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Business Wire
08-05-2025
- Business
- Business Wire
LRN Research Exposes Gaps in Ethical Culture, Enforcement, and Risk Management
NEW YORK--(BUSINESS WIRE)-- LRN Corporation, a leader in ethics and compliance (E&C) solutions, has released its 2025 Global Study on Ethics & Compliance Program Maturity, providing one of the most comprehensive views on the state of corporate compliance programs worldwide. As the global regulatory environment grows more complex, the study finds E&C programs remain uneven in their maturity and reveals significant shortfalls in areas critical to long-term success, including cultural measurement, manager accountability, and enforcement consistency. The data from our latest study shows progress, but also offers a call to action for organizations to do more to embed ethical behavior into day-to-day decision-making, especially at the middle management level. 'As organizations face increasing scrutiny, rising complexity, and fast-evolving risks, the strength and sophistication of a company's E&C program becomes a true differentiator,' said Kevin Michielsen, CEO of LRN Corporation. 'The data from our latest study shows progress, but also offers a call to action for organizations to do more to embed ethical behavior into day-to-day decision-making, especially at the middle management level.' Drawing on insights from global benchmarking and survey data using LRN's proprietary Program Maturity Assessment (PMA), the report evaluates the maturity of E&C programs across six core dimensions: Culture, Written Standards, Enforcement & Incentives, Risk Assessment, Training & Communication, and Resources & Board Oversight. The study reveals that while organizations are updating codes of conduct and expanding board-level oversight, deep gaps remain in middle management engagement, culture-building, enforcement, and risk assessment. Key Findings: Cultural Alignment Underdeveloped: Although 76% of companies conduct annual ethics or culture assessments, only 31% evaluate ethical behavior in performance reviews. Just 15% report having a strong 'tone in the middle,' with manager training and accountability notably under-resourced, including 20% offering no manager-specific training at all. This lack of investment risks reducing corporate values to empty rhetoric, rather than lived practice. Codes of Conduct Frequently Updated, Not Fully Embedded: 71% of organizations revise their Code of Conduct at least every three years, with 45% doing so annually, up from 11% a decade ago. However, many still struggle to integrate these standards into real-world decisions and ensure they're seen as relevant, actionable, and accessible to employees across functions and geographies. Training and Impact Measurement Gaps Persist: Only 44% of organizations assess training comprehension, and just 37% track misconduct trends after training. Many programs focus on completion rates rather than outcome-based metrics, limiting their ability to demonstrate true effectiveness. Investigations Remain Manual and Fragmented: Over 35% of organizations still use spreadsheets to track misconduct cases, and fewer than 30% use cross-functional investigation teams, raising serious concerns about data integrity, auditability, and consistency. Risk Assessment Practices Lack Depth: Only 19% of organizations include talent management risks in their compliance risk assessments, and fewer than one-third evaluate reputational or ethical misconduct risk comprehensively. 'Organizations that embed ethics into how they lead, manage, and reward people are positioning themselves for long-term resilience and trust,' said Ty Francis, MBE, Chief Advisory Officer at LRN Corporation. 'Organizations may have the right policies on paper, but without investment in middle management, integrated systems, and accountability structures, they will struggle to translate principles into practice.' The 2025 Global Study on E&C Program Maturity offers a clear roadmap for building resilient, values-driven organizations based on insights from a diverse, global pool of compliance professionals. Organizations must reinforce manager accountability to ensure that ethical values are consistently modeled and upheld at every level. They should modernize investigations by adopting integrated tools, enhancing speed, transparency, and credibility, and closing the measurement gap by rigorously evaluating organizational culture, training effectiveness, and ethics-based decision-making. To download the full 2025 Global Study on Ethics & Compliance Program Maturity, visit here. The 2025 Global Study on Ethics & Compliance Program Maturity is the latest installment in LRN's decade-long research series of surveys and analyses that track data points from organizations across the world. This research complements other LRN ongoing studies, including the Ethics & Compliance Program Effectiveness Report, the Benchmark of Ethical Culture Report, and Code of Conduct Report. Combined, LRN industry research provides unparalleled insights into best practices, benchmarks, and innovative strategies shaping the future of compliance programs. About LRN Corporation LRN is the world's largest dedicated ethics and compliance company, educating and helping more than 30 million people each year worldwide navigate complex legal and regulatory environments and foster ethical cultures. As one of the Inc. 5000 Fastest-Growing Companies, LRN's growth and impact underscore our commitment to excellence and innovation in the advancement of ethical business practices. Our combination of practical analytics and software solutions, education, and strategic advisement helps companies translate their values into concrete practices and leadership behaviors that create sustainable, competitive advantage. LRN is the trusted long-term partner to more than 2700 organizations, including some of the most respected and successful businesses in the world.
Forbes
28-03-2025
- Business
- Forbes
Why Financial Firms' Ethics Gap Matters To Us All
Firms operating in the City of London and other financial centers have become much more regulated in ... More recent years. (Photo by) Many people — perhaps unfairly — struggle to think of financial services firms in the same context as ethics. Some of this cynicism is undoubtedly down to the fact that money is at the centre of what these firms do, but it is also likely that the fact that the industry is difficult for non-experts to understand adds to the sense that all is not always as it should be. It is little wonder, then, that — as more and more members of the public become directly involved with these institutions through saving for their old age as well as buying their homes — the industry has fought hard to clean up its image. And it is certainly true that employees on New York's Wall Street, in the City of London and elsewhere for the most part behave nothing like their predecessors did in a world that was much less regulated than is the case now. This is not to say that nothing can go wrong. Scandals such as Bernard Madoff's huge Ponzi scheme discovered earlier this century and the collapse of the energy firm Enron a few years earlier are proof enough of that. But, particularly since the financial crash of 2008 and the realization that the connectedness of the world's markets makes us all highly vulnerable, considerable efforts have been made to make the risks and returns of the industry less volatile. Some institutions have even lost their taste for the deal-making aspects to such an extent that they have closed parts of their operations. Only this week, it emerged that the international banking group HSBC had sacked London-based investment bankers on the day they expected to hear news of their annual bonuses as part of an effort to bring down costs and sharpen the bank's focus on its core businesses in Asia and the Middle East. Against this background, it is especially disappointing to see a new report from LRN Corporation, which advises organisations a round the world on ethics and compliance, finds 'significant gaps' in how ethics and compliance are implemented across different levels of leadership. The study based on data from the organisation's recently published 2025 Ethics and Compliance Program Effectiveness Report reveals a clear disconnect between ethical expectations at the executive level and what it calls real-world decision-making among middle and front-line managers. In other words, organizations can say the right things and may even have the correct policies in place, but that does not mean that these translate into what actually happens on an everyday basis. Indeed, the report found that, while 91% of executives and senior leaders in 'high-impact' financial services ethics and compliance programs are reported to make decisions consistently in line with company values, only 28% of middle managers are reported to do the same. That is a staggering 63-point gap. In a statement launching the report, Ty Francis, LRN's chief advisory officer, said the findings reinforced 'the need for financial institutions to invest in ethical culture initiatives beyond the executive level.' That is putting it mildly. Either something is seriously wrong with the recruitment procedures and/or the training is inadequate. Whatever the cause, and it is hard to imagine that the extraordinary rewards still enjoyed by those running some financial institutions do not create something of a sense of entitlement, things — probably particularly in the area of incentives — need to change pretty quickly. As LRN points out, effective ethics and compliance programs are no longer just about mitigating risk, they are also fundamental to sustainable business success. That is crucial in any sector, but in the financial industry — as we have seen only too recently — it is especially so.
