Over 60% of organisations have incorporated ethical behaviour into performance management, hiring, and reward practices. Here’s how to use ethics and compliance programmes to manage risks and improve business performance


Risk mitigation and analysis were the main areas that Ethics & Compliance programmes prioritised over the past 12 months as the use of AI, hybrid working models, and regulatory action increased in frequency.


Over 60% of organisations have incorporated ethical behaviour into performance systems, major hiring decisions, promotion, and bonuses, showcasing the use of incentives to promote risk-adverse behaviour, according to the latest edition of LRN’s Ethics & Compliance Program Effectiveness Report.

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How ethics and compliance systems are changing

The study shows the focus of E&C programmes has shifted significantly in the past year, from areas like bribery and corruption (27%) to complex government regulations (94% have put effort into this), information security including AI (90%), and data protection (91%).


In tandem, nearly three-quarters (74%) of organisations say they have made significant changes to their E&C programmes to better reflect the needs of remote and hybrid employees.


52% of respondents said their executive leaders are generally “walking the talk” when it comes to dealing with compliance risks by operationalising company values.


However, the data also illustrates that these decisions are largely taken by executive leadership (76%), rather than middle managers (39%).


This indicates that those at the middle level may be struggling to make difficult decisions consistent with company values and purpose.


The report also found that 53% of organisations with high-performing E&C programs have disciplined or terminated a senior executive for unethical behaviour in the past year.


There is also a growing global use of compensation clawbacks in the event of misconduct – with 73% of organisations with high-impact programs having clawback policies in place.


Key findings

The landmark report is based on a survey of more than 1,400 E&C professionals, the vast majority of which come from companies and organisations with at least 1,000 employees in 19 different countries and 26 industries across North America, Europe, and Asia-Pacific.

Other notable findings include:

  • Nearly two-thirds of respondents (63%) indicated that their boards actively ensured that misconduct by senior executives or excellent performers was addressed within the last year.
  • 77% of E&C professionals indicated their organisation emphasises values rather than rules to motivate ethical behaviour—a 27 percentage-point increase from when LRN first asked this type of question in 2016.
  • More than four out of five high-performing programmes indicated that their board engaged in E&C oversight, possessed E&C expertise, and received E&C training—1.4 times more than less-effective programmes.
  • Fewer (only 38%) respondents said they have strengthened risk controls in the areas of sanctions and trade controls, down from 45% just two years ago, despite an increased focus on the global risk landscape and the ongoing conflicts in Ukraine and the Middle East as well as continued sanctions on China, Russia, Iran, and other countries.

Lessons for businesses

This year’s report shows a return and refocus on the basics of what makes an E&C programme effective and impactful.


LRN senior advisor Susan Divers, a former award-winning chief ethics and compliance officer, and lead author for the report, said: “With the global emergence of artificial intelligence tools, geographically dispersed workplaces and hybrid working models, as well as a growing convergence of regulatory enforcement for organisations, it’s clearer than ever before that high-performing E&C programs are focusing on values, adapting to change, and emphasising personal accountability to navigate these new waters.”


“Businesses globally are facing numerous challenges from a regulatory and technological perspective, and it’s important that their E&C programs anchor board members and employees alike to company values and missions,” added Kevin Michielsen, CEO of LRN.


“Each year, the findings of the E&C Program Effectiveness Report showcase a link between fostering ethical cultures and business performance. The more adaptable, organised and clearly communicated an E&C programme is, the more prepared a company is to face the everchanging industry and regulatory challenges that lie ahead.”