Magazine article Talent Development

Corporate Integrity Pays off in Better Performance: Organizations That Take Action and Encourage Employees to Speak Up about Corporate Misbehavior Experience Fewer Workplace Violations and Higher Shareholder Returns

Magazine article Talent Development

Corporate Integrity Pays off in Better Performance: Organizations That Take Action and Encourage Employees to Speak Up about Corporate Misbehavior Experience Fewer Workplace Violations and Higher Shareholder Returns

Article excerpt

[ILLUSTRATION OMITTED]

Fostering a culture in which employees feel free to speak up about company wrongdoing does more than promote open communication; new research shows that it is also improves company performance and productivity.

According to a Corporate Executive Board (CEB) survey of nearly 500,000 employees from 150 global companies (120 U.S.-based) in 85 countries, companies that encourage employees to speak up about misdeeds and communicate openly "deliver shareholder returns an average of 5 percent higher than their peers."

In addition, the research showed that employees in work cultures with high integrity are 67 percent less likely to see major incidences of corporate misconduct. In contrast, companies low on the ethics scale experience 10 times more misconduct, according to CEB.

"Misconduct refers to any violation of law or company policy from the perspective of the respondent employee," says Dan Currell, executive director of CEB's Legal and Compliance Practice. These range from insider trader (very few reports) to harassment (many more reports) as well as finance fraud, and environmental and regulatory violations, he says.

In addition, CEB studies show that direct managers who live the corporate values in their daily work can improve employee performance. In reference to the question, "Does my manager demonstrate corporate values," on a CEB survey on employee productivity, Currell says, "There was a 12 percent difference between employees who had negative answers and those with positive answers to the question. …

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