Singapore organisations lead the way in ethics and compliance: Report

When it comes to ethics and compliance (E&C), Singapore employers are head and shoulders above organisations from other parts of the world, according to a report from E&C solutions provider LRN.

Overall, 90% of organisations in Singapore reported making difficult decisions that were consistent with the organisation’s values in the past year – 20% higher than the global and APAC averages. 

Also, 72% of employers in Singapore indicated that their boards have actively modified or abandoned business initiatives based on compliance factors – also 20% higher than the global and APAC averages. This could include walking away from business deals with customers or business partners with questionable ethical practices, according to the report.

“The way the questions were answered by the majority of organisations in Singapore is that there's a strong culture for acting in an ethical way. And so that's a good place to start,” said Eric Morehead, director of advisory service solutions at LRN and lead author of the Singapore report, in talking with HRD.

Organisational alignment is the key to realising ESG strategy, according to a previous report.

Ethics in incentives, disincentives

Singapore organisations significantly outperform global and APAC programmes in the implementation of incentives and disincentives for ethical behaviour, according to LRN’s survey of 1,415 ethics, compliance, and legal experts at companies and organisations in 19 different countries and 26 industries across North America, Europe, and Asia-Pacific, including 112 companies in Singapore

That’s because they factor in ethical behavior in considerations into measuring the following:

• management performance (87% for Singapore; 79% globally)
• hiring (82% for Singapore; 72% globally)
• promotion (79% for Singapore; 67% globally)
• bonus awards (73% for Singapore; 60% globally).

Three-quarters (75%) of Singapore employers also reported that they factored ethical behaviour into their promotion and bonus consideration, and 60% terminated or disciplined an executive or high-performing employee over unethical behaviour in the past year. The global and APAC averages stand at only 40%, according to the report.

“When we're talking about incentives and disincentives… it’s easier to implement penalty, whether that's [cutting] someone's bonus or demoting them or terminating them from employment,” said Morehead. “That is something that is pretty well-trodden ground. A lot of HR professionals that are in the audience understand that we have processes in place for investigation and remediation whenever there's that misconduct alleged. 

“It's much harder to put together incentives – especially effective incentives. Primarily, what we're seeing where it's been most effective is where organizations prioritize doing business the right way, and making ethical decisions and business and rewarding.”

What’s happening is, these days, in different companies, middle managers are taking on more responsibilities to ensure compliance, said Morehead.

“In many organizations now, [middle managers] have responsibility to make sure all of their direct reports are completing the training, all of their direct reports are not engaging in this conduct, all their direct reports have a two-way discussion with the manager about both expectations and issues that might come up. So those middle managers are much more conduit of the compliance program and [these are] more mature programs.

“And in those situations, you can measure those objective things: Have your direct reports completed all the training? Have you delivered messaging or information that is required to directly cascade to your direct reports?”

This makes giving incentives easier, he said.

Investors want to know how businesses are addressing the climate crisis and the need for sustainability, as well as questions around ethical business and employee health and wellbeing, according to a previous report.

Room for improvement at Singapore organisations

Despite being ahead employers from other part of the world, employers in Singapore still have a lot of room for improvement when it comes to their E&C programming, said Morehead.

“Overall, Singapore starts a little bit ahead of the game with organizations, perhaps in other jurisdictions because they have a strong foundation,” he said.

However, employers in Singapore can do better when it comes to beefing up E&C programs.

“Singapore is really strong on culture, but needs a little more work on the structural components of programs,” Morehead said.

They need “stronger, more robust, more modern training” around the area, he said. Singapore employers also need to put some more resources towards modernizing the apparatus of compliance where, Morehead said “there is a significant gap”.

In its 2024 Ethics & Compliance Program Effectiveness Report, LRN noted: “Program effectiveness is foundational to risk mitigation. Global ethics and compliance programs ranked risk mitigation and risk analysis as their top priorities for improvement and usefulness for evaluating program impact.”