See Something, Say Something
A new global survey underscores the link between corporate culture and the bottom line.
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What your employees aren’t telling you could be putting your business at risk. In a survey of more than 525,000 employees at 130 companies through its RiskClarity Corporate Integrity Service, The Corporate Executive Board Co., or CEB, found that among any given 10,000 employees, an average of three people witness accounting issues and 15 observe harassment each week.
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A Matter of Integrity
But that’s not the worst part. “Only a tiny portion of misconduct ever reaches the part of the company that can actually do something about it,” said CEB CEO Tom Monahan at an NYSE Euronext roundtable in May. The survey showed that nearly half of all observed incidents go unreported — and the CEO panelists agreed that such misconduct can jeopardize a company’s reputation.
Ultimately, executives should be proactive about building a stronger corporate culture for many reasons — one of the most straightforward being overall performance. “High-integrity companies enjoy productivity gains, improved internal communications and better strategic alignment,” Monahan noted. “That adds up to better shareholder return across a five- and 10-year horizon.”
Why People Don’t Report
The top reasons employees in the two biggest economies keep quiet
U.S.
52% fear retaliation
20% feel that they don’t have enough information
18% raised concerns in the past and nothing happened
CHINA
41% fear retaliation
30% feel that they don’t have enough information
20% don’t think the company will do anything about it
The Integrity Index
CEB identified seven key attributes that affect corporate culture — such as tone at the top, openness of communications and organizational justice — and used them to rank companies by level of integrity. Comparing 10-year total shareholder returns of companies scoring in the top quartile with those in the bottom quartile, CEB found that higher-integrity companies outperform their counterparts by 16.2 percentage points.
Higher-integrity companies
+8.8% return
Lower-integrity companies
-7.4% return
Employees with a low regard for their company’s culture are nearly 10 times as likely as those with a favorable perception to spot misconduct at work.
Less than 5 percent of compliance misconduct incidents get reported via a corporate hotline.
Of the managers surveyed, only 53 percent say they feel prepared to respond to employee reports of misconduct.