My experience over the last several years in corporate governance and internal audit finds that developing a culture of respect in the workplace is critical for a strong control environment. You can even find that expressed right in the COSO Internal Control Framework: “Control environment factors include the integrity, ethical values, and competence of the entity's people; [and] management's philosophy and operating style.” A workplace with a philosophy and operating style of integrity and ethical values is based on a foundation of respect.
So how can companies assess the level of respect within the organization? One of the most effective and easiest tools to use is an annual employee survey. Here are a few points to consider in using employee surveys.
First, all employees should be encouraged to participate in the employee survey, but not mandated—so the participation rate itself can be one of the metrics studied. A low participation rate can indicate several things: (1) Everything is great, so nobody feels the need to communicate to the company; or (2) Management is directing only certain employees to participate.
More likely, though, a low participation rate means employees don't feel comfortable raising concerns even when given the opportunity to do so anonymously. That might be due to fear of retaliation, or because they doubt that management will take any action to address the concerns. Either way, these causes for low participation indicate a lack of respect.
Most of my experience is with manufacturing companies, where many employees work on manufacturing lines or in warehouses where they don't use computers or have Internet access. As a result, those companies need several options to give all employees the opportunity to participate in a survey, including Internet-based survey tools, paper surveys, or even kiosks with anonymous voting technology. All responses should also be kept anonymous to encourage honesty and candor.
In most employee surveys, some of the questions attempt to get at the issue of respect. For example, they might ask how employees feel their supervisors treat them, and whether they feel they are paid fairly for the work they do. While these questions don't directly ask about respect, the responses to them allow you to infer information about the respect employees feel.
Where respect really matters in organizations is respect among employees within the company—and most importantly, between supervisor and employee. Managers and employees often have considerably different views of their company's operations, pointing to potential respect issues.
GUEST COLUMNIST
Jason Mefford,VP, Business Process Assurance, Ventura Foods
Jason Mefford is a sought after adviser and speaker on corporate governance, ethics, GRC, and internal audit. He is currently VP, Business Process Assurance at Ventura Foods, a food manufacturer based in southern California where he is responsible for internal audit, risk management, ethics, and investigation activities of the company. Previously he was the director of internal audit of a major agribusiness manufacturing company and a manager at Arthur Andersen and KPMG.
Mefford is active in the Institute of Internal Auditors (IIA) and has served in various volunteer leadership positions at the local and international level. He serves on the Leadership Council for the Open Compliance and Ethics Group (OCEG) a non-profit organization that uniquely helps organizations drive “Principled Performance” by enhancing corporate culture and integrating governance, risk management, and compliance processes.
So what does respect mean to employees? How do companies show respect to employees? Here are some examples shared by employees:
Being able to approach one's supervisor in confidence about concerns without fear of retribution.
Providing needed training to help employees perform their jobs.
Providing the necessary resources and authority so employees can perform their jobs.
Managers and supervisors setting a good example of living the organization's values.
Paying employees a fair market wage.
Providing consistent discipline for Code of Conduct violations regardless of performance level or position.
Being responsive to employees' feedback and concerns.
Treating employees equally.
Open, honest, and transparent communications.
Honest and candid feedback during performance reviews.
Analyzing employee survey results by location or business unit also provides valuable insights. I have found a statistical correlation between locations that score low on respect questions from employee surveys and those with employee relations and audit issues.
Another valuable tool in predicting respect issues is metric analysis. Each location or business unit is unique in its number of employees, products produced, complexity of operations, and other factors, so creating common metrics for comparison is important. Some metrics from a manufacturing environment that help gauge respect levels are:
A workplace with a philosophy and operating style of integrity and ethical values is based on a foundation of respect.
Employee turnover
Customer complaints to pounds produced
Workers compensation losses to employees
Frequency of workers compensation claims
Standard labor cost variances
How do these metrics relate to respect? Disgruntled or disengaged employees tend to have a higher rate of worker compensation claims than engaged employees. Locations with higher-than-average worker compensation claims tend to have more disgruntled or disengaged employees. Workers compensation claims tend to rise during slower economic times or with an increase in dissatisfaction with location management. This dissatisfaction is often the result of employees not feeling “respected” by their supervisors.
If you want more engaged and productive employees, then focus on improving respect in your organization. If you want to improve the control environment of your organization, focus on improving respect. If you want a workplace with a philosophy and operating style of integrity and ethical values, focus on building a foundation of respect. After all, it's a matter of respect to most employees. It's about time managers started seeing it that way also.
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