Attitudes toward ethical behavior in corporate America still suffer from a gaping divide among executives and rank-and-file employees

Survey Shows Executives Feel Businesses Operate Ethically; Employees/Customers Admit to Mistrust

• 32% of general public said very few and 6% said none of the top 1,000 corporations in America operate ethically
• 79% of executives surveyed said that almost all or most of the top 1000 companies operate ethically
• 80% of general public indicated that their perceptions of a company's compliance with ethical behavior had a direct influence on their purchasing decisions
• 94% of executives believe that ethical companies are generally more efficient and better run

Los Angeles, CA, November 18, 2003 - U.S. employees and the general public are still having a tough time trusting management in Corporate America in the wake of the current criminal trials of former executives. Interestingly, senior management has quite a different view. Based on the findings of a recent survey conducted by independent analyst group, Wirthlin Worldwide, and LRN, a leading provider of legal, compliance and business ethics management and education services to mid-sized and global corporations, the gap between attitudes of the working public and the senior management they report to is markedly wide.

Despite the proliferation of dialogue in this country about the ethics debate and the move by lawmakers to institute regulatory requirements such as Sarbanes-Oxley to control corporate abuses, the average American is not convinced that dramatic change is taking place. According to the Wirthlin Worldwide/LRN study, nearly three-fourths (71 percent) of the general public queried say that, at best, only some of the top 1,000 corporations in America operate in a fair and honest manner. While one third (32 percent) say very few corporations operate ethically, and six percent believe that no large U.S. corporation operates ethically. Six in 10 (61 percent) believe that mistrust in corporate America, in light of recent scandals, is justified.

However, despite the high degree to which corporations still lack credibility among the general public, the study also indicated that managers, for the most part, take the opposite view. According to the Wirthlin Worldwide/LRN findings, 79 percent of executives surveyed believe that, of the 1,000 top corporations in the U.S., "almost all of them" or "most of them" are operating in a fair and honest manner. At least 71 percent of those polled believe that Corporate America is being unfairly judged and 90 percent of the executives queried were either "very confident" or "somewhat confident" that American companies are now taking the appropriate actions to prevent future financial mismanagement and scandals. Ninety-one percent were very confident that the appropriate actions were being taken in the organizations they manage.

"This study clearly reveals that, despite heightened regulatory scrutiny and efforts by companies to implement ethics programs, Corporate America is still at risk of missing the mark, at least in the public's eye, when it comes to doing - and consistently demonstrating that they're doing - all the right things," explained Dov Seidman, chairman and CEO of the Los Angeles-based LRN. "Until that changes and there is a true restoration of trust, it's an enormous drag on profits as customers choose to spend only with companies they can trust."

According to the survey, the link between attitudes about a company's ethical stance and an individual's incentive to either purchase that same company's product or become affiliated with that company was surprisingly high. Eighty percent of the general public queried indicated that their perceptions of an organization's ethics and compliance with ethical behavior had a direct influence on their likelihood to buy a particular brand. Additionally, 76 percent said that their perceptions of a company's ethics had an impact on whether they would want to work at that organization. Even more disturbing, 74 percent of those queried indicated that their perceptions of a company's ethical behavior directly influenced their decision to invest in the company stock - a finding that should be of particular concern for companies and their Board members looking to reinvigorate their Wall Street reputation in the light of executive scandals.

"This survey only reiterates the immense impact of trust on our corporate economy," added Mark Wirthlin, senior vice president of Wirthlin Worldwide. "Companies simply cannot underestimate the destructive effects of ethical missteps on their short-term profits and long-term reputations. The findings of this study reveal that, despite the advent of regulatory measures and the compliance of a well-informed few, most organizations just are not doing enough to change long-standing and bitter perceptions among the lay public and the general workforce."

According to Seidman, changes in perception have to begin within the employee base. "Business has a unique opportunity to turn things around by demonstrating to workers that they are serious when they say 'We don't want you to cut corners; we want you to do the right thing.'"

LRN, which Dov Seidman founded in the early 1990s, provides law and ethics training for some of the most high profile names on Wall Street including Boeing, Dow Chemical, DuPont, Ford, MetLife, Pfizer and Raytheon. The company helps organizations instill trust throughout their employee base by enabling workers to better understand the expectations of management in the critical area of lawful, ethical behavior. The LRN series of online ethics education programs allows employees to receive vital training, directly at their desktop, through a comprehensive interactive tutorial on a variety of ethics issues. The compliance management systems developed by LRN provide an integrated platform for launching, maintaining and reporting on ethics and compliance related activities across the global enterprise.

About The Survey
LRN commissioned the Wirthlin Worldwide study to identify trends within the workplace relative to trust and ethics, and to specifically examine comparative perceptions among senior leadership and the constituents they serve - both the employee workforce (from the shop floor to the executive office) and the general consumer on the street. According to Seidman, the findings reveal "the disparity is still far too extreme for companies to not take the issue of ethics very seriously."

"Ethics and integrity must be designed into the system - like quality and safety - rather than issued in a disembodied edict. Companies need to weave ethics into all business processes," added Seidman. "Trust is earned over time through responsible, ethically sound behavior throughout organizations, not just at the top."

The survey directly supports Seidman's assertion. An overwhelming 94 percent of executives believe there is a connection between ethics and company performance saying that companies with ethical cultures - cultures that encourage openness, honesty and doing the right thing in all situations - generally have more efficient, better-run operations.

The study, conducted the week of September 29th through the week of November 3rd, surveyed attitudes among a representative sample of 1,001 adult Americans for the general public perceptions and a sample 150 top executives from the nation's top 1000 corporations.