Every three years, the UK’s Institute of Business Ethics surveys the employees and managers of UK organisations for their views on how well ethics is being managed at work. This year’s findings should resonate with insurance firms on two counts, the first of which I’ll explore in this post, and the second next week. Both are sources of ethical risk to insurance firms
One of the changes being introduced through the Senior Insurance Managers Regime will be the appointment at director level of a whistleblowers’ champion, to be in place from 7th March 2016. They won’t find the IBE’s survey to be a reassuring read and I’ll explain why through a series of statistics.
The IBE survey found that 84% of employees were aware of their firm having a means for them to report misconduct confidentially. That’s an increase of 32 percentage points over the 52% level of awareness back in 2005, when the survey was first conducted. Big tick there then. Interestingly, as the age of employee increased, the level of awareness dropped: not hugely, but enough to be noticeable.
Aware of Misconduct
The 2015 survey found that 20% of employees had been aware of misconduct by their employer or colleagues during the previous twelve months. Misconduct was taken to mean either breaking the law or their organisation’s ethical standards. That percentage has been fairly consistent over the years. The top three types of misconduct were:
- people being treated inappropriately / unethically / unfairly – 46%
- bullying / harassment – 42%;
- safety violations – 28%
Another fairly consistent percentage over the ten years of the survey has been the number of employees who were aware of misconduct and who then reported it – 55%. While that’s a sizeable percentage, so is the 45% who did not report it, and the top three reasons for not reporting were:
- I felt I might jeopardise my job – 30%
- I did not believe corrective action would be taken – 24%
- I felt I would be seen as a troublemaker by management – 17%
Satisfied with the Outcome?
And now for the really explosive finding: of that 55% who did report misconduct (from the 20% who saw it), only 39% of that 55% were satisfied with the outcome of having spoken up. That’s a huge drop from the 70% who were satisfied back in 2012. The IBE’s thoughts on this radical decline? It’s that management are not convincing people that they’re taking the necessary corrective action in response to reports of misconduct.
So what can insurance firms learn from all this? Three things:
- You can produce the written policies and procedures, but you need to make sure that people are using them. There’s not enough ‘walking the talk’. Firms should assess the extent of that ‘gross-net’ gap and work out what’s behind it;
- Middle managers need to do better. They need to be trained in how to handle whistleblowers correctly, and they need to be told in no uncertain terms that they’re responsible for making sure the message is listened to and the messenger treated properly. I wrote this paper last year for the CII on just this topic.
- retaliation should be the whistleblowers’ champion’s main worry. The IBE survey points to it still being rife. I expect the FCA to bring one or two highly visible cases against firms and individuals who retaliate or tolerate retaliation.
Some insurance firms may try to dismiss the IBE ‘ethics at work’ survey as irrelevant, as too broad to apply to them. The wider evidence however indicates that it is most definitely relevant: indeed, the overall financial services sector may be struggling even more than others. With all the individual accountabilities wrapped up in the Senior Insurance Managers regime, due to ‘go live’ in only a few months time, there’s plenty in the IBE survey to fill out the audit and training plans for insurance firms in 2016.
You can read the IBE’s ‘Ethics at Work’ 2015 survey report here