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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
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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.
Lay
off
s o
f Te
am
Mem
ber
s
Sig
nifi
can
t O
rgan
izat
ion
al
Res
tru
ctu
rin
g
Su
bst
anti
al C
han
ge
in S
enio
r L
ead
ersh
ip
Ch
ang
e in
Yo
ur
Dir
ect
Man
ager
Hir
ing
Fre
eze
Sig
nifi
can
t C
han
ge
in J
ob
Res
po
nsi
bili
ties
Wag
e F
reez
e o
r S
alar
y C
ap
Red
uct
ion
in B
enefi
ts
Tran
sfer
to
New
Tea
m
Red
uct
ion
or
Elim
inat
ion
in
Var
iab
le P
ay
Sig
nifi
can
t C
han
ge
in
the
Ski
lls Y
ou
Use
Ear
ly R
etir
emen
t O
ffer
Mer
ger
/Acq
uis
itio
n
Man
dat
ory
Un
pai
d
Lea
ve/F
url
ou
gh
Pro
mo
tio
n t
o
Man
ager
0%
25%
50%
23% 21% 20% 18% 17% 15% 14% 13% 10% 9% 8% 7% 5% 5% 4%
DERF 12-4536
Catalog #
Title
4
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
5
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
rvin
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
6
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
plo
yees
Ob
serv
ing
Mis
cond
uct
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
7
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
Mo
men
t
Lay
off
s
Org
aniz
atio
nal
R
estr
uct
uri
ng
Ch
ang
e in
Sen
ior
Lea
der
ship
Ch
ang
e in
Jo
b
Res
po
nsi
bili
ties
0%
5%
10%
3%
5% 5% 5%
9%
Observations of Insider TradingPercentage of Employees Observing During Select Moment
0%
5%
10%
2%
7%6%
7%6%
No
Mo
men
t
Lay
off
s
Org
aniz
atio
nal
R
estr
uct
uri
ng
Ch
ang
e in
Sen
ior
Lea
der
ship
Ch
ang
e in
Jo
b
Res
po
nsi
bili
ties
0%
5%
10%
1%
4%
2% 2%3%
No
Mo
men
t
Lay
off
s
Org
aniz
atio
nal
R
estr
uct
uri
ng
Ch
ang
e in
Sen
ior
Lea
der
ship
Ch
ang
e in
Jo
b
Res
po
nsi
bili
ties
0%
5%
10%
2%
6%5%
4%5%
No
Mo
men
t
Lay
off
s
Org
aniz
atio
nal
R
estr
uct
uri
ng
Ch
ang
e in
Sen
ior
Lea
der
ship
Ch
ang
e in
Jo
b
Res
po
nsi
bili
ties
8
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
edu
ctio
n o
r E
limin
atio
n in
V
aria
ble
Pay
Lay
off
s o
f Te
am
Mem
ber
s
A R
edu
ctio
n in
B
enefi
ts
A S
ub
stan
tial
C
han
ge
in O
ne
or
Mo
re S
enio
r L
ead
ers
Man
dat
ory
Un
pai
d
Lea
ve-F
url
ou
gh
A H
irin
g F
reez
e
A N
ew E
arly
R
etir
emen
t O
ffer
to
E
mp
loye
es
A C
han
ge
in Y
ou
r D
irec
t M
anag
er
A M
erg
er-A
cqu
isit
ion
A T
ran
sfer
to
an
E
nti
rely
New
Tea
m
A W
age
Fre
eze
or
Sal
ary
Cap
A S
ign
ifica
nt
Org
aniz
atio
nal
R
estr
uct
uri
ng
A S
ign
ifica
nt
Ch
ang
e in
th
e S
kills
Y
ou
Are
Usi
ng
A S
ign
ifica
nt
Ch
ang
e in
Jo
b
Res
po
nsi
bili
ties
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.).
9
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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
10
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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.
Intervention Impact ■ Reduces observation of misconduct by 21%.
■ Increases employee reporting rate by 34%.
■ Increase perceptions of integrity by 26%.
Intervention Message3
Key AttributeCommunicate the importance of integrity through a career moment.
Intervention Impact ■ Reduces observation of misconduct by 37%.
■ Increases employee reporting rate by 54%.
■ 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.
11
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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%)
12
© 2013 The Corporate Executive Board Company. All Rights Reserved. CELC5704813SYN
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