The ROI of Compliance
The ROI of a compliance program provides a foundation for justifying the value of that program throughout the organization. It is a common language that ties impact, reward, and loss to something everyone can understand: money.
A truly effective program will do more than serve as a stopgap against litigation and fines. It can contribute to the profitability, success, and competitive advantage of an organization by bolstering a culture of ethics and compliance so employees are never forced to make moral compromises to complete their jobs.
With 65% of employees looking for a new job and toxic cultures being a driver 10x bigger than “higher wages,” perhaps the lowest hanging fruit E&C teams can harvest is a forgotten resource: discretionary effort.[1]
The Great Resignation has shown us that employees care about the authentic culture of integrity they work in, and the toxicity of their workplace is directly correlated with employee disengagement.
A recent study[2] showed the following:
- There is a direct relationship between a toxic workplace and employee engagement.
- Employees in a toxic environment spread negativity to other co-workers leading to a compounding effect.
- Toxic workplace feelings (such as harassment, bullying, etc.) lead to unnecessary stress, burnout, anxiety, and depression.
- Employee well-being directly affects employee behaviors, discretionary effort, and overall sentiment toward the organization.
- However, organizational support increases employee engagement and work quality directly.
Discretionary Effort
Boosting employee engagement is the key to unlocking discretionary effort and increasing this engagement must be a multi-departmental task, but because it is rooted to workplace toxicity (i.e., toxic workplaces are the antithesis of high integrity cultures), E&C needs to play a central role.
Discretionary effort is the often untapped (or under-tapped) resource every organization hopes to inspire its workforce to use. An employee providing more discretionary effort is going beyond the bare minimum required to not get fired, something increasingly important to consider in our knowledge work economy.[3]
When organizations hire someone, the traditional model is to think they have bought 100% of that employee’s effort, but this is rarely the case. Instead, companies have actually “bought” merely the percentage of effort necessary for a person to keep their job.
Further, no jobs would require 100% of someone’s effort as those jobs are obviously not sustainable and would quickly lead to burnout. Most jobs require about 50% to 70% of a person’s available effort, corresponding to the bare minimum required to fulfill a job’s requirements and not get terminated.
When an organization pays someone, it pays the same amount of money for an employee to meet their minimum requirements as it does for them to show discretionary effort. Discretionary effort is up to the employee’s discretion of whether or not to go beyond what is minimally required.
Unlocking Discretionary Effort
Therefore, you could be getting more of a return from your workforce if they are kept engaged and willing to provide discretionary effort at any level above the aggregate average, or technically, above the average level below which they would be terminated.
In order to help bolster the conditions for additional discretionary effort, E&C teams who discover anti-engagement problems through issue intake channels that they oversee should look to either resolve those themselves, or reach out to those who can remedy them more directly.
A hotline allows you to react sooner so you can keep that discretionary effort level rising, especially when those who speak up are listened to, not retaliated against, and are celebrated for the courage they exhibit for caring about the values the organization espouses.
Doing work that fits you, having a manager guide you, having a mis- sion to believe in, and working in an authentically ethical culture can boost your discretionary effort, but having your voice heard is crucial to reaching the last tier of discretionary effort: belonging.
When someone feels like a member of a family, they are willing to strive towards a collective goal with greater energy and focus, epitomizing the expression, “going above and beyond.” E&C can contribute to the effort to unlock discretionary effort by giving employees a stronger and louder voice, reinforcing a culture of integrity, fighting retaliation, and fortifying a workplace that fights toxicity.
A recent Gallup survey found that only 20% of global employees describe themselves as engaged at work and 36% within the US. It is estimated that $8.1 trillion is lost every year across the globe due to low engagement.[4] This means there is a lot of additional potential value for E&C teams to add to their organizations.
Want more actionable insights, data, and stats on the future of compliance programs? Get the ComplianceLine 2022 Ethics and Compliance Benchmark Report here.
[1] Sull, D., Sull, C, & Zweig, B. (2022, January 11). Toxic Culture is Driving the Great Resignation.
MIT Sloan Management Review. Retrieved from sloanreview.mit.edu/article/toxic-culture-is-driving-the-great-resignation
[2] Rasool S.F., Wang M., Tang M., Saeed A., & Iqbal J. (2021) How Toxic Workplace Environment Effects the Employee Engagement: The Mediating Role of Organizational Support and Employee Well-being. International Journal of Environmental Research and Public Health; 18(5):2294. Retrieved from https://doi.org/10.3390/ijerph18052294
[3] Powell, W.W.; Snellman, K. (2004). “The Knowledge Economy”. Annual Review of Sociology. 30 (1): 199–220. Retrieved from https://www.jstor.org/stable/29737691
[4] 5Gallup Inc. (2021). State of the Global Workplace 2021 Report. Retrieved from https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx
