There is often a significant gap between how senior management sees the effectiveness of ethics and compliance programs and the view that is taken by frontline employees. That’s the standout finding from LRN’s annual Ethics & Compliance Program Effectiveness Report, which observes “the higher the leadership level, the ‘rosier’ the glasses when it comes to ethical culture.”

The report, now in its 11^th year, surveyed over 1,500 ethics and compliance professionals across industries in North America, Europe and Asia-Pacific.

Other findings include:

• High-impact programmes are almost twice as likely to use data, leverage advanced tools and use automation as those classed medium-impact.
• Gen Z employees are more than twice as likely to be skeptical about managerial fairness.
• Use of misconduct trend analysis is 63% for high-impact programs compared to 33% for medium-impact programs.
• There is an increased focus on emerging risks, such as third-party due diligence and supply chain compliance.

And, for the second consecutive year, the top challenges identified by respondents remain unchanged. They are:

• outdated internal systems (64%);
• complex regulatory environments (59%);
• budget constraints (55%);
• mergers and acquisitions (M&A) pressures (52%); and
• staff shortages (51%).

The disconnect between leadership and the front line, alongside the generational gap in perception of fairness and accountability, really stands out, and is markedly different from the findings on data, tech and benchmarking that might be expected from a compliance technology vendor.

The report identifies the disconnect as “one of the most persistent and significant barriers to E&C program effectiveness,” going on to say that, “employees frequently note disparities in how values are enforced, particularly at the managerial level, where middle managers may not always embody the high standards expected of others.”

Drawing on past surveys, it says: “The gap between executive leadership and middle management has been consistently growing year over year. This trend reached its peak in 2025, marking the widest reported disparity to date. This growing divide is a critical challenge for organizations aiming to foster a cohesive and effective E&C program.”

Delving deeper into these findings reveals that while 81% of C-suite executives report incorporating organizational values into their decision-making, along with 79% of executive leaders, just 42% of frontline staff report the same. “While leadership may believe in the robustness of their ethical framework, it is not resonating with or reaching those operating on the ground,” the report observes.

LRN says this data suggests:

• lack of visible ethical role modelling from leaders;
• ineffective communication;
• potential disconnect between stated values and everyday practice.

Another area of disconnect is the perception of consistency in enforcing ethical standards. Even in organizations with low-impact programs, 68% of respondents agreed that their executive leadership made difficult decisions consistent with company values, but just 39% believed middle management did the same.

Contributory factors were identified as:

• perceived favoritism;
• lack of transparency;
• limited involvement of frontline staff.

The report goes on to observe that: “Generational differences further complicate the dynamics between leaders and employees.” It continues: “Gen Z employees, for instance, are less likely than other generations to trust that their managers uphold the same ethical standards expected of them. The data suggest that less than half of Gen Z workers believe their managers hold themselves to the same standards as others.”

LRN says that its findings highlight, “a critical trust gap and a reluctance among younger employees to engage openly in hierarchical environments, posing a challenge for organizations aiming to foster inclusivity and collaboration.”

It suggests improving training, enhancing visibility and strengthening communication to include more robust feedback mechanisms to address the problem.

The findings also revealed another significant divergence, this time in benchmarking, tools and resource adoption. Some key snapshots include;

• 63% of high-impact E&C programs relied significantly on misconduct rend analysis, while only 33% of medium-impact programmes did.
• High-impact programs are almost twice as likely as medium to prioritize the use of benchmarking data.
• Employee insights are twice as likely to be analyzed and used in high-impact programs.
• Significant effort in understanding government regulations is 1.9 times more likely to be prioritized by high-impact programs.
• High-impact programs are 2.3 times more likely to prioritize third-party due diligence.
• The risks of AI, its use in training programs, and its inclusion in codes of conduct is far more likely to feature in high-impact programs.

“High-impact programs equipped with advanced tools and expertise,” says the report,  “are better positioned to navigate regulatory complexities and adapt to emerging risks.” That’s because they can identify trends by using industry benchmarks, enhance decision-making by using advanced data analysis, and improve efficiency by using automation that allows teams to focus on more strategic tasks.

The full report is available to download from LRN’s website.