I recently returned from the latest ECI Fellows meeting, which focused on behavioral ethics. This post is part of a series where I share my insights and lessons from the meeting.
According to a 2018 report from the Association of Certified Fraud Examiners, 40% of workplace wrongdoing is identified through tips provided by employees. No other form of identification comes close (internal audit, IT controls, surveillance, etc.).
This is noteworthy for at least two reasons, both related. First, this high percentage is achieved despite a strong fear of retaliation by employees (reports of retaliation doubled between 2013 and 2017). Second, we can unleash even more reporting if we invest in our speak-up culture rather than in our controls.
Companies should make sure they have an anonymous reporting channel and a non-retaliation policy in place. Beyond these program elements, they should focus on creating a culture where people don’t feel pressured to compromise standards and feel safe when reporting concerns (i.e. don’t fear retaliation). If done well, I would like to think that 80% of wrongdoing could be identified by employee reporting (and the rest by controls).
How can you start down that path today? Identify a business pressure and tell your employees you do not expect them to compromise their standards to overcome this pressure. Then – and this is key – ask them how they intend to meet their goals despite this pressure. They won’t believe you truly want them to do things the right way until they truly believe you care about how things get done. Once that belief is set, they will feel safe to report wrongdoing and won’t fear retaliation for doing so.