Ceb career moments presentation

Why Career Moments Matter...And What You Can Do About Them

CEB Compliance and Ethics Leadership Council

2

© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN

ACCELERATION OF CORPORATE CHANGEMacroeconomic, market, and business uncertainty drive frequent changes to corporate strategy, financing, and operating processes.

■ In the past two years, 84% of companies experienced a significant company-wide change.

n = 63.

Key Trends Driving Corporate Change

Companies Experiencing Change in the Past Two YearsCommunications Executive Council Member Survey, 2012

Single Company-Wide Change

0%

35%

70%

0%6%

10%

19%

65%

No Change

Minor Change

Isolated Change in BU

Multiple Company-Wide Change

Macroeconomic Changes

■ Slow, volatile economic growth

■ Uncertain interest rates

■ High unemployment rates

Market Changes

■ Increase in global regulations and uncertainty in enforcement

■ Advance in technology

■ Shift in consumer demand

Production Changes

■ Increase in supply chain risks

■ Shift in employee demographics, geography, and expectations

3


EMPLOYEES FEEL THE PAIN

Percentage of Employees Experiencing Given Career Moment in the Past YearSelect Employee Moments , CELC Survey Data 2012

Corporate changes manifest as career moments for employees.

■ Eighty-three percent of employees have experienced career moments in the past year.

■ On average, employees experience 2.2 career moments per year.

n = 3,311.

Degree of Change Fatigue Company Reported, CEC Member Survey 2011

n = 63.

0%

25%

50%

2% 3%10%

24%

44%

14%

3%

Not at All Very Low Low Moderate High Very High Severe

Fre

que

ncy

of

Res

po

nse

DERF 11-3580

Catalog # CEC1086311SYN

Title

Increasing StressSixty-two percent of corporate employees agree that workplace stress has increased in the past two years.

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23% 21% 20% 18% 17% 15% 14% 13% 10% 9% 8% 7% 5% 5% 4%

DERF 12-4536

Catalog #

Title

4


A SCIENTIFIC APPROACH

CELC’s Workforce Change Survey, 2012

The CELC launched a new-to-world survey to understand the impact of career moments on employee behaviors, perceptions, and receptivity to training and communications.

■ The CELC explored the relationship between specific career moments and the related corporate and compliance response.

What Impact Do Career Moments Have on Employee

Behavior?

Which Career Moments Do Employees Experience?

How Can Compliance and Ethics Maximize Integrity During Times of Change?

Impact ■ Observations of Misconduct ■ Misconduct Reporting Rate ■ Perceptions of Integrity ■ Employee Engagement and Discretionary Effort

Career Moments ■ Corporate Change 1 ■ Compensation/Benefit Change 2

■ Role and Team Change 3 ■ Promotions 4

Intervention ■ Timing of Intervention ■ Channel of Intervention ■ Content of Intervention

Employee Demographics ■ 3,311 responses from full-time employees of large organizations (500+ employees)

■ 25+ countries represented ■ Respondents represent full range of industries and corporate positions

■ Average respondent age of 37.4

1 Corporate Change: Layoffs of team members, significant organizational restructuring, merger/acquisition, and/or substantial change in senior leadership.

2 Compensation/Benefit Changes: Wage freeze or salary cap, reduction in benefits, reduction or elimination in variable pay, mandatory unpaid leave/furlough, hiring freeze, and/or early retirement offer.

3 Role and Team Change: Significant change in job responsibilities, significant change in skills you use, change in your direct manager, and/or transfer to new team.

4 Promotions: Promotion to manager and general promotion.

DERF 12-4536

Catalog #

Title

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Impact of Career Moments1 on Observations of MisconductBy Number of Career Moments in the Past Year (Excluding Promotions)

0%

25%

50%

Per

cent

age

of

Em

plo

yees

O

bse

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g M

isco

nduc

t

No Moments

5–10 Moments

Four Moments

Three Moments

Two Moments

One Moment

Benchmark Average = 27.9%

n = 3,311.

INTRODUCING CHANGE RISKCareer moments have a significant impact on observations of misconduct, reporting rates, and perceptions of integrity.

■ Employees experiencing two or more career moments in a given year observe twice as much misconduct as other employees.

Impact of Career Moments on Employee Perceptions of IntegrityBy Number of Career Moments in the Past Year (Excluding Promotions)

n = 3,311.

Em

plo

yee

Per

cep

tio

n o

f In

teg

rity

No Moments

5–10 Moments

Four Moments

Three Moments

Two Moments

One Moment

-12%

-6%

0%

A 4% decline is equivalent to moving from middle to bottom-quartile scores in perceptions of integrity.

Career Moments and Reporting

■ Employees more frequently report misconduct as they experience additional career moments.

■ Reporting rates increase most significantly during role or team changes.

1 Career moments excluding promotions.

DERF 12-4536

Catalog #

Title

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Impact of PromotionsNot surprisingly, promotions—particularly promotions to manager—decrease levels of observed misconduct.

IDENTIFYING TOP CHANGE RISKS

Compliance Risk1 of Specific Career Moments

Considering the likelihood and impact of each career moment illustrates the magnitude of change risk.

■ Career moments increase risk by:

– Causing employee stress,

– Creating control gaps,

– Exposing employees to new rules and operating procedures before receiving appropriate training, and

– Changing perceptions of company integrity and willingness to rationalize behavior.

Corporate Changes

Compensation/Benefit Changes

Role and Team Changes

Top Four Risks 2

1. Layoffs2. Organizational

Restructuring3. Change in Senior

Leadership4. Change in Job

Responsibilities

Per

cent

age

of

Em

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yees

Ob

serv

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Mis

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at M

om

ent

in P

ast

Year

Percentage of Employees Experiencing Moment in Past Year

1 The CELC attempted to isolate the compliance risk of specific moments. While some moments do happen in tandem, factor analysis reveals a relatively low and random relationships between specific moments.

2 Risk Ranking is defined as the frequency of moments multiplied by the percent change in observed misconduct. This score represents the gross compliance risk of a moment.

DERF 12-4536

Catalog #

Title

0%

15%

30%

0% 15% 30%

Layoffs

Organizational Restructuring

Change in Job Responsibilities

Change in Senior Leadership

Change in Direct Manager

Transfer to New Team

No Moments

Change in the Skills You Use Hiring

Freeze

Wage Freeze

Reduction/Elimination in Variable Pay

Mandatory Unpaid Leave/

Furlough

Merger/Acquisition

Early Retirement

Offer

Reduction in Benefits

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THE MAGNITUDE OF CHANGE RISKKey career moments trigger significant increases in specific types of misconduct.

■ Employees experiencing corporate layoffs observe 1.7x as much inappropriate giving, 3x as much bribery, 3.5x as much fraud, and 4x as much insider trading as unaffected employees.

What the Numbers MeanDuring layoffs, for every 10,000 employees, an additional 500 employees would observe fraud.

Observations of Inappropriate GivingPercentage of Employees Observing During Select Moment

Observations of BriberyPercentage of Employees Observing During Select Moment

Observations of FraudPercentage of Employees Observing During Select Moment

No

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0%

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9%

Observations of Insider TradingPercentage of Employees Observing During Select Moment

0%

5%

10%

2%

7%6%

7%6%

No

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0%

40%

80%

73%70%

62% 61% 61%58% 58% 56% 56%

54% 54%50%

48%

35%

REPORTING THROUGH CHANGE

Employee Reporting Rates1

By Career Moments

Employee reporting rates increase during most career moments.

■ Employees may feel more willing to speak- up before they become invested in workplace practices and with new colleagues.

■ Compliance and ethics officers should mine these “amnesty” periods where employees can critically review workplace practices and accepted norms.

Role and team changes significantly increase reporting and represent a valuable opportunity to solicit information about workplace practices and culture.

Role and Team Changes

Corporate Changes

Compensation/Benefit Changes

A R

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Pay

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Employee Reporting Rate At No Moments

= 45%

Reduction or elimination in variable pay (and compensation changes generally) may suppress reporting.

n = Varies by moment.

1 Reporting Rate—Percent of employees that report observed misconduct to an internal party (manager, compliance, helpline, etc.).

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Two-thirds of employees do not receive the appropriate amount of information during a career moment.

■ To relieve employee stress—and improve positive outcomes—the CELC identified the attributes that impact employee behavior during career moments.

■ The proper timing, channel, and content of compliance interventions explains 40% of changes in employee perceptions of integrity during key career moments.

NOT YET MEETING THE CHALLENGE

Employees Receiving Right Amount of Information1

Percentage of Employees at Career Moment

34% Received

Appropriate Amount of

Information

46% Neutral

n = 2,218.

1 Employees were classified as having “Received Appropriate Amount of Information” if they had scores of 5.0 or higher on a 7-point agreement scale. Scores below three were classified as “Not Receiving Appropriate Amount of Information.”

2 Regression analyses were conducted to determine the aspects of outreach most indicative of higher perceptions of integrity and lower rates of observed misconduct. While a wide range of demographic and independent variables were included in the model, the three variables above provided the highest level of explanatory power.

20% Did Not Receive Appropriate Amount of Information

Timing of Communication

Channel of Communication

Content of Communication

1

2

3

Attributes of Effective Compliance and Ethics Interventions2

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CREATING EFFECTIVE INTERVENTIONS

Attributes of Effective Compliance and Ethics Interventions

CELC identified the attributes of timing, channel, and message with the greatest impact on employee perceptions, misconduct, and engagement.

■ This research helps companies target the right employees with the right message at the most critical times.

1 Timing—Employees were asked if they received compliance and ethics messages before, during, and/or after career moments.2 Channel—Employees were asked who they received communications from senior leaders, corporate functions (HR, Legal, Corporate Communications),

managers (formally), managers (informally), peers, media, social media, and unions.3 Message—Employees were asked if they received six key messages surrounding the moment(s).

Intervention Timing1

Key AttributeCommunicate before (as soon as practical) a career moment.

Intervention Impact ■ Reduces observation of misconduct by 20%.

■ Increases employee reporting rate by 5%.

■ Increases perceptions in integrity by 21%.

Intervention Channel2

Key AttributeUse direct managers to communicate through a career moment.



■ Increase perceptions of integrity by 26%.

Intervention Message3

Key AttributeCommunicate the importance of integrity through a career moment.



■ Increases perceptions of integrity by 40%.

Key Teaching

Reaching out to employees before a career moment can mitigate the increase in misconduct and decline in integrity almost entirely.

Key Teaching

Effective manager involvement at key career moments reduces misconduct and significantly increases employee reporting.

Key Teaching

Employees seek different messages at different moments, but require a foundation that empowers ethical decision making.

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PUTTING IT ALL TOGETHERIdeal Intervention AttributesCouncil Analysis

Potential Impact on Employee Perceptions of IntegrityPercentage Change in Perceptions of Integrity by Intervention

Potential Impact on Employee Observations of MisconductPercentage Change in Observations of Misconduct by Intervention

Delivering the most effective interventions improves employee perceptions of integrity by 40% and reduces observed misconduct by almost two-thirds.

■ Effective interventions actually improve employee perceptions above pre-moment levels.

■ Change is not just an under appreciated risk, but a significant compliance opportunity.

Before a career moment

From direct managers+ Importance

of integrity+

Ideal Intervention 1

Least Effective Intervention 2

∆ = 73%

1 Ideal intervention is made up of communication before the event, through a direct manager, and messages about the importance of ethical integrity. Least effective intervention is made up of communication after the event, through a formal channel, about the organization’s response to misconduct.

2 Ideal and least effective interventions were calculated by comparing the integrity scores for the various combinations of interventions. An intervention had to have at least 10 individuals experience it in order for it to be included.

An ideal intervention increases perceptions above the level of employees who experience no moments.

Timing Channel Content

Ideal Intervention 1

Least Effective Intervention 2

Beyond Compliance: Business Case Ideal interventions increase:

■ Employee engagement by 23%

■ Discretionary employee efforts by 8%

(23%)

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OVERVIEW OF SOLUTIONSToday’s session will focus on leading strategies for building a moments-responsive program that maximizes integrity at key career moments.

1Integrate Compliance

at Key Career Moments

2Equip Managers to

Lead through Moments

3Create Moment-

Relevant Messages

Establishing Tone at the Start Fostering Early Ethical Leadership

Creating Moments-Responsive Message

Shaping Acquired Employee Perceptions

Aligning Company Values to Managerial Decisions

Measuring Organizational Health

Identifying Role-Specific Learning Needs

Embedding Compliance in Senior Manager Priorities

Simulating Consequences of Future Decisions

CELC Tools and Resources

Moment-Specific Toolkits Ethical Leadership Portal ■ Workforce Change Survey ■ Communications Message Generator

CEB Compliance and Ethics Leadership Council

To learn more about CEB Compliance and Ethics, please visit www.ceburl.com/compliance-ethics

Ceb career moments presentation

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