Big Changes at the Company? Expect Employee Misconduct
In recent years, company-wide layoffs, organizational restructuring, and changes in senior leadership have become corporate realities. Significant and/or frequent dismantling of the status quo, however, can lead to an escalation of employee misconduct, including incidents of bribery, harassment, and other violations of the law or company policy. According to a recent report from CEB, Managing Misconduct During Career Moments: Reinforcing Ethics in a High-Change Environment [PDF], employees in the highest-change environments witnessed almost three times the level of peer misconduct as employees in environments undergoing no company-wide change.
CEB, a member-based advisory company, included responses from 3,311 employees in this latest executive guidance. Survey respondents represented more than 25 countries, and all were employed on a full-time basis by organizations with at least 500 workers.
According to CEB research, 84 percent of companies underwent at least one significant company-wide change in the last two years, and more than 65 percent experienced multiple changes. CEB research director Abbott Martin says company-wide changes are occurring more often than they did in years past. Theres definitely a notion among employees and among organizations themselves that the changes were talking about are occurring with increased frequency, he told CorpCounsel.com.
According to CEB, there are eight career moments that pose the biggest threats to businesses in terms of employee misconduct:
- Organizational restructuring
- Change in senior leadership
- Change in job responsibilities
- Reduction in benefits
- Change in direct manager
- Wage freeze
- Hiring freeze
Martin says the research showed that these critical changes go hand-in-hand with increased observations of misconduct and decreased perception of corporate integrity. Executives who can identify the particular career moments affecting their workplaces can reduce employee misconduct and the damage it causes their companies. Employees experiencing corporate layoffs, for instance, observe three times as much bribery, 3.5 times as much fraud, and four times as much insider trading as unaffected employees.
Overall, disruptions to an employees environment can take an emotional toll, which, according to the report, can negatively affect how they behave and make decisions in the course of their work.
According to CEB, most executive leaders focus their risk mitigation efforts on conventional areas of concern such as emerging markets and changing regulatory landscapes. But not enough companies anticipate specific corporate changes and put targeted strategies in place to reduce the risk of misconduct ahead of and during an internal change.
Only 34 percent of employees reported receiving what they considered to be the appropriate amount of information from their employer at a career moment.
Martin says, "If compliance officers and HR executives want to drive engagement and create a culture of integrity, they must begin asking themselves when and how they can communicate to most effectively influence employee behavior during these critical times of change."
CEB found that companies that proactively address significant events with employee outreach can reduce misconduct by as much as 42 percent. An ideal outreach strategy communicates the changes to employees in advance, stresses the importance of ethical behavior, and uses managers to communicate with workers about ethics during the change.
CEB recommends three steps for minimizing misconduct risk at critical career moments; all three are discussed in detail in the free report:
- Understand, prioritize, and address the highest-risk career moments for your company.
- Integrate and reinforce ethics in your change management strategies.
- Help managers during career moments by providing targeted tools and resources.
Proactively approaching career moments and other corporate changes should be part of a broader risk mitigation strategy. Martin says companies, their managers, and corporate leaders of functions such as HR and legal should keep in mind that its not always about pushing out new rules and policies and memos and so forth, but understanding the employee experience a little bit more.