Regardless of industry or where their headquarters is based, all companies should be concerned about misconduct. In 2015, 23.3% of corporate employees either observed misconduct (12.9%) or said they might have but weren’t sure (10.4%), according to CEB data.
So for every 10,000 employees at the typical company, 1,290 are likely to have observed — and 1,040 are uncertain whether they observed — some form of misconduct, from conflict of interest to harassment to health and safety violations.
Companies have responded in numerous ways to combat this behavior. Training, policies, controls, and compensation have all been changed and produced results, up to a point. But the best “predictor of future misconduct” (i.e., the thing most likely to lead to misconduct or the lack of it) is a company’s corporate culture. The unwritten rules and conventions that permeate all employee interactions and decisions are a powerful determinant of how employees approach many situations, including harassment, fraud, corruption, how they handle information, and corporate quality.
If they want to help their companies reduce misconduct and encourage employees to report it when they see it, compliance teams will make best use of their resources by building and sustaining a “culture of integrity.”
Communication and a Culture of Integrity
Based on surveys of nearly 1.5 million employees, a successful culture of integrity is composed of seven elements (pdf; see page 19) and, of these seven, professionals, managers, and senior executives felt least positive about “openness of communication,” according to CEB data.
Non-managers were only slightly more positive; they scored openness of communication second lowest, just above “trust in colleagues”. (See Table 1).
Table 1: Components of the integrity index ranked by position level Respondents 2009-2015 RiskClarity™ Benchmark; n=214 companies, 1,474,843 employees Source: CEB 2009-2015 RiskClarity™ Surveys
Two Ways to Encourage More Open Communication
All of this makes openness a good starting point for many compliance teams that want to improve the corporate culture. Openness really boils down to two things. First, that managers are willing to share important information with employees and, second, that employees are encouraged to offer opinions on issues facing the company. Two tactics can help with this.
Help managers to communicate compliance issues and encourage ethical behaviors: The compliance team at one large chemicals conglomerate in CEB’s networks built a cascade of communication throughout the corporation that encouraged managers of different levels to pass on important compliance messages.
To start off, Compliance published business ethics bulletins on the company intranet. These were based on real violations – such as an account of how corporate courier services were used for personal packages and that included the company policies that were transgressed and how the guilty employees were dealt with – and positive examples of ethical behavior – such as how a manager had refused to accept a gift she won at a supplier raffle because it contravened the firm’s ethics policy.
More importantly, the company tapped all managers and supervisors to disseminate these ethics messages. Managers of all ranks, ranging from business unit heads to plant supervisors, were required to discuss the bulletins with their direct reports via emails, phones, in groups, or in one-on-one dialogues.
The fact that the bulletins referred to real-life cases meant that managers and the team could more easily share opinions and openly exchange thoughts about preventive actions for the future.
Encourage employees to openly discuss ethical concerns: Open communication also means giving more junior employees the freedom to speak their mind.
The regular team meeting is a good starting point. When employees sit down with colleagues they already know, they feel more comfortable expressing their real thoughts.
The group leader or meeting host can start with a recent ethical dilemma that resonates with team members. Real examples from the department, function, or business unit allow employees to picture themselves in a similar situation, and spark their thinking.
Train managers to encourage everybody to participate. Here are a few questions to trigger lively discussions:
What’s the nature and cause of this issue?
How would it affect the organization?
What advice would you give to the parties?
How would you prevent this problem?
In addition, the meeting host could give brief feedback to help employees understand the value of their open and frank conversations.
For example, when an employee mentions a gray area in the company codes, the host could say, “Thank you so much for bringing that to my attention. I will reach out to Compliance and make sure they’re aware of this issue, too.”