Are more execs being fired for unethical behaviour?

Survey finds employers 'sharpening their focus on one standard for everyone' – and clawbacks are common

Are more execs being fired for unethical behaviour?

More than two out of five organisations have disciplined or terminated a high-ranking employee in the past year due to unethical behaviour, according to a survey among ethics and compliance professionals. 

The survey — carried out by LRN among 1,860 professionals — revealed that 44% of the respondents said that bad behaviour led to the sacking or disciplining of a senior executive or top performer at their organisation.

The findings indicate that companies are "sharpening their focus on one standard of ethical behaviour for everyone," according to LRN senior advisor Susan Divers.

Consequences of unethical behaviour

Among the respondents who reported employee terminations from unethical conduct, 76% said these individuals became subject to financial "clawback."

In fact, 56% of the respondents said their organisations have policies that cover the clawback of bonuses, incentives, and other forms of financial compensation, according to the report.

"Unethical behaviour or compliance failures invariably impact a firm's economic performance, and the substantial use of 'financial clawbacks' in such circumstances not only protects company revenues but also drives home that they have a business culture where misconduct will not be tolerated," Divers said.

For other organisations, executives' and employees' ethical behaviour are evaluated as a significant factor in the following aspects:

  • Performance management process (72%)
  • Hiring for managerial, executive, or control functions (69%)
  • Promotion (67%)
  • Bonus award process (61%)

Across the world, reports of unethical behaviour resulting to termination or resignations are widespread.

Just last year, Essendon Football club's former chief executive Andrew Thorburn stepped down a day after his appointment after it was found that he chaired a church that claimed homosexuality was a sin. 

In 2020, the former CEO of US fertiliser company Agroplasma was dismissed after footage of him allegedly insulting a Black Uber driver surfaced.

In 2019, McDonald's former CEO Steve Easterbrook was fired over his sexual relationships with subordinates.

 

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