Levonius - More carrot, less stick

MORE CARROT, LESS STICK:

How the Tone @ the Top
Creates a Culture of Integrity
DON LEVONIUS, MA
don.levonius@comcast.net
©2011 Victory Performance Consulting

AGENDA
• Workplace deviance • The fraud triangle ∆
– It’s a BIG deal! – It takes 3 to tango
• Ethics, morality & honesty • Deterring deviance
– Oh, my! – Scare conditioning
• Factors of employee • Creating a culture of
deviance integrity
– F3 = org x gen x econ – A 12 step program


WORKPLACE DEVIANCE …
… IT’S A BIG DEAL!!!


ORGANIZATIONAL
Production Deviance Property Deviance
• Leaving early • Sabotaging equipment
• Taking excessive breaks • Accepting kickbacks
• Intentionally working slowly • Lying about hours worked
• Wasting resources • Stealing from the company
MINOR MAJOR
Political Deviance Personal Aggression
• Showing favoritism • Sexual harassment
• Gossiping about coworkers • Verbal abuse
• Blaming coworkers • Stealing from coworkers
• Competing non-beneficially • Endangering coworkers
INTERPERSONAL Robinson and Bennett, “A Typology of Deviant Workplace Behaviors”


WORKPLACE DEVIANCE
• 27% of employees believe their organization’s
leadership is unethical 1

• 48% of employees admit to committing unethical
or illegal acts in the past year 2

• Workplace deviance costs businesses $1 trillion
per year 3

• Employees who believe their workplace is ethical
are 6 times more likely to stay 4

1) Society of Human Resource Management, 2) Jackson, 3)Association of Certified Fraud Examiners, 4) Smith


FRAUD & THEFT
• Employee theft costs $50 Billion per year 1

• Incidents are increasing 3% annually 2

• Losses are increasing 10% annually 3

• 1 in 30 employees stole at work last year 4

• 30%-40% of all business failures are caused by
employee theft 5

• Geopolitical and economic uncertainty is
expected to drive unprecedented increases
1) US Department of Commerce; 2, 3, 4) Jack L. Hayes International, Inc.; 5) US Small Business Administration


ETHICS, MORALITY
& HONESTY…
…oh, my!


ETHICS
Deontological Ethics Teleological Ethics
• Evaluates decisions • Evaluates decisions
based on what is right based on outcomes
• A matter of principle • End justifies the means

Moral Absolutism Moral Relativism


ETHICS
Deontological Ethics Teleological Ethics
Inner dialog: Inner dialog:
Q: “Is this the right thing to do, Q: “Will this action produce a
despite the consequences?” good or desirable outcome?”


MORALITY & HONESTY
Moral Honesty Conditioned Honesty
• Intrinsically motivated to • Extrinsically influenced to
act ethically despite act ethically based on
circumstances perceived consequences
– Subconscious – Conscious decision
– Self-evaluative process – Conditional process
developed during continually influenced by
childhood external conditions


UNDERSTANDING HONESTY


UNDERSTANDING HONESTY
For some people, the
decision to “do the
right thing”…
…is greatly
influenced by their
perception of being
caught


UNDERSTANDING DISHONESTY
• There are people who WILL NOT
steal, no matter what
• There are people who WILL steal, no
matter what
• There are people who can go either
way, depending on the circumstances

Kessler, Longmore-Etheridge


FACTORS OF
EMPLOYEE DEVIANCE
F3 = org x gen x econ


ORGANIZATIONAL
“When the organization as an entity, or in
the person of the supervisor, has defaulted
on the obligations of the organization to it’s
members, reciprocal deviance can result.”
Theodore Kemper


ORGANIZATIONAL
• Reciprocal Deviance
– Retribution toward management
– Employee seeks to get even
• Parallel Deviance
– Imitation of management
– Employee mirrors unethical behavior by
management


GENERATIONAL
• Work ethic
• Job satisfaction
• Rewards & recognition
• Financial perspectives


ECONOMIC
• Financial hardship
• Economic uncertainty
• Fear of impending layoffs
• Feelings of exploitation
• Preemptive deviance


THE FRAUD TRIANGLE

It takes 3 to tango!


THE FRAUD TRIANGLE

Opportunity

THE FRAUD TRIANGLE
• Need or Desire
– Experiences financial hardship
– Senses external pressures
• Rationalization
– Believes employer deserves to incur loss
– Believes organization can afford the loss
• Opportunity
– Perceives there is little chance of being caught

Frank


THE FRAUD TRIANGLE
• Need or Desire
– HR has virtually NO influence
• Rationalization or Motive
– HR can influence employees’ moral reasoning
• Perceived Opportunity
– HR can increase employees’ perception of being caught

Frank


DETERRING DEVIANCE

Perception of Being Caught
scare conditioning

Conditioned Honesty

DETERRING DEVIANCE
How Conditioned Honesty

Extrinsically influencing
can we ethical behavior by
influence increasing the perception
of detection
people
to be
honest?
High

Low Conditioned Honesty
High

High
DETERRING DEVIANCE
What

deters
people
from
breaking
the law?
High

High

High
DETERRING DEVIANCE
What

deters
people
from
workplace
deviance?
High

High

CREATING A CULTURE OF
INTEGRITY

A 12-step program


THE BOTTOM LINE ON INTEGRITY
• Companies that encourage open communication
deliver 5% higher returns
• Managers who demonstrate ethical values report
12% higher employee performance
• Employees who believe their workplace is ethical are
6 times more likely to stay 4

• Employees in high-integrity organizational cultures
are 67% less likely to experience major deviance at
work

Brotherton, Corporate Executive Board (CEB) Survey, 4) Smith


KEY DRIVERS OF INTEGRITY
• Comfort in speaking up
• Trust in colleagues
• Relationship with direct manager
• Tone at the top
• Clarity of compliance expectations
• Openness of communication
• Organizational justice

Brotherton, Corporate Executive Board (CEB) Survey


12 STEPS TO A CULTURE OF INTEGRITY
1. Set an ethical tone at the top
2. Establish a code of ethics
3. Carefully screen job applicants
4. Assign proper authority & responsibility
5. Mandate fraud and ethics training
6. Implement effective disciplinary action

Association of Certified Fraud Examiners


12 STEPS TO A CULTURE OF INTEGRITY
7. Implement a confidential hotline
8. Establish a whistleblower policy
9. Follow through of reports of misconduct
10. Promote effective internal controls
11. Prevent reprisals
12. Create a culture of doing the right thing

Association of Certified Fraud Examiners


SETTING THE RIGHT TONE
• Communicate expectations to employees
• Lead by example
• Provide a safe mechanism for employees
to report wrongdoing
• Reward integrity

Treadway Commission


• Organizational justice
Establish the belief among
employees that leadership
will take action against
wrongdoing is a leading
driver of an creating a
culture of integrity…

Brotherton, Corporate Executive Board (CEB) Survey


• Open communication
Create an environment
in which employees are
encouraged to voice
concerns and rewarded
when they do so


QUESTIONS?
Don Levonius, MA
Victory Performance Consulting
linkedin.com/in/donlevonius
352.978.9736


THANK YOU!
Don Levonius, MA
Victory Performance Consulting
linkedin.com/in/donlevonius
352.978.9736


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