Enron, WorldCom leave employees bitter

Lack of trust in senior leaders hurting productivity, recruitment

Watching the recent spate of corporate scandals unfold has had an impact on working Canadians. Many now say they have little confidence in the ethics of their top management.

In a report released by consulting firm Watson Wyatt, only 51 per cent of Canadian employees said they trust and have confidence in their senior leaders and fewer than half said senior leaders are effectively managing their companies.

“It is more than evident that few companies have escaped untouched by the fallout from the recent turmoil in the business environment,” said Jan Grude, national practice director, human capital group for Watson Wyatt. The 2002 WorkCanada survey polled 2,300 Canadians, at all job levels, about their attitudes towards their employers and workplace.

Based on responses to questions about job satisfaction, loyalty to the organizations and intentions to stay, Watson Wyatt concluded employee commitment is up 12 points since 2000. (61 per cent of respondents had a “favourable commitment” in 2002.) But only 31 per cent of respondents feel actively engaged in the activities of their employers.

While at first glance these two findings may seem contradictory, they actually aren’t, said Dawn Bell, organizational effectiveness national practice leader for Watson Wyatt.

“It’s not that actual commitment was going up, employees during the economic turbulent times were weighing the risks and the benefits of a job move, but the risks outweighed the benefits,” she said. “Employees are feeling more disengaged but have decided to ‘hang in there’ for the next year or so because there are fewer options and it’s too risky to move.”

The lack of trust in senior leaders and disengagement is hurting productivity. The study shows the total returns to shareholders for companies with high trust and confidence levels is nine times higher than for those with low confidence levels.

Nearly half (45 per cent) of those polled said senior leaders do a poor job of motivating the workforce, attracting and retaining qualified people, growing the business and controlling costs. Only 39 per cent believe their companies do a good job with talent management.

“Employers need to get employees motivated to come out of bed to work and do their best every day and that comes right back to feeling involved,” Bell said. “That means employers need to make sure they communicate why they’re doing things, making sure the communication chain in every team unit is connected to what’s coming out of the mouths of senior leaders.”

Joan Flynn said she hasn’t witnessed a fallout at her company and it’s largely due to open lines of communication.

“If there is a problem that needs resolving…they know we’re available and we’re not going to take their concern lightly,” said Flynn, HR manager for Montreal-based AerRianta International, a company that operates duty-free shops in airports.

Flynn makes a concerted effort to regularly visit all 200 AerRianta employees on location.

“We encourage a team spirit (and) don’t want to see a hierarchy here. Everybody is important and equal, has good ideas, and we want to hear from them,” Flynn said.

Kathy McMonagle, HR advisor for the City of Dryden in Ontario, said the stakes are similar when it comes to getting employees to trust senior government leaders.

“There will always be those people who aren’t comfortable with what’s going on. Everyone is aware there is a money issue (here) and you must be accountable for every dollar you spend,” she said.

If a company wants its employees to have faith in its leaders, employees need to feel a sense of belonging, that their contribution is worthwhile and significant, McMonagle said.

A recent poll of career-management experts noted the ethics of corporate leaders will become one of the top issues when candidates are seeking new employment, and companies should be prepared to answer questions around leadership practices and ethical conduct.

“People are looking into where they work much more profoundly,” said Denis St-Amour, president of the Centre for Executive Options at DBM, the HR consulting firm that produced the poll. About 200 career management experts from 40 countries were surveyed and more than 80 per cent cited corporate leadership ethics as important.

People are worried their names will be put on the line if they take on a job at an unethical company, St-Amour said.

“Employers need to anticipate the issues and concerns that a potential employee may have in today’s marketplace where there is a lack of credibility for organizations, their values and principles. They have to deal with the skepticism upfront,” St-Amour said.

The report indicates job seekers will now thoroughly research prospective employers by:

•asking to speak with a range of current employees to understand the corporate culture during the selection process;

•checking with the Better Business Bureau and financial and government agencies to learn about complaints lodged against the prospective employer;

•asking hiring managers about the values that the organization appreciates most and requesting examples showing how these values translate into day-to-day activities; and

•researching employers on the Internet.

“Enron and WorldCom were huge organizations. People are saying, ‘My God, if it could happen in those places, it could happen anywhere.’ Businesses are going to have to demonstrate that they can really walk the talk,” said St-Amour.

Almost everyone has seen the morale of corporate governance collapse in so many organizations. It’s just the tip of the iceberg though, he said, there are so many more companies that have not been caught in the act yet.

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