsen

Amy Coates Madsen serves as the Program Director of the Standards for Excellence Institute.
This entry was posted in Conflict of Interest, Financial Management, Human Resources, Legal. Bookmark the permalink.

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