'If an issue has come to their attention, they arguably have a responsibility to look into whether those complaints might have a basis to them'
Canada’s top financial institutions were in the spotlight last week when TD employees were allegedly caught on hidden cameras misleading customers and selling them inappropriate products to meet sales targets.
In a report from CBC Marketplace, employees from other major Canadian banks spoke out about how pressure to meet increasing sales targets has led to associates in the industry selling customers products they don’t need.
So how should HR leaders who work in such cut-throat environments handle rumours of employee misconduct — especially when there may be risk of liability for the organization?
HR’s responsibility to investigate rumours of misconduct
“An HR professional’s role in an organization is to manage risk, and to minimize that risk from an HR perspective,” said Jensen Leung, employment lawyer with KSW Lawyers in Vancouver.
“If they are dealing with rumours of misconduct, the usual starting point would be for HR to look into those rumours and to determine whether there's potential merit. In other words, they of course shouldn't act blindly and just follow whatever the rumour says. But if an issue has come to their attention, they arguably have a responsibility to at least look into whether those complaints might actually have a basis to them."
If rumours are found to have merit and an investigation is necessary, the next step is determining if HR can conduct the investigation without a conflict of interest. If there is, a third-party investigator should be brought in, said Leung. A conflict of interest includes if employees suspected of misconduct report directly to the investigator, or if the investigator reports to the suspected party.
“In a situation like that, where there are serious concerns regarding a culture of misconduct, that is arguably a situation where in their role, it would make sense for the HR professional to escalate those concerns. Basically, they should be passing it up the chain so that it can be flagged to the appropriate senior management or executive.”
Organization could be liable for customer harm
Marketplace undercover investigators recorded employees at various financial institutions giving them incomplete or misleading information while offering them products – some were discouraged from paying off credit card debt in favour of investing, which would help to hit sales targets.
Also, employees reported their managers pressuring them to be unethical in their sales tactics.
This is an area where employers could get into trouble, Leong said. If an organization can be shown to have been aware of employee misconduct, it can be held vicariously responsible for that damage.
If misconduct is stemming from above, as might be the case with difficult sales quotas and other performance markers, HR still has an important role to play even if they are not directly responsible, Leung said.
“The role of HR is to manage and control risk to the extent that they can. So that means bringing the issue to the executive’s attention, potentially recommending an independent investigation if the misconduct was serious enough, and then otherwise just continuing to manage things in terms of, for example, if there are complaints from employees or if there's concerns regarding employee performance.”
What if policies aren’t followed?
Organizationally, there are other considerations for HR as well when there are systemic misconduct issues, said David Hannah, professor of management and organization studies at S.F.U.’s Beedie School of Business in Vancouver.
It goes beyond writing more policies or rules, he explained to Canadian HR Reporter.
“When it comes to the rules themselves, employees will make their own judgments about whether the rules are justifiable or not,” said Hannah.
“Employees are often under a lot of pressure at work. So if someone was under pressure to meet sales targets, and they knew that bending a rule would let them hit the sales target, they may think, ‘Well, my employer actually wants me to bend this rule.’”
Difficult-to-achieve sales targets or other strict measurements of performance can serve to divide a workforce, he said, because some employees will “play that game” and engage in dodgy behaviour while others can struggle or even quit.
A culture of misconduct or inconsistency in rule-following can also negatively affect the morale of employees who aren’t engaging in the behaviour.
“If you have a rule or policy, and then some people follow it and some people don't, and nothing happens, the people who have been following the rules can become demotivated,” said Hannah.
“If it takes effort to follow rules, and you put forward the effort, and someone else ignores the rules and there's no consequence, then you think, ‘Well, why am I putting forward this effort?’”
Providing clarity, clear communication
This is why providing clarity around policies and why they are implemented, and then following through with enforcement, is a crucial role that HR plays in preventing cultures of misconduct from growing, said Hannah.
“Sometimes HR departments can be too focused on the requirements of rules: ‘Here's what you must do. Here's what you must not do,’ without explaining the ‘why,’” he said.
“When employees know the ‘why,’ then they can make more informed decisions in situations where they may be facing a dilemma … that's where there needs to be an open line of communication between employees and their supervisors or HR. Employees need to be able to go to someone to say, ‘Hey, these two rules appear to contradict themselves. How am I supposed to react in this circumstance?’ And then each boss should have an answer in that situation.”
