Automotive industry employees, as well as employees in a variety of other industries, are observing widespread illegal and unethical conduct in the workplace, according to a new nationwide survey by KPMG LLP, the professional services firm.

Of the 117 automotive employees surveyed nationally by KPMG, 78 percent responded they had observed violations of the law or company standards in the previous 12 months. This was a slightly higher response than the 76 percent registered for the entire sample size of 2,300 employees.

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“Today, the auto industry is more open to new ideas, perspectives and diversity of approaches,” said Dale R. Frank, director and national industry account leader for KPMG’s Management Assurance Services practice. “While new ways, and sometimes revolutionary ways, are definitely moves in the right direction, they do create significant challenges to companies’ internal control systems. This period of significant change and the KPMG survey is management’s wake-up call for ensuring that there are effective risk management and control processes embedded in the day-to-day operation.”

According to Frank, this includes a strong tone at the top, a robust ethics process and an adaptable and dynamic risk control monitoring system. “As the results of the KPMG survey show, leadership style is a key factor in improving a company’s exposure to fraud, said Frank. Management relationships with employees, customers and suppliers will require a degree of trust, open knowledge sharing and progressive change leadership in this period of re-inventing the industry.”

The KPMG automotive survey found that three-fourths of workers would not place a compliance helpline call if they noticed any violations on the job. Only one-fourth would feel comfortable seeking advice from the compliance helpline if they had questions or concerns about company’s standards, 15 percentage points lower that the national industrial average.

In addition, only 38 percent of all automotive workers believe their CEO and other corporate executives know what type of behavior goes on in the company. This is 6 percentage points lower than the national industrial average and ten percent lower than the national average in the chemicals and pharmaceutical industries.

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In other key KPMG survey findings for the automotive industry:

  • When asked if their report would be treated confidentially if a
    violation was reported to management, less than half thought it would. Comparatively, it is 11 percentage points lower than the
    national industrial average and 19 percent lower than the national
    average in the chemicals and pharmaceutical industries.
  • With respect to reporting a violation, only 36 percent of
    employees in the automotive industry feel they wouldn’t experience some sort of upper management retaliation. This is 9 percentage points lower the national industrial average.
  • Only 77 percent of automotive employees feel that their customers
    are satisfied with the products and services they receive, compared
    to 95 percent in the chemicals and pharmaceutical industry. This
    automotive statistic is 12 percent lower than the national industrial average.

    The KPMG automotive industry survey also showed that the industry felt positive with future expectations and were very comfortable to suggest some key areas:

  • 42 percent of automotive employees felt that if there was a better
    evaluation of business practices by the company’s board of directors, standards would be easier to comply with.
  • Half of all automotive workers surveyed felt if there was a stronger level of commitment from managers, standards would be met more easily.
  • 41 percent of automotive workers thought if there were set earnings and growth projections that were more realistic, they would find it easier to comply with company standards.

    Methodology: KPMG commissioned one of the world’s largest database firms to establish a national database on company standards of conduct, employee perceptions and behaviors relating to organizational ethics. Questionnaires were sent to homes of 3,075 pre-qualified working adults. The questionnaires were fielded between October 15, 1999 and November 15, 1999. A total of 2,390 completed questionnaires were returned for a response rate of 78 percent.

    KPMG LLP, the accounting, tax and consulting firm, is the link between business and technology, providing objective business advice of uncommon clarity that helps clients achieve market-leading results. KPMG LLP is the U.S. member firm of KPMG International. KPMG International’s member firms have more than 103,000 professionals, including 7,000 partners, in 159 countries. KPMG’s Web site is www.us.kpmg.com. KPMG Consulting, LLC is a leading provider of Internet integration services and can be found on the Web at www.kpmgconsulting.com or reached through the firm’s site.