The Auto Channel
The Largest Independent Automotive Research Resource
The Largest Independent Automotive Research Resource
Official Website of the New Car Buyer

Auto Industry Workplace Misconduct Seen As A Widespread Problem

6 June 2000

Finding is Part of Nationwide KPMG Survey
    NEW YORK - 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.

    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.

    "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.

    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 provides business advice 
to help 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.