Category Archives: ethics

Communicating with Coaches

Norma Nielsen dove right into a serious topic to launch Day Two of the International Coach Federation’s ICF Converge 2017 meeting (held Aug. 23 – 26 at the Washington Marriott Wardman Park Hotel in Washington, D.C.)

Nielsen, the learning and development manager at the Argus Group, has worked as an attorney, and she’s worked in HR. She’s also a certified professional coach, of course, and her presentation this morning focused on some of the ethical dilemmas she’s encountered in working with employees, their managers and the HR leaders at their organizations.

Some of the common quandaries that she and other internal coaches find themselves in, she said, revolve around maintaining boundaries and confidentiality, for example. When asked to share some of the ethical challenges they’ve faced, the coaches in the crowd spoke to their experience with such issues.

One coach, for instance, recalled a client company whose HR leader approached him in search of details on the coaching sessions he had conducted with various high performers in the organization. The exchange with HR, he said, left him uncomfortable, as he was bound to maintain confidentiality between himself and the individual employees he coaches.

“Keeping boundaries and confidentiality with [coaching clients] when HR comes in looking for ‘intel,’ ” said Nielsen, “can get tricky.”

While Nielsen’s presentation was aimed at professional coaches, some of the scenarios she outlined raised interesting questions for HR.

For example, coaches sometimes “feel pressure” from either line managers or HR leaders to provide information on an employee’s progress in an internal coaching program, which she says creates potential confidentiality issues.

Does HR have a claim to that type of information? What sort of information should coaches share with HR?

Nielsen also recalled a peer in the coaching profession whose coaching client admitted to being subjected to bullying and other unacceptable behavior at work, but didn’t want the coach to share that information with anyone within the organization. Nielsen herself acknowledged that she once coached an employee who admitted to bullying co-workers.

HR would no doubt want to be aware of such behavior taking place. Nielsen, and a handful of coaches in the audience, made mention of working with employee assistance programs in some instances, in an effort to help employees who might pose a risk to others or even themselves. In these kinds of situations, maintaining confidentiality is certainly paramount. But these and other ethical dilemmas that Nielsen shared this morning seem to underscore the need for HR to help establish guidelines and boundaries with internal coaches at the onset of the relationship.

Risk on the Moral High Road

If, as an HR leader, you’re going to take a stand on ethical grounds, you had better be ready for the backlash if you change your mind later on.

That seems to be a key lesson to emerge from the findings of research recently published in the Journal of Personality and Social Psychology.

For their study, Tamar Kreps, an assistant professor in the department of management at the University of Utah, and Kristin Laurin, an assistant professor in the department of psychology at the University of British Columbia, conducted a series of 15 online experiments that involved more than 5,500 participants between the ages of 18 and 77.

In each experiment, these individuals were provided information about political or corporate leaders who had changed their opinions on a particular subject. Some participants were told that the leaders staked out their original positions on moral grounds, while others were informed that these initial stances were based on a more pragmatic view, such as “it was good for the economy.”

Across the multiple studies Kreps and Laurin conducted, they found that participants saw leaders who changed their minds after taking a moral stand as being hypocritical. In most cases, these individuals also perceived these leaders as “less effective and worthy of their support than leaders whose initial stance was pragmatic,” according to a statement.

“Leaders may choose to take moral stances, believing that this will improve audiences’ perceptions. And it does, initially,” says Kreps.

“But all people, even leaders, have to change their minds sometimes. Our research shows that leaders who change their moral minds are seen as more hypocritical, and not as courageous or flexible, compared with those whose initial view was based on a pragmatic argument.”

That perception can be tough to shake, too. According to the authors, they “tried to test various factors we thought might weaken the effect” across several studies. For example, the authors asked participants how they would feel if the leader “did not rely on popular support and therefore would have no reason to pander” or “used the same moral value in the later view as in the earlier view.”

Still, no dice.

“None of those things made a difference,” says Kreps. “Initially moral mind-changers consistently seemed more hypocritical” to those taking part in the study.

While opining that moral beliefs tend to stay constant over time, Kreps cautions that leaders should take the ethical high road on a given issue only if they genuinely feel that way.

“Taking an inauthentic moral view to try to pander to a moralizing audience could backfire,” she says, “if a leader needs to change that view later on.”

More Woes for Whistleblowers

Even a CEO’s authority has its limits.

James Staley, the U.S. chief executive of British banking heavyweight Barclays was recently reminded of this fact, and offered other executives a case study in how not to handle a whistleblower complaint in the process.

As the New York Times reported this week, Staley finds himself being investigated by British authorities after he called on Barclays’ internal security team to try to uncover the identity of a whistleblower in an “‘honestly held’ but ‘mistaken’ belief that he had clearance to do so.” According to the Times, the Barclays security team even received assistance with the search from a United States law enforcement agency.

Staley’s effort did not sit well with the bank’s leadership, including Chairman John McFarlane, who the paper reports had “personally chastised” Staley, and had expressed his disappointment in the CEO’s actions directly to him.

The roots of McFarlane’s frustration trace back to last summer, when Stanley brought on Tim Main—a friend and former colleague of Staley’s at JPMorgan Chase—to chair Barclays’ global financial institutions group.

“Mr. Main, who was known for his team-building skills at JPMorgan, seemed like a great hire” for Staley, the Times wrote.

In order to join Staley at Barclays, Main left New York-based investment banking advisory firm Evercore Partners, where he had been “a star,” according to Roger Altman, the firm’s founder and chairman.

Just a month after Main’s hiring, however, Barclays officials received letters sent by an anonymous whistleblower who claimed that Main had “acted erratically” while at JPMorgan; a claim later supported by two JPMorgan employees who reported to Main during his time there.

Barclays did not disclose the details of the letter, but Staley reportedly took offense to the whistleblower’s allegations leveled against Main, which “related to personal issues from many years ago,” Staley wrote in an email to employees. “The intent of the correspondents in airing all of this,” he told workers, “was, in my view, to maliciously smear this person.”

In response to these claims, Staley twice asked Barclays’ internal security team to find the letter’s author. The inquiry didn’t reveal the whistleblower’s identity, and the bank ultimately disregarded his or her assertions.

While both Main and Staley have declined to comment on the situation, Staley did release a statement saying he has apologized to the Barclays board and “will accept whatever sanction it deems appropriate,” which will include a “very significant compensation adjustment,” according to the bank.

An independent law firm was commissioned to investigate Staley’s attempts to unmask Main’s anonymous former colleague, and determined that Staley “erred in seeking out the … whistleblower, but that his belief that he had clearance to do so was an honest mistake,” according to the Times.

That could very well be. But the Barclays brouhaha serves as just the latest example of the hostile treatment that whistleblowers continue to face.

Jeffrey Pfeffer, a professor of organizational behavior at Stanford University’s Graduate School of Business, told the Times as much.

“Whistleblowers are typically treated horribly, even in the government, let alone in the private sector,” said Pfeffer. “People don’t like to have problems pointed out.”

Zenefits: Unicorn Comeback?

Remember Zenefits — the cloud-based benefits-administration startup that was going to revolutionize the industry by providing a benefits platform to small and mid-sized businesses and which was valued at $4 billion just two years after it was founded? The high-flying unicorn plummeted back to earth amid revelations that Zenefits’ co-founder and CEO, Parker Conrad, led an effort to help the company’s sales reps skip over state insurance-licensing requirements so they could start selling as soon as possible. More fuel was added to the bonfire when details started emerging about Zenefits’ rowdy office culture, in which managers had to send out a memo specifically banning employees from having sex in the building’s stairwells. The company parted ways with Conrad, laid off hundreds of employees, and cut its valuation in half in order to avoid a lawsuit by investors.

Now the company is struggling to regain its once-lofty perch, but its got robust new rivals to contend with. In today’s New York Timestechnology columnist Farhad Manjoo interviews Zenefits’ current CEO, David Sacks, about its soon-to-be-released software redesign, the internal reforms he undertook to fix the company’s culture and its new branding campaign, which include billboards throughout Silicon Valley that ask: “What is Z2?” In the wake of Conrad’s resignation, Manjoo writes, Sacks worked hard to rebuild Zenefits’ reputation by being open and honest about previous wrongdoings, describing his strategy as “admit, fix, settle and repeat.”

But Zenefits’ path to redemption faces roadblocks in the form of  new, well-funded competitors such as Gusto, which has 40,000 paying customers and was recently valued at $1 billion, Manjoo writes. Gusto has a much different corporate culture than did the earlier incarnation of Zenefits, where the philosophy had been “ready, fire, aim”: Gusto is taking a slower, more deliberate approach to building its business under the leadership of its CEO, Joshua Reeves. Its offices “has the air of a meditative retreat,” Manjoo writes, with plants, couches and a ban on wearing shoes “to make it feel more like home than work.”

Yet regardless of whether Zenefits or Gusto ultimately prevails, this heated competition for the SMB market probably means the ultimate winners will be the small to mid-sized companies that had previously been unable to afford the sort of benefits-administration software that large companies have long enjoyed. Despite the sordid behavior that marked its rise, Zenefits’ early founders at least deserve props for being one of the first to use the cloud to help this long-underserved market.

 

Retaliation for ‘Playing by the Rules’

There’s a troubling new HR-centric theme spinning out of the Wells Fargo illicit-accounts mess, according to today’s New York Times: A group of aggrieved Wells Fargo workers who say they faced retaliation in some form from their employer — by being either fired or demoted — for staying honest and falling short of sales goals they say were unrealistic.

These workers who claim that they played by the rules and were punished for it, the NYT reports, are starting to coalesce around two lawsuits that were just filed and that seek class-action status:

The first was filed in Los Angeles last week by former Wells Fargo workers who say that while their colleagues created unauthorized accounts to meet cross-selling quotas, they were penalized or terminated for refusing to do the same. The bank’s chief executive, John Stumpf, has often stated his goal that each Wells customer should have at least eight accounts with the company. That aggressive target has made the bank’s stock a darling on Wall Street, the lawsuit notes.

The story notes that a federal lawsuit with analogous claims was filed on Monday in the United States District Court for the Central District of California, seeking to create a class of current and former Wells employees across the country who had similar experiences.

“These are the people who have been left holding the bag,” said Jonathan Delshad, the lawyer representing the workers in both suits. “It was a revolving door. If you weren’t willing to engage in these types of illegal practices, they just booted you out the door and replaced you.”

One of those people, Yesenia Guitron, told the paper that she did everything the company had taught employees to do to report such misconduct internally. She told her manager about her concerns. She called Wells Fargo’s ethics hotline. When those steps yielded no results, she went up the chain, contacting a human resources representative and the bank’s regional manager:

In a statement on Monday, Wells Fargo said: “We disagree with the allegations in the complaint and will vigorously defend against the misrepresentations it contains about Wells Fargo and all of the Wells Fargo team members whose careers have been built on doing the right thing by our customers every day.”

No matter the ultimate resolution to this dark chapter of the venerable bank’s history, this latest twist to the story should serve as a reminder to HR leaders to ensure that the processes they have put in place to catch illicit activity in the workplace are actually doing their jobs.

 

 

Successful C-Suite Psychopaths

Higher-than-expected levels of psychopathic traits exist among people found in the upper echelons of the corporate business sector, and companies should undertake psychological screening to help identify ‘successful psychopaths.’

That’s according to new research presented at the Australian Psychological Society’s Congress, which was recently held in Melbourne.

Forensic psychologist Nathan Brooks says emerging studies show that, while one in 100 people in the general community and one in five people in the prison system are considered psychopathic, these traits are common in the upper echelons of the corporate world, with a prevalence of between 3 percent and 21 percent.

Brooks says the term “successful psychopath,” which describes high-flyers with psychopathic traits such as insincerity, a lack of empathy or remorse, egocentric, charming and superficial, has emerged in the wake of the 2008 global financial crisis, prompting a range of new studies.

To arrive at their conclusions, Brooks and colleagues first examined psychopathic traits in the business sector. One study of 261 corporate professionals in the supply chain management industry showed extremely high prevalence rates of psychopathy, with 21 percent of participants found to have clinically significant levels of psychopathic traits — a figure comparable to prison populations.

The current issue of HRE also features a story by Julie Cook Ramirez about how HR can weed out psychopaths in the workplace:

What sets a psychopathic leader apart is the way in which he or she manages or interact with people, says William Spangler, associate professor of management and organizational behavior at the School of Management, State University of New York at Binghamton.

“Psychopathic leaders are toxic individuals who manage subordinates [with] a combination of fear, threats, punishment and public humiliation,” says Spangler. “They present a positive persona to their superiors and are often promoted for what is perceived to be their effectiveness, but they can [cause] great harm to the organization by destroying relationships, damaging work units and putting the entire company at risk for legal action.”

Ramirez also quotes A.J. Marsden, assistant professor of human services and psychology at Beacon College in Leesburg, Fla. who says that, by hiring a person who demonstrates these types of tendencies, “you are putting your other employees at risk for bullying and other abuse.”

“The organization may end up losing many good employees [and] facing harassment suits against the psychopath,” says Marsden. “At higher levels of employment, psychopaths may engage in unethical and illegal behaviors, such as embezzlement, just to look successful.”

 

Internal Investigations are Getting Longer

Patience may be a virtue, but HR leaders shouldn’t expect their employees to necessarily see it that way when it comes to the increasing number of days it’s taking employers to complete internal investigations.

ThinkstockPhotos-470406181As some of you may recall, my colleague — Kristen Frasch — posted details on Friday from NAVEX Global’s 2015 Europe, Middle East, Africa and Asia Pacific State of Compliance Programmes Benchmark Report. In it, NAVEX reported that, on a global scale, boards are not getting regular compliance reports from their ethics and compliance officers.

Well, here’s an even newer report from NAVEX that sheds light on the time it’s taking these days to respond to open internal-investigation cases.

In its 2016 Ethics and Compliance Hotline Benchmark report, NAVEX reveals that the timeline for internal investigations is continuing to lengthen. More precisely, companies took a median of 46 calendar days to close such cases, up from 39 days in 2014 and 32 days in 2011.

HR, diversity and workplace-respect cases, in particular, jumped to 47 calendar days, up from 37 days in 2014. (These cases represented 71 percent of the 867,551 reports — at 2,311 client organizations — in NAVEX’s database.)

Needless to say, this doesn’t bode well for employers that want to keep employee morale high and limit how often employees take their complaints outside their organizations. Who needs the EEOC knocking on your door, right?

Asked what’s driving these longer timelines, Carrie Penman, chief compliance officer and senior vice president of advisory services for NAVEX Global, pointed to several factors.

In a poll conducted during a client webinar held by NAVEX last week, Penman said, roughly 46 percent of the respondents cited a lack of resources as the primary reason. “Resources are simply not keeping pace with the volume,” Penman pointed out. Case complexity turned out to be the second-most-mentioned driver in the poll.

Penman said some of the respondents specifically mentioned the global nature of many of the cases and the more frequent involvement of legal counsels as important drivers. (She said roughly 1,000 individuals participated in the webinar, with about six in 10 taking part in the polling.)

So what should HR leaders be doing about this lengthening time frame?

Penman hopes many will use these findings to hammer home the need for additional resources. As far as her clients are concerned, she said, she advises them to “record all of the issues they are working on in a central database so they can get a holistic picture of what’s going on in their organizations” and can, in turn, make a stronger case for more support.

Among other disturbing findings in the more recent NAVEX report: Workers are apparently skipping an internal remedy and taking retaliation claims outside their organizations. Despite the noticeable rise in retaliation claims being taken up by the Equal Employment Opportunity Commission in recent years, they continue to represent less than 1 percent of all reports in NAVEX’s database.

“People are simply not giving their organizations a chance to address their concerns and are instead taking them outside … ,” Penman said.

Compliance Efforts Not So Great Globally, Either

507249886 -- compliance word cloudIt wasn’t that long ago that I wrote a news analysis about the problems with ethics and compliance programs here in the United States.

Experts in that piece lamented the lack of clout being given to many corporate ethics and compliance officers, and the tendency at far too many organizations to require ethics officers to wear too many hats — doubling up on such governance responsibilities as risk management and human resources, thereby not being able to focus properly on any one of them, especially ethics and compliance.

Well, it appears those two disciplines are in need of collar corrections on the global stage as well. According to the recently released NAVEX Global’s 2015 Europe, Middle East, Africa and Asia Pacific State of Compliance Programmes Benchmark Report, despite tighter government enforcement, boards are not getting regular compliance reports and 40 percent don’t have regular reporting cadence with their boards or are not sure. And the majority say their budgets for ethics and compliance will remain the same or will be less in the coming year.

To come up with its findings, NAVEX Global partnered with an independent research agency to investigate how companies headquartered  across Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) develop and execute their ethics and compliance programs.

Researchers polled 247 key decision-makers and individuals responsible for ethics  and compliance programs. The purpose of the survey was to benchmark “the top priorities and challenges faced by ethics and compliance professionals headquartered in EMEA and APAC,” according to the report.

From the report (edited slightly for English readers):

“It is not surprising that measuring program effectiveness was cited as the biggest program challenge, since this is a complex undertaking. Organizations struggle to define the right combination of key indicators of culture and compliance to demonstrate the program is working.

“The key challenges of time availability and managing regulations speak to the need for programs to be properly resourced. A robust risk-assessment process can help to identify and better manage resource allocation and to prioritize jurisdictional issues. Successful programs regularly review resources against the organization’s risk profile to ensure appropriate management and mitigation actions .

“Survey write-in responses to challenges included concerns about implementing standardized programs across locations and being seen as a “troublemaker” for bringing up issues. The wide variety of responses serve as a reminder that every organization has its own culture and challenges to be factored into the development and implementation of an effective ethics and compliance program .

Key takeaways from the report:

  • Take a Risk-Based Approach: Program components and implementation strategies can be complex and will vary significantly by company and by region. The development of these programs should be driven by the organization’s risk profile, which can be identified by conducting a comprehensive ethics, compliance and reputational risk assessment.
  • Put Meaningful Program Measurements in Place: Consider a variety of metrics to determine the effectiveness of the program as there is no one metric or indication that will provide complete insights. A combination of useful metrics could include whistleblower-hotline benchmarks, feedback on training sessions, leadership feedback, employee surveys and focus group data, exit interview feedback, and legal actions.
  • Train Middle Managers and Supervisors: First- and second-level managers are culture carriers — the strongest link senior management has to employees. These managers need to be trained on communicating organizational expectations to employees — and trained on how to respond when issues arise. Investing in these managers will pay dividends in terms of creating a strong culture of integrity and compliance.
  •  Engage Leadership and Your Board of Directors: Both best-practice frameworks and regulatory bodies around the world have defined a clear oversight role for the board of directors. Neglecting this duty could mean putting the organization, and board members themselves, at risk. A regular reporting cadence — with high-quality data put into context — will help keep the board and leadership engaged.
  • Do More With Less: Make good use of systems and processes that will improve the efficiency and accuracy of their programs. There is still opportunity for further automation in many areas of respondents’ E&C programs.

How Much Are Caustic Workers Costing You?

There’s been a lot of research dedicated to studying the havoc wreaked by jerks at work.

Some of these studies focus on the noxious influence that abusive, bullying bosses have on their teams, and what employees can do to cope with an out-of-control supervisor.

Some find that being a bit boorish can actually work to one’s advantage in certain situations, and share advice for recognizing when the circumstances call for flipping the jerk switch.

Some even provide tips on how to self-correct if you are the work jerk, or are in danger of becoming one.

A new working paper from Harvard Business School, however, is taking a more pragmatic look at the workplace jerk, attempting to put a price—in actual dollars and cents—on what employees who are destructive in one way or another can cost an organization.

Spoiler alert: It’s steep.

Economist Dylan Minor and Michael Housman, chief analytics officer at Cornerstone OnDemand, explored a dataset of close to 60,000 workers across 11 different firms. The goal of the ongoing study, the authors say, is to document various aspects of workers’ characteristics and circumstances that lead them to engage in “toxic” behavior, defined by the paper as conduct that’s harmful to an organization’s property or people.

“I wanted to look at workers who are harmful to an organization either by damaging the property of the company—theft, stealing, fraud—or other people within the company through bullying, workplace violence or sexual harassment,” Minor recently told the Harvard Gazette.

Housman and Minor, a visiting assistant professor of business administration at HBS, also analyzed the relationship between productivity and the ripple effect that a toxic employee has on his or her peers.

While finding those defined as toxic are “much more productive” than their less-troublesome colleagues, the authors determined that the former actually diminish the productivity of those around them, and often drive co-workers to leave organizations faster and more frequently, generating sizable turnover and training costs. Ultimately, these caustic workers are so damaging from a financial standpoint that “avoiding them or rooting them out delivers twice the value to a company that hiring a superstar performer does,” according to the Gazette.

More specifically, the paper states that, “while a top 1 percent worker might return $5,303 in cost savings to a company through increased output, avoiding a toxic hire will net an estimated $12,489.”

And that figure, the authors say, doesn’t even include the money that could be saved by avoiding the litigation, regulatory penalties or decreased productivity that a devious or disruptive employee may leave in his or her wake.

These bad seeds come in all shapes and sizes, of course. But the paper identifies a few key predictors to help find them lurking within your workforce.

Toxic workers, for example, tend to demonstrate very high levels of self-regard or selfishness and overconfidence.

As Minor points out, this kind of hubris can lead one to take unnecessary chances, riding high on the belief that he or she is too smart to ever get caught engaging in questionable conduct, or is too valuable to be hit with any real consequences if that day does eventually come.

This paper also reiterates an uncomfortable truth unearthed in past studies: These folks are often high performers, which means that many employers grudgingly tolerate their antics rather than let them go. But few studies have attempted to quantify the actual cost of keeping them on, according to Minor.

And, while many managers may be more apt to look the other way when the offending employee is, say, putting up gaudy sales numbers, an organization literally can’t afford to ignore—and, in effect, reward—corrosive workers’ bad behavior any longer, he says.

“The worst thing to do is to not do anything, which happens a lot, unfortunately.”

Das Deception: VW Probe Deepens

When a corporate scandal hits, it typically takes a while to identify all the key players.

So, it probably shouldn’t be shocking to learn that the ongoing investigation involving Volkswagen is now expanding to include managers who may have looked the other way as engineers installed software designed to manipulate emissions controls during laboratory tests in roughly 11 million Volkswagen diesel vehicles since 2009.

As the New York Times reports, “a person briefed on the inquiry” says the probe—being conducted by law firm Jones Day, at the behest of the Volkswagen supervisory board—could soon see as many as 10 Volkswagen employees being suspended.

While some of these individuals were engineers “directly involved in programming cars to cheat on emissions tests,” the Jones Day investigation is now taking a closer look at “managers [who] may have learned of the deception and failed to take appropriate action,” according to the Times.

So, it seems the seat could start to get pretty hot for some Volkswagen managers in the days and weeks to come. But the organization’s leadership is already under heavy fire for the part it played—or didn’t play, as it were—in gaming the emissions testing process for more than five years, and its top executive has already toppled from his perch.

On Sept. 3, Volkswagen opted to explain to federal regulators why many of its diesel automobiles were emitting more toxic emissions on the road than they did in the test lab. (The automaker’s alternative was losing Environmental Protection Agency certification for all of its 2016 diesel models.)

Michael Horn, CEO of Volkswagen’s U.S. business, appeared before Congress earlier this month. Horn testified that he was aware of potential issues as far back as spring 2014, but claimed he didn’t know for sure until this past September that the company had been using illegal software to deceive emissions testers.

At least three members of Volkswagen’s supervisory board “have said they learned of the illegal software from media reports on Sept. 18,” the Times reports. Now-former Volkswagen chairman Martin Winterkorn claims to have been in the dark all along, however. In a Sept. 23 statement announcing his resignation, Winterkorn said he was “ ‘shocked’ to learn of the deception and had committed no wrongdoing,” according to the Times, which notes that shareholder representatives have criticized Winterkorn’s failure to keep them informed as the controversy unfolded.

Former employees have joined the chorus as well, condemning “what they said was a culture inside Volkswagen that centralized decision making at company headquarters in Wolfsburg, Germany, and discouraged open discussion of problems, creating a climate in which people may have been fearful of speaking up,” the Times reports.

It may be months before this web is untangled, and we have a better sense of who knew what and when they knew it. But it’s probably safe to go ahead and classify the Volkswagen emissions saga as yet another reminder of just how wrong things can go in organizations that don’t effectively communicate with their people, and in cultures where employees are afraid to blow the whistle on unethical behavior.