To Reduce Misconduct, Companies Need To Stop Focusing Solely On The Tone At The Top
ARLINGTON, Va., Aug. 21, 2017 /PRNewswire/ -- Just one-in-four employees believe their teammates engage in and model ethical behaviors, according to a new study from CEB, now Gartner. With recent headlines proving cultural failures can lead to serious misconduct within organizations, it is imperative that companies build cultures of integrity or risk reputational and financial damage.
In 2017, CEB surveyed 5,000 employees on drivers of culture and found only 25 percent of employees believe their teammates and colleagues engage in and model the right ethical behaviors. So for many employees, what their teammates and colleagues say and do has a significant impact on their perceptions of culture.
For almost a decade, building a culture of integrity has been the most frequently cited goal of compliance executives. In fact, more than half stated it was their most critical objective in 2016. However, while this focus led to an increase in resources and training centered on improving corporate culture, these efforts have not meaningfully reduced the amount of misconduct present in organizations. An analysis of nearly 2 million employee responses on corporate culture and misconduct shows that in the last eight years, there has been a less than 1 percent decrease in the number of employees who observed misconduct at their organizations.
"Employees today do not believe their companies are any more ethical than they were eight years ago," said Brian Lee, compliance practice leader at CEB, now Gartner. "Most companies' top-down approach to improving corporate integrity and culture—focused on senior leaders' messages and tone—is clearly not enough to create change. Seeing and sensing integrity in the everyday actions of their peers is what really makes a difference, and until companies focus efforts there, cultural challenges are likely to remain and fester."
A Two-Pronged Approach
Companies should not discount the impact of improving tone at the top. Using a top-down approach requires limited resources and ensures employees learn about culture from individuals that they know and trust. More than half of employees CEB surveyed believe that senior leaders engage in and model the right ethical behaviors, and 61 percent feel the same about their direct managers. However, those leader-level efforts are not enough if they aren't reinforced by the behaviors front-line employees sense and experience among their colleagues.
"Leaders need to model appropriate integrity and ethical behavior, but companies can't stop there," said Lee. "To trust that employees will behave with integrity at all times, leaders must also create an environment where a culture of integrity is consistently reinforced among front-line employees."
While culture seems intangible, it is measurable and efforts to improve it have a meaningful impact. CEB research shows employees from strong cultures of integrity are 90 percent less likely to observe misconduct and are more likely to report that which they do see. They are also more likely to over-perform on individual and team goals. There are financial opportunities, too – notably, companies with strong cultures of integrity have 10-year total shareholder returns, 7 percentage points higher than companies with low perceptions of integrity.
Make Meaningful Changes
Companies can improve trust between colleagues and improve corporate cultures by:
- Helping employees exhibit good behaviors in their work: While employees often know how to avoid committing a compliance violation, they are less sure of how to demonstrate positive compliance and ethics behaviors in their day-to-day jobs. Companies can help employees exhibit behaviors that strengthen their local climate by linking these behaviors to performance expectations and objectives.
- Ensuring managers send consistent messages: Most managers don't actively encourage employees to engage in negative ethical behaviors, but they may deprioritize compliance and ethics messages and requests given other business needs. To ensure teams receive consistent messages, companies should help managers assess and understand what signals they may inadvertently send to employees.
- Making colleagues' positive behaviors more visible: Positive compliance and ethics behaviors exist on many teams, but are often not shared broadly. By encouraging teams to publicly share and commit to consistently demonstrating ethical principles, leaders can ensure that positive behaviors are visible to all employees.
CEB Compliance & Ethics Leadership Council provides organizations and compliance and ethics professionals with cutting edge research, tools and insight help build plans that drive results, save time and money and minimize exposure to fraud and risk. Learn more at https://www.cebglobal.com/compliance-legal.
About CEB, Now Gartner
Leading organizations worldwide rely on CEB services to harness their untapped potential and grow. Now offered by Gartner, CEB best practices and technology solutions equip clients with the intelligence to effectively manage talent, customers, and operations. More information is available at gartner.com/ceb.
Gartner, Inc. (NYSE: IT) is the world's leading research and advisory company. The company helps business leaders across all major functions in every industry and enterprise size with the objective insights they need to make the right decisions. Gartner's comprehensive suite of services delivers strategic advice and proven best practices to help clients succeed in their mission-critical priorities. Gartner is headquartered in Stamford, Connecticut, USA, and has more than 13,000 associates serving clients in 11,000 enterprises in 100 countries. For more information, visit gartner.com.
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