Culture is one of the first things that needs to change, but often it's the last thing that ever does because the process is so challenging. Photo: Shutterstock)
What happened in 2019 within the executive ranks at several of the most prestigious and storied public companies should serve as a wake-up call to corporate boards all across this country: Boards cannot afford to not know what's going on within their organization.
We have seen a high number of corporate boards surprised by cultural problems and behavioral issues within senior management, some of which have led to CEO terminations, negative impacts on brand and company valuations, and also in plaintiff attorneys holding boards accountable for their lack of visibility into foundational issues. And yet, visibility into fundamental issues remains elusive for so many organizations.
Related: Company boards becoming more diverse, but still lagging
Part of the reason could be because they know they have their work cut out for them. Culture is one of the first things that needs to change, but often it's the last thing that ever does because the process is so challenging. Some report it takes two to three years, others claim it takes a "movement." And we know that even when the consequences of resisting change are serious – life-threatening, even – precious few truly follow through.
After all, an aversion to change is basic human nature. An article published in Harvard Business Review points out that only 10 percent of people who've had heart surgery later make appropriate dietary adjustments.
Fortunately, there are a few smaller, but nevertheless impactful actions corporate boards can take right now. Enterprise Risk Management positions (ERM) are already a vital part of board reviews–rightfully so–and most corporate boards have at least heard of continuous evaluation, which provides increased insights and dashboards into monthly and quarterly operations. While both these initiatives will prove essential, there's still more that must be done.
Employees are an important, yet often untapped source of inside information. They are the ones "on the frontlines" so to speak, and therefore have valuable insights that corporate directors and leadership can use to evaluate whether the organization is staying the course or veering off into a dangerous direction.
The problem is that both physical and mental barriers keep employees from alerting leadership to concerning behaviors. In a recent Insider Threat Report, survey participants were presented with five scenarios and asked how they would respond. When asked if they would report a senior staff member who they saw coming to work on the weekends and returning after everyone else has left the office, only 14% said they would.
Why? Because the stakes are high if their report isn't kept confidential–a real fear for 52 percent of those surveyed in the same very report. If they report their boss for inappropriate behavior and their boss finds out about it, they fear differential treatment, if not ultimately being fired.
To overcome these issues, corporate boards need a workforce assurance platform that facilitates anonymous and relevant incident reporting. The ability to pick up these qualitative, questionable events and behaviors from employees across all parts of the organization is essential. They not only help the board of directors identify toxic leadership and put an end to behaviors before they become a cultural norm, they also help employees feel empowered, protected, heard and valued, all things that typically enhance a company's recruitment and retention.
Improved rates of recruitment and retention mean businesses can potentially reduce personnel replacement and training costs. But the benefits of having engaged employees don't stop there. A new study found a strong, positive correlation between employee satisfaction, employee productivity, customer satisfaction, and, as would be expected, profitability. In other words, an organization with satisfied employees – who, as the Economist describes, " … feel able to raise problems with managers without fearing for their jobs" – typically has productive employees, happy customers, and a better bottom line.
The best investment a corporate board can make is in a technological capability that enables employees to share what they see, and, in turn, allow board members to see what's going on in the organizations for which they have a fiduciary responsibility. This technology exists today and is the only way for public boards to truly fulfill their obligations to their shareholders and employees.
Tom Miller is CEO of ClearForce, an organization that protects businesses and employees through the continuous and automated discovery of employee misconduct or high-risk activities. Dann Adams is former president at Equifax Global Consumer Solutions and a member of the ClearForce board of directors.
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