Levonius - More carrot, less stick

©2011 Victory Performance Consulting

MORE CARROT, LESS STICK:

How the Tone @ the Top Creates a Culture of Integrity

DON LEVONIUS, [email protected]


AGENDA• Workplace deviance

– It’s a BIG deal!• Ethics, morality & honesty

– Oh, my!• Factors of employee

deviance – F3 = org x gen x econ

• The fraud triangle ∆– It takes 3 to tango

• Deterring deviance – Scare conditioning

• Creating a culture of integrity – A 12 step program


BIG

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


Personal Aggression• Sexual harassment• Verbal abuse• Stealing from coworkers• Endangering coworkers

Property Deviance• Sabotaging equipment• Accepting kickbacks• Lying about hours worked• Stealing from the company

Political Deviance• Showing favoritism• Gossiping about coworkers• Blaming coworkers• Competing non-beneficially

Production Deviance• Leaving early• Taking excessive breaks• Intentionally working slowly• Wasting resources

ORGANIZATIONAL

INTERPERSONAL

MINOR MAJOR

Robinson and Bennett, “A Typology of Deviant Workplace Behaviors”


WORKPLACE DEVIANCE• 27% of employees believe their organization’s

leadership is unethical1

• 48% of employees admit to committing unethical or illegal acts in the past year2

• Workplace deviance costs businesses $1 trillion per year3

• Employees who believe their workplace is ethical are 6 times more likely to stay4

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


FRAUD & THEFT• Employee theft costs $50 Billion per year1

• Incidents are increasing 3% annually2

• Losses are increasing 10% annually3

• 1 in 30 employees stole at work last year4

• 30%-40% of all business failures are caused by employee theft5

• 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

©2011 Victory Performance Consulting©2011 Victory Performance Consulting

ETHICS, MORALITY & HONESTY…

…oh, my!


ETHICSDeontological Ethics• Evaluates decisions

based on what is right• A matter of principle

Teleological Ethics• Evaluates decisions

based on outcomes• End justifies the means

Moral Absolutism Moral Relativism


ETHICSDeontological EthicsInner dialog:Q: “Is this the right thing to do,

despite the consequences?”

Teleological EthicsInner dialog:Q: “Will this action produce a

good or desirable outcome?”


MORALITY & HONESTYMoral Honesty• Intrinsically motivated to

act ethically despite circumstances – Subconscious– Self-evaluative process

developed during childhood

Conditioned Honesty• Extrinsically influenced to

act ethically based on perceived consequences– Conscious decision– Conditional process

continually influenced by external conditions


UNDERSTANDING HONESTY




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



• 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

UNDERSTANDING DISHONESTY


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


• 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

THE FRAUD TRIANGLE

Frank


DETERRING DEVIANCE

Perc

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Conditioned Honesty

scare conditioning


Conditioned Honesty Extrinsically influencing ethical behavior by increasing the perception of detection

Low High

How can we influence people to be honest?

High

DETERRING DEVIANCE

Perc

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Bei

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Conditioned Honesty

©2011 Victory Performance ConsultingLow High

What deters people from breaking the law?

Perc

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Bei

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augh

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Conditioned Honesty

High

High

DETERRING DEVIANCE

©2011 Victory Performance ConsultingLow High

What deters people from workplace deviance?

High

High

Perc

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Bei

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augh

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Conditioned Honesty

DETERRING DEVIANCE


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 stay4

• 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 top2. Establish a code of ethics3. Carefully screen job applicants4. Assign proper authority & responsibility5. Mandate fraud and ethics training6. Implement effective disciplinary action

Association of Certified Fraud Examiners


7. Implement a confidential hotline8. Establish a whistleblower policy9. Follow through of reports of misconduct 10. Promote effective internal controls11. Prevent reprisals12. Create a culture of doing the right thing

Association of Certified Fraud Examiners

12 STEPS TO A CULTURE OF INTEGRITY


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

to report wrongdoing• Reward integrity

Treadway Commission


SETTING THE RIGHT TONE• 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 communicationCreate an environment in which employees are encouraged to voice concerns and rewarded when they do so

SETTING THE RIGHT TONE


QUESTIONS? Don Levonius, MA

Victory Performance Consultinglinkedin.com/in/donlevonius

[email protected] 352.978.9736


THANK YOU! Don Levonius, MA

Victory Performance Consultinglinkedin.com/in/donlevonius

[email protected] 352.978.9736
