Kathleen Edmond, Best Buy's Chief Ethics Officer

The Ethics Resource Center and Hay Group recently published a research study titled Ethics and Employee Engagement. The topic immediately captured my eye, particularly given the intense focus Best Buy places on employee engagement as measured by tools like our annual Viewpoint survey. The ERC/Hay study offers a fascinating look at human behavior and is, in my opinion, a must-read for anyone who has the responsibility and privilege of managing other employees:

Finding #1:  Positive perceptions of an organization’s ethical cul­ture are associated with higher levels of employee engagement. Furthermore, management’s commitment to ethics is particularly important for employee engagement.

• “The more employees see others being held accountable for ethical actions and acting with integrity, the stronger the ethical cul­ture of the organization will be.”
• “…confidence in leaders is a strong engagement predictor. Today’s employees recognize that their prospects for con­tinued employment, career development, and ad­vancement depend on their companies’ health and stability. And they cannot be expected to bind their futures to those of their employers unless they are confident that their companies are well managed and well positioned for success.”

Finding #2:  Employees who observed misconduct were less en­gaged than those who did not. In addition, engaged employees are less likely to feel pressure to commit misconduct.

• “Only 61 percent of employees who wit­nessed misconduct displayed high levels of engage­ment, compared with 85 percent of those who did not witness wrongdoing.”
• “…employees who perceive pressure to commit a violation are also very likely to observe misconduct in their workplace…Only 6 percent of engaged employees felt pressure to compromise company standards, compared with 18 percent of disengaged employees. In other words, disengaged employees were three times as likely to have felt pressure as their engaged peers.”

Finding #3:  Engaged employees are more likely to report miscon­duct when they witness it, thus reducing the compa­ny’s ethics risk.

• “…en­gaged employees respond differently to observations of misconduct than their disengaged peers.”
• “…study results show that 67 percent of engaged em­ployees who witnessed misconduct reported it, ver­sus only 57 percent of other employees. Perhaps be­cause of increased trust in leadership or a stronger commitment to the company’s ideals and standards, engaged employees are more likely to report obser­vations of misconduct.”

The ECS/Hay researchers went on to offer three takeaways, each addressing one of the key findings listed above. The implications are very clear; when ethical business practices are absent, employee engagement suffers, and vice versa:

Takeaway #1:  Given the profound connection between a com­pany’s ethical culture and employee engage­ment, managers and supervisors should work actively to demonstrate a commitment to ethics, foster open communication, promote ethical role modeling, and encourage accountability.

Takeaway #2:  Higher levels of misconduct and greater per­ceived pressure to commit a violation equate with lower levels of employee engagement. Therefore, in order to maintain high levels of employee engagement, leaders need not only to set an example but to carefully monitor and manage compliance with corporate ethics standards. All levels of management should be careful not to create work environments where employees perceive that hitting deadlines and meeting revenue goals are the priority regard­less of how those goals are achieved.

Takeaway #3:  Efforts to increase employee engagement can serve the parallel purpose of increasing report­ing [of ethical issues]. HR and ethics and compliance profession­als should work together to increase employee engagement, which would help to meet the ob­jectives of both functions.

1)    Have you ever observed a scenario which low ethical standards on the part of a company or leader harmed overall employee engagement? Please describe.

2)    How about the opposite? Have you witnessed a situation in which poor employee engagement may have contributed to a lowering of ethical standards exhibited by the company or its employees?

3)    In the spirit of the classic “chicken or egg” debate, do you think one (i.e., low employee engagement or low ethical standards) generally comes first? Why?

4)    After scanning the Takeaways listed above, which things do you think Best Buy (or your company) generally does well? Where do you see the greatest room for improvement?