ALM Properties, Inc.
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In recent years, companywide layoffs, organizational restructuring, and changes in senior leadership have become common corporate realities. Significant and/or frequent adjustments 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 member-based advisory company CEB, employees in the highest-change environments witnessed almost three times the level of peer misconduct as employees in environments undergoing no significant change.?The report, "Managing Misconduct During Career Moments: Reinforcing Ethics in a High-Change Environment," included responses from 3,311 employees who hailed from more than 25 countries. All were employed full-time by organizations with at least 500 workers.
CEB research director Abbott Martin says changes are occurring more often than they did in years past. "There's definitely a notion among employees and among organizations themselves that the changes we're talking about are occurring with increased frequency," he says. And with good reason. CEB's research found that 84 percent of the companies underwent at least one significant change in the last two years, and more than 65 percent experienced multiple changes.
According to CEB, there are eight "career moments" that pose the biggest threats to businesses in terms of employee misconduct:
Martin says the research showed that these critical changes go hand-in-hand with increased observations of misconduct and decreased perception of corporate integrity. 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 employee's 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. 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.
Executives who can identify the particular career moments affecting their workplaces can reduce employee misconduct and the damage it causes their companies. "If compliance officers and HR executives want to drive engagement and create a culture of integrity," Martin says, "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 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:
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 "it's not always about pushing out new rules and policies and memos and so forth, but understanding the employee experience a little bit more."