The culture of rogues and revolving doors

Rory Gregg

Rory is a Partner at Grant Thornton, leading their Business Transformation consulting practice in Sydney. His specialties are business strategy, performance improvement, and transformational change. Follow him on Twitter @rory_gregg

Finding enough hours in the work day is a serious challenge for many business leaders. To fit everything into a hectic workload, regular feedback and mentoring sessions with direct reports are often sacrificed.

There will always be people who like to moan about their jobs, and take up serious chunks of your work day with their concerns. After work social activities can be a useful release valve for your employee frustrations, but it is worth making sure that frustrations are properly addressed in a more formal way. As seen within the Australian Navy, extreme behaviours can start to be considered “normal”, and severely damage the image of the organisation.

When a serious problem springs up, many CEOs tend to naturally focus on repairing the public image of the organisation. Other very signficant issues can easily be overlooked – such as increased employee turnover.

Nipping a problem in the bud is always going to be cheaper. Some useful KPIs which can help you spot the early signs of an emerging problem with corporate culture include:

• employee attrition trending upwards
• service quality measures declining
• absenteeism rates trending upwards
• use of sick days increasing

A sexual harassment complaint is clearly one of the clearest possible signs of problem. While they can be isolated incidents, they are typically intertwined with problems in corporate culture, and often become highly publicised.

The Australian Human Rights Commission has produced guidelines for businesses working through sexual harrassment complaints processes. They have found that 86% of complaints involve a male harrassing a female co-worker, and that 60% of cases involved a more senior person harrassing the complainant. Recent high profile Australian cases in business and sports are now being touted as causing an increase in legal action, as aggrieved parties realise the potential size of settlements.

When scandal hits, the villain is sometimes a rogue employee. Whether the sin be fraud at Satyam, sexual harrassment complaints at David Jones, or racist and anti-semetic public comments by a top employee at Dior – there is often an obvious villain.

While the rogue may get much of the public attention, it can be easy for a disconnect to develop between the public corporate message, and the reality of the corporate culture perceived by employees. Legal advisors offer little help to leadership trying to avoid internal damage to workforce efficiency and corporate culture.

Disconnects can be devastating for employee performance and retention, and increase the chances of further problems emerging. The ongoing scandals uncovered within the Australian Navy clearly directly impact recruitment and retention, damage the reputation for defence related organisations, and are one of the most extreme examples of systemic failure of leadership you will ever find.

Even relatively minor problems with corporate culture can lead to higher employee attrition, and seriously increased wage costs. In addition to the expense of recruiting replacements – which is often 25 to 40% of salary – industry wage rates rarely decline. Hiring at today’s salary rates is inevitably more expensive than retaining an employee for 6 years with modest annual salary increases.

To give this some perspective, you might be interested to know that the Northern Territory has consistently had one of the highest population growth rates in Australia. While achieving that total growth, it also manages to have the highest proportion of residents leaving each year. 7% of the entire NT population leave every year, resulting in a rapidly spinning revolving door of population change.

Darwin would already be one of Australia’s most propserous cities – if they could just slow down the exodus of skilled residents. Many corporates would be overjoyed to reduce employee attrition to a mere 7%.

Tags: leadership, corporate culture