The speak-up gap is killing your company: How to fix it

According to Violation Tracker, the top 100 regulatory fines, criminal penalties, and class-action settlements for U.S. corporate wrongdoing since 2020 amount to an astounding $221.9 billion. How much money is that? Let’s put it this way: the National Football League is worth about $207 billion, so this would be like dissolving the biggest sporting league in the U.S.

In April, U.S. corporations passed the $1 trillion mark for fines, penalties, and settlements since 2000. And none of this includes the harm done to brand reputation, lost research and development resources, missed investment opportunities, and elevated costs associated with finding and retaining talent. Simply put, the cost of corporate misconduct is almost too mammoth to imagine.

So, why do these misconduct fiascos happen again and again? The answer is fairly simple. According to Ethisphere research, up to 75 acts of employee misconduct per 1,000 employees go unreported every year. When employees don’t speak up against misconduct, bad actors introduce potentially ruinous levels of legal and regulatory risk into the enterprise. Weak speak-up culture is inflicting terrible wounds upon companies. Thankfully, there are ways to get employees to report something if they see something.

The speak-up gap

The key to a strong speak-up culture lies in understanding its core challenge: getting otherwise honest, ethical employees to report misconduct when they witness it. Ethisphere maintains the largest dataset of employee culture survey responses of its kind, and of the millions of employees we have spoken to, 97% of employees say that they would be willing to report misconduct if they witnessed it. But at the moment of truth, only 50% of employees who witness misconduct actually report it. Again, when we put that in perspective, a company with 10,000 employees should expect between 500 and 1,500 misconduct incidences a year, yet half of which will likely go unreported.

When asked why they didn’t report misconduct, 48% of employees said they were afraid they would face workplace retaliation for it. Another 48% said that they were afraid that corrective action wouldn’t be taken. And these numbers persist, even though 83% of employees are aware that their employer prohibits retaliation against employees who report misconduct or participate in an investigation, and 87% of employees believe their manager will uphold anti-retaliation policies. Clearly, there’s some work to do.

6 best practices to supercharge a speak-up culture

Despite those discouraging numbers, there is one area where you can make a huge difference by concentrating your efforts, and that’s on training your people managers to be speak-up champions. Sixty percent of employees report misconduct directly to their managers, which is six times as often as they use reporting hotlines. People managers are also the front line for speaking to employees (and other parts of the organization) about values, mission, doing business the right way, and creating an environment where people feel comfortable voicing concerns when something isn’t working right.

People managers are the lifeblood of ethical culture within any organization. You cannot have a strong speak-up culture unless your leadership is actively embracing, promoting, and applauding it as a central part of business integrity. Let’s look at some of the most impactful practices to improve a culture of ethics:

• Encourage employees to speak up. Have your managers talk with their team members about speaking up as a positive opportunity to address issues within the company, to make it a better, more ethical place. This is an area where companies can always do a better job of communicating the idea that speaking up is not snitching and is worthy of respect. But it’s one thing to hear this from the top; it’s another thing to hear it from a direct manager.

• Practice active listening. A commonly cited reason for why employees choose to not report misconduct when they witness or experience it is because they do not trust their manager to take it seriously or elevate it within the organization. Even if investigations are a long and potentially impersonal process, make sure that your managers know how to set expectations, and give authentic answers around what the process is likely to entail and how long it will be.

• Talk about ethical culture. Regularly have conversations around business integrity. Some companies even carve out time in regularly scheduled meetings to talk about integrity. Use ethics and compliance toolkits to help equip managers to lead such discussions as well as set a schedule of topics and expected frequency. This is an everyday opportunity to better understand what is expected of everyone and to give some guidance on how to put ethical values into action.

• Avoid untimely suspension, terminations, or transfers. Moving somebody off the team or out of the company for any reason after a misconduct report or during an ongoing investigation can easily feel retaliatory, even when it is not. Make sure to educate your managers on this to avoid credibility hits to your speak-up program.

• Share investigations data with employees. Transparency is the key to addressing skepticism that speak-up will produce results. A growing number of companies are including investigations data in their ESG reports as a way to show that they take organizational justice seriously.

• Create strong organizational values and principles. Not every ethical dilemma is clear-cut, so employees need to know that they should make decisions based on the organization’s values and principles. Some situations may not be covered in a code or policy. That is when values provide the best guidance, and why it is so importance for leadership to set and exemplify those standards.

Strong organizational cultures don’t just happen. They require intentional support so employees know that when they do the right thing, they will get the support they need. Speaking up is an act of integrity. Let’s all make sure that it doesn’t have to be an act of courage, too.

Erica Salmon Byrne is the chief strategy officer and executive chair for Ethisphere.