Tag Archives: ethics

Business ethics and corporate social responsibility

Business ethics and corporate social responsibility

by Ingrida Andrijauskaite

Business-Ethics

Every year the watchdog of ethics focuses on ethical values in business. The desire to have an ethical and responsible business is developing a colaboration between small and large corporations. Ethical organisations, such as the Institute of Business Ethics, are seeking to unite all companies to join and share knowledge concerning the best ethical practices, activities and solutions.

The ethics of a business depends on the company’s culture. The decision to do activities ethically is an example of  moral behaviour. All corporations have to decide what to do and how to do it in order to align their behaviour with their ethical values.

A Cadbury Schweppes – Business Case Studies[1] presents some examples of the positive impact that ethical behaviour and corporate social responsibility has on a business:

  • Attracts customers to the firm’s products, thereby boosting sales and profits.
  • Makes employees want to stay with the business, reducing labour turnover and therefore increase productivity.
  • Increases the number of employees wanting to work for the business, reducing recruitment costs and enabling the company to obtain the most talented employees.
  • Attracts investors and keeps the company’s share price high, thereby protecting the business from takeover.

So, ethical behaviour and social responsibility in business is considered the key to success for a company. Also, it is a way for businesses to gain the publics’ trust.

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Attitudes of the British Public on Business Ethics

Every years Ipsos MORI, a market research company, conducts a survey about the British publics’ view on ethical behaviour of British business and the issues that most need solving. The survey results revealed that in 2014 the majority of the British public considered that the general behaviour of British enterprises is fairly or very ethical. 58 % of the respondents thought that British business was more ethical than unethical. However, 40 % of the respondents thought that the behaviour of British businesses was “not very” or “not at all” ethical.

This survey also asked the British public to compare the behaviour of British businesses to how it was 10 years ago. The data of Ipsos MORI showed that 36% of the British public thought that businesses were behaving “less ethically” than 10 years ago. Just 25 % of the respondents believed businesses were more ethical. 36 % thought that businesses looked the “same”.[2]

We can assume that, although the majority of the British trust and think positively about the behaviour of businesses, there is a large percentage of the public who acknowledge the lack of ethical behaviour in business. It is very important for businesses to incorporate social responsibility, integrity, and honesty.

The main issues mentioned by the British public were corporate tax avoidance ( 35%) and executive pay (34%). However, the data of the survey revealed that bribery and corruption has also increased one place (19%).

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Also, this information shows us that the British public wants to see more honesty from the business community, especially from employers who could inform companies about unethical behaviour or wrongdoing.

Perhaps, we can hope that this data could encourage the business community to focus more on forging reliable and honest connections with society. Also, it is vital not to forget to emphasize the practical applications of a company’s ethics in the public arena so that people can find out about a corporation’s social responsibility and their efforts to incorporate ethics into their business strategies.

HSBC tax scandal – an example of unethical behaviour

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The HSBC tax scandal, is a clear example of corporate unethical behaviour. HSBC has been shaken by leaked financial documents, most from around 2005-2007, that reveal that it helped wealthy customers evade taxes. The documents were leaked by Hervé Falciani, a former systems engineer from HSBC’s Geneva branch.

This secret data revealed that the bank not only helped rich customers evade taxes but also provided accounts for international criminals, corrupt businessmen and other high-risk individuals. HSBC presented a general letter to the public, in which they apologized for this tax dodging scandal and emphasized that they have made changes since the period which is covered by the documents, and that it’s Swiss private bank had been “completely overhauled.”

Such scandles are the reason for why corporate tax avoidance is a public concern. This is one of the biggest problems in businesses. How did HSBC manage their reputation crisis? They sent a public notice in which they sincerely apologized about the tax scandal. Also, they tried to emphasize how now everything has changed and improved.

What about HSBC’s current culture? As HSBC’s group Chief Executive, Stuart Gulliver said: HSBC has been working tirelessly and with great dedication to build a stronger bank with fully global businesses and functions, rigorous controls and the highest global standards, all underpinned by a clear strategy to serve our millions of loyal customers. We can try to believe it, but now HSBC have to prove their integrity and focus on ethical standards.

The unethical financial situation of HSBC has showed us how employees are able to speak up about companies’ wrongdoing. Hervé Falciani’s behaviour could be considered criminal, as he secretely stole private company financial data. Nevertheless, this is evidence that large corporations do not always respect the ethical standards or even the law, and do not focus on their compliance.

The advantages of Ethical behaviour in business

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In summary, all companies should not forget the advantages of ethical behavior in business. It is very important to build and improve customer loyalty – consumers have to know that a company appreciates and respects them. Also, a company’s reputation built around it’s ethical behaviour can help to create a more positive image in the marketplace and allows them to reach a greater number of potential clients.

On the contrary,  if a company has an unethical reputation, the chances of obtaining new customers decreases, especially in this era of innovative social networks, where all customers are able to quickly find negative information about a company’s  activities.

The improvement of internal communications. It is significant to share information within an organization so that all employees are aware of the values of a company. Focusing on the improvement of professional skills is important to employees, as talented individuals want to  improve their skills and knowledge, in order to advance in their career.

In addition, every employee wants to be part of an organisation where they know the truth about whats is going on, particularly in crisis situations. Those companies which are responsible and open with their employees have a better chance of attracting and retaining more talented staff.

Avoid Legal Problems  a company has to respect and abide by the law. Also,  companies must focus on environmental regulations and labour laws, and also not ignore workers’ safety. If these factors are not taken into account, a company’s reputation can be damaged. Those companies which focus on the highest ethical standards can build a strong protection of their fundamental values.

 

[1]Business Case Studies: http://businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/the-importance-of-ethics-in-business.html#axzz3Ru3WMJWB

[2]The survey results of the Institute of Business Ethics: http://www.ibe.org.uk/userassets/surveys/attitudes2014.pdf

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Why increasing discretionary effort in the workplace is the key of success

Why increasing discretionary effort in the workplace is the key of success

by Antonia Di Lorenzo

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“If you don’t trust someone to spend the right amount of time at work doing the job, or to turn up dressed correctly for a meeting, then are you likely to be empowering them to act on behalf of a customer?” The answer to the rhetoric question by David Radford, market management director at insurers Allianz Retail, seems to be: “No, I do not.”

More recently a Chartered Institute of Personnel and Development (CIPD) report on leadership noted that “the key to performance is through engaging employees in ways that produce discretionary effort and creating an environment which encourages greater employee empowerment and voice to facilitate the exchange of ideas and know-how.”

Discretionary effort is the level of effort people could give if they wanted to, above and beyond the call of duty. David Jukes, president EMEA at Univar, a leading global chemical distributor, says in regards that “the organisations with discretionary effort tend to be the ones that care more, that make things happen, make people feel better about what they do. It makes colleagues feel wanted and appreciated, and customers feel loved and special.”

It is evident how discretionary effort is associated with engagement, and in some cases, it seems to be the natural result of the latter. Marc Woods, founding director of SladenWoods management consultants and a gold medal winning Paralympian, highlights how in today’s organisations, perhaps more than ever before, people matter. People’s actions are the main contribution to the success of an organisation. It seems there is a gap between what people are potentially prepared to do, and what they actually do, depending on the environment they’re working in, the organisation’s culture, their relationship with their manager or co-workers. These factors can stimulate people to stop from doing that little bit extra or going beyond the call of duty.

Woods wrote a book based on the results of his research: “Why Some of Your Team Go the Extra Mile and Others Don’t Show”. He identifies six drivers that organisations can target if they want to create an environment that fosters discretionary effort:

  • autonomy and empowerment;
  • consideration of the individual;
  • self-sacrificial leadership;
  • fairness and equity;
  • identifying with your team;
  • trust.

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In the context of discretionary effort, trust operates on several levels. One factor that impacts on trust, and therefore discretionary effort, says Alf Crossman, a senior lecturer in industrial relations and human resource management at Surrey Business School, University of Surrey, is the psychological contract between employer and employee, in other words, how employees believe they are entitled to be treated and the kinds of promises that people infer from their employee relationship. If on the one hand, people are prepared to give, then on the other, they expect to get something back in return.

According to Radford, even though the discretionary effort may be voluntary, it is important that organisations reward this behaviour to give the individual more consideration; on the other hand, they cannot take actions against who decides to not put in a bit more. It’s a matter of choice.

According to a study commissioned by Aubrey Daniels International (ADI), the only way organisations can earn discretionary effort is through the effective use of positive reinforcement,  that is any consequence that increases the probability of this behaviour. If people experience positive and immediate consequences, there will be more probabilities that people enjoying what they are doing will choose to go beyond the minimum required. After all, that’s exactly what happens in the everyday life, bringing the same attitude into an organisation, collaborating in building positive reinforcement.

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Reese Haydon, Marketing Specialist at DecisionWise, points out how discretionary effort varies by tasks – some of them can be more engaging than other ones and stimulate us to put in a bit more (extrinsic engagement) – or by person – according to this school of thought, the nature of task does not matter (intrinsic engagement). It is believed that both the theories are true. Engagement is a choice made by two parties: employer and employee. If the employee chooses to go beyond the minimum required, the employer needs to create an environment where the first one can be more engaged. Discretionary effort and employee engagement seem to be a by-product of a two-part equation.

Woods recognises that there is massive potential value to the employee, being able to contribute to the organisation more than managers imagine and expect: “No matter what your role or position, you can help your organisation focus on and improve the key drivers that can unlock that potential. Why wouldn’t you want to create an environment in which discretionary effort is able to flourish? That’s the kind of organisation we all want to be part of.”

When people enjoy, they are motivated to find solutions, are creative, guarantee a high level of commitment, a long-term and consistent relationship with the organisation.

The importance of Ethics in Sales: the opinion of Nick Lee, Honorary Professor at Aston University, Birmingham

The importance of Ethics in Sales: the opinion of Nick Lee, Honorary Professor at Aston University, Birmingham

by Antonia Di Lorenzo

nick lee 2009

As water and oil for some companies or bread and butter for other ones, Ethics and Sales is one of the thorny problems which involves the new frontier of the business.

As if I were one of his students, Nick Lee, Honorary Professor at Aston University, Birmingham, explained me in an interview the importance of “being ethics” and how to connect this aspect to the main aim of making profit.

Author of Journal of Management, Journal of Business Ethics, Journal of Personal Selling and Sales Management, Dr. Lee’s work has also featured in popular outlets such as The Times, The Financial Times and BBC Breakfast.

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  • Dr Lee, what relevance does ethics have in business and why?

I think it depends, there are a lot of ways you can say it is relevant. It depends on what you mean by ethics.

  • What does ethics mean for you?

I think you talk about behaving in a fair manner. Essentially not taking advantage of the organization or customers in sales. In sales I think this is a very important thing. We have to be realistic. In sales the main objective is to make profit but automatically I think the important thing is to talk about long-term profit.

If we behave in an unethical way we tend to focus on the short-term. If we see companies having problems this is because they don’t have very good long-term prospects on relationships. Some of the reasons for the financial crisis was that there was too much short-term focus on making profit. If you think about long-term continuing relationships and continuing business, then  ethical behavior is the natural thing to do.

  • How would you recognize an ethical business? What characteristics do ethical business have in your opinion?

There isn’t a model that you can look at a business and you can say that it is ethical. You don’t have to say “we are an ethical business”. I guess what ethical organizations have in common is that they have good ethical role models, that is people who behave ethically and show you can be successful by being ethical. A lot of problems with ethics is that people make bad decisions. But they don’t make bad decisions because they are bad people, but because they don’t have experience or a knowledge what the right decision can be or they feel under pressure.

  • What do you mean for “bad decisions”?

Defining what makes a behavior ethical or unethical is actually a difficult task. Everyone knows you are wrong if you go to a customer meeting and you hit your customer with a baseball bat. But what about if you are in a customer meeting, you have to make a target by the end of the week and the customer maybe is thinking he wants to delay the decision for two weeks. What do you do? Do you lie to the customer? You can say if he orders after the end of the week, his order will be not quick enough because many factory facilities are overstressed, so he has to order quickly. And it is lying to the customer.

Lying is unethical in a philosophy point of view, but you can look at a practical one. Is anybody really being hurt by unethical behavior? Do you just think of unethical because of the behavior or the consequences? This is one of the questions we always have to think when we talk about ethics. But also why people behave like that. One reason may be they are under pressure or they don’t realize the importance of behaving in a truthful manner or they don’t have a good role model as sales manager.

  • What about Trust and Credibility? Firstly, how is possible to get the customer’s trust? How long does it take to develop a strong relationship with a customer?

If you have ethical behavior you can build trust. Sometimes people behave unethically because they are afraid. According to an economic theory, if you think someone is harming you also feel you can advantage of them. Building trust from the customer is always a difficult task.  As every relationship, it takes a long time to build a good relationship but it doesn’t take very long to break the relationship. Usually in a long term is always an ineffective strategy to be unethical, but in a short term you can relate to a great performance.

  • How much can the reputation influence a customer?

Company reputation can play an important role at the beginning of the relationship. It can help a lot to build trust.

  • If credibility comes from performance and professional reputation, what is the role of the social media? How much can they influence what people think about you?

Social media plays an important role. I think it is easier to influence people in a bad way rather than in a good way. I think it takes more to build a positive reputation. A lot of campaigns were wrong because people who were running them didn’t expect how consumers will take that. A lot of companies don’t know what it is going to happen when you put something online.

  • Can spending time together and sharing the same interests be a way to get the customer’s trust? If yes, which is the borderline?

Yes, it can. Psychologically we know that sharing interests can help to build a relationship together. But the important thing is to avoid to pass the “borderline” and be genuine. The company has to look genuine, in terms that you have to look real, not just an act.

  • Do you believe there are many organizations currently adopting an ethical approach in terms of engagement?

I think it is hard to say. It is hard to really place ethical frameworks around what people are doing. There are a couple of things to be worried about: one is how important you think being authentic is unethical or to be presenting an image to the world that is not true. But companies do that as part of their job. But probably the image ethical concerning everybody, consumers and staff, related online, is the data collection and data protection.

  • At the recent London conference by Ethisphere on ethics and governance one attendee suggested “sales trump ethics every time.” This was asserting that for most companies if it’s a choice between ethics and sales, the latter always wins. What do you think about that? Do you believe that sales always trumps ethics?

It is a kind of false choice. It is easy to say things like that, but we don’t have any reference. If you face people with the right choice you can always influence what they choose. But the problem is between Ethics and Sales on a long term prospective. On a short term basis perhaps that’s the case, for individual salespersons sometimes the choice can concern choosing the easier and the more beneficial outcome for themselves. What we have to do is showing very clearly the benefits.

People always choose the benefit over no benefit. That’s the truth. We have to present the ethical choice as long term benefit, rather than a short term benefit. The problem we had in the past concerns that there were a lot companies focused on short term performances and influenced by unethical behavior. Ethical behavior is more about long term relationships generation.

If you think about your personal life, for example, if you married with somebody you have a long term prospective or if you have a long term relationship, it is in your benefit to place wider criterion of your decision rather than your short term benefit when you are out on an evening or in a night club. Business is not different to life. If we have long-term prospective the ethical choice is always the highest performance choice. The problem is when we motivate people with short-term prospective.

If we have effective long terms wider intensive motivational programs, people will be motivated to behave more ethically. Our job is saving the long-term prospective as preference.

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Ethical Leadership: Women do better!

Ethical Leadership: Women do better!

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Today, I opened door n° 68 at 9:15 am. I took a seat and made a coffee.

There were ten people working this morning, eight of them were women. Mothers, wives or girlfriends. But it seemed everyone had something in common: a potential for ethical leadership.

According to a study at the University of Pennsylvania’s Wharton School, women are less ready to compromise their ethical values for money and social status.

It sounds good, but let’s try to understand why and how.

Firstly, ethical leadership is about understanding your core values and having the courage to express them in all parts of your life, in service of the common good.

It starts with an inner journey, in search of values which define one’s own identity, developing a vision as a frame to articulate one’s actions, and finally, finding the voice with which to express it, in order to lead the whole community.

It sounds like this person would be organised, with a deep commitment to her priorities, able to juggle work and everyday life, never once taking their eyes off their goals, always ready to serve others, following a moral code. It looks almost like a portrait of a mother.

Supporting this thesis, Liz Earle, British entrepreneur, but foremost a mother of five children, reveals that the working mothers’ approach is the key to success in an interview released in the Irish Times on 30th September 2014.

She told the Irish Times: “I always say if you want something done well ask a woman, but if you want something done really well and fast, ask a busy woman.”

According to Liz, women are able to think faster than men, because they naturally have to do so. She co-founded the Liz Earle Beauty Company in 1995 when she was a young, working mother, sold it fifteen years later to Avon. Today, it is a global brand with 600 employees.

Jessica Kennedy, the paper’s lead researcher and a post-doctoral fellow in Legal Studies and Business Ethics at Wharton, said: “It is the very need of ethics that is driving many of us to talk about bringing the ‘feminine’ relational characteristics to the masculine ‘wield power’ characteristics of the workplace.”

Nevertheless, the headline of a global development article on the Guardian, entitled “Women are better off today, but still far from being equal with men”, explains that, despite the improvement in women’s role, in both industry and government, the faces remain stubbornly male. According to the statistics, the number of women owning a small and medium-sized business is estimated to be between 8 and 10 million.

An article in The Independent published on of the 28th September reports the initiative of one of the world’s leading executive headhunters, Egon Zehnder, to end the male dominance in the boardrooms of the UK’s top firms. Under the guidance of Miranda Pode, the managing director, Egon Zehnder has promised to re-organise the male-dominated executive roles, to push women to the top of the UK’s FTSE 100 companies.

Currently, there are just five women covering the big boss role, such as Carolyn McCall of Easyjet, Véronique Laury of Kingfisher and Olivia Garfield of Severn Trent.

It seems women cover support roles but are far from the leadership of a company.

You could ask me why. I could reply to you with another question that could be useful for reflection. If it is true that women are potential ethical leaders, following core values in their actions in the business more than men, the lack of female faces at the top of companies leaves open some questions:

  • Is ethics still a taboo in developing business topics?
  • Considering the wish to renovate the male-dominated executive positions, can ethics and business work together to innovate the old view of business?
  • Can following a moral code save the business or is it just blocking the interests of other parties?
  • Can core values and showing the emotional side of a company create an engaging environment in the office and transmit it to the clients?
  • Can clients be more engaged, feel like a part of a community, be more mindful of their real necessities?

If the answer to all the questions above is yes, it means you are ready to start the change. Put the business in the hands of a woman, she will make sure it is successful.

 

Allowing Employees To Have A Voice: Needless or Necessary?

 Allowing Employees To Have A Voice: Needless or Necessary?

By Brooke Paterson

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Employee voice:

Why, one might ask, should we allow our employees to have a voice in the workplace? This is a somewhat straightforward question that has a multitude of answers. Nita Clarke, director of the Involvement and Participation Association and vice-chair of the MacLeod review, adopts the simplistic approach, stating that employee voice is the key to creating and maintaining a successful business [1]. And she certainly has a point. Employee voice, generally speaking, has four main purposes, it: “helps organisations to understand the employee attitudes about work, presents a form of collective organisation to management, influences leaders’ decisions on work-related issues, and shows the reciprocal nature of the employment relationship” [2]. Adopting and promoting a structure, where employee voice is central, allows for a deeper and more meaningful relationship between the employee and the employer, helping to improve and further develop communication. Allowing employees to speak up and have an unrestricted opinion on work affairs, poses an extensive number of benefits not only to the employee but also to the employer.

Benefits to the employee From an employee’s point of view, having an assertive voice within the organisation he or she belongs to is most definitely profitable. But why?

Increases your value

First and foremost, it increases your value. Voice, according to William Kahn, is “the harnessing of organisation members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performances” [2]. Voice, after all, characterizes the value an individual brings to a company. If you regularly share the views you have and vocalise your opinions on certain issues, you are more likely to be considered a valuable and worthy part of the team. However, if you are less willing to articulate how you feel and very rarely give useful input or share new ideas, colleagues and more senior members of the company may be more inclined to view you as a replaceable and unimportant component of the team.

More say in work

Having a voice at work ultimately means you have more influence and control over the work you do and the amount of it you are doing, allowing you to better manage your workload. When you freely and regularly express how you feel, it allows you to take control of matters and perhaps carry out a project or piece of work in a manner, which is more to your liking or to a time-scale that suits you better. If you do not let your voice be heard and fail to communicate with your manager or supervisor, then they will not be aware of any problems you may have. If you don’t speak up or voice any concerns or problems, you cannot expect things to improve or be rectified. 

Depicts you as an individual

Additionally, how you express your opinions at work reflects who you are as an individual, and more importantly mirrors the beliefs and morals you hold. For example, if a certain issue goes against the beliefs or values you have, and you speak up and make it known that you disagree, you will come across as a moral and ethical individual who whole heartedly stands by there beliefs. This may even result in other employees respecting you more, not only for speaking up about your dissatisfaction over work issues, but also for holding such commendable and creditable morals.

Leads to more opportunities

These days’ people are keeping their heads down and staying quiet as a means of avoiding confrontation and keeping favour with their boss. Many are under the impression that it is out with their role to challenge other employees or introduce new ideas. Often, employees would rather “suffer in silence” [3], as they believe they will be more likely to advance in the workplace, be offered promotions, and in turn, get more responsibilities. However, it is quite the opposite. Individuals who are more outspoken often have a more dominant and presidential role within the company. Those who are not afraid to speak their mind are often tasked with taking meetings and managing a larger group of employees, showing that it pays to have a voice within an organisation.

Develop and refine skills

By speaking up and having a voice, an employee can learn a lot about where their strengths and weaknesses lie. If they can identify a weakness and feel comfortable enough to address it with their line manager or that alike, the area of weakness can be evaluated and hopefully improved, resulting in the employee feeling happier and more comfortable with a certain area within their line of work. Similarly, they can also establish what they are best at, allowing them to hone in on that skill and focus more on that area of their job.

Job satisfaction

When an individual feels as if they can be themselves and openly voice how they feel at any given time, they understandably begin to enjoy their role more and start to truly appreciate the colleagues they are surrounded by. In a recent study carried out by Blessing White, 38% of engaged employees stated the reason they stay with the company is due to job satisfaction and fully enjoying the job they are doing. [3] When you feel as if you cannot truly address issues and problems you inevitably begin to become stressed. Giving employees a voice therefore reduces stress levels and takes a huge weight off their shoulders, allowing them to appreciate their work more and subsequently, increase their productivity.

Benefits to the employer

Allowing employees to make themselves’ heard in the workplace presents a whole number of advantages to the employers, also.

Better organisational performance

The organisation as a whole suffers when employees are not involved in decision-making and cannot have a say in company affairs. Productivity and performance becomes increasingly worse and employees begin to lose motivation and become disgruntled when they feel as if they cannot speak about how they truly feel or address any on-going issues or problems. By allowing employees to have a voice, individuals begin to flourish in their working environment and feel more comfortable and confident when it comes to sharing ideas, giving feedback and input, and having group discussions. Furthermore, there is a boost in motivation when employees have a voice, as they believe they have contributed to the overall outcome or the decision that has been made, making them feel valuable and an integral part of the team.

Gains good reputation

By treating staff fairly and allowing them to have an active input, the organisation will become well recognised for it’s stance on employee voice. As a result, recruiting will gradually become easier as more and more people will want to work with a company that values employees and considers their participation an intrinsic and fundamental part of the organisation

Reduces conflict and hierarchical divides within organisation

Employee voice results in a reduction in conflict. When an employee can exchange new ideas and openly speak their mind, there is an increase in co-operation and thus, an improvement in the relationship between the employer and the employee. As reported by Dale Carnegie, 80% of employees dissatisfied with their direct manager were disengaged. [4] These statistics prove that by having a more relaxed and open approach in the company, employees are more likely to feel engaged and will not feel as if they are being dictated to or controlled by other members of staff.  

So promoting employee voice is favourable, but is it really a necessity in the working environment? 

There are two sides to this coin. On one hand, employee voice makes relatively no difference. On the other, it is extremely detrimental to the way the organisation is run and the success it can have. So which is correct? Essentially, the evidence doesn’t lie. Well-researched statistics and figures show that implementing a structure, which allows employees to have an active role and play a vital part in the way a business is ran, is profitable to everyone. However, it is no good just promoting this kind of structure. It needs to be implemented and religiously followed, continuously allowing for employee voice to be heard. After all, if no one spoke up and had their say, where would we be?

Continue the discussion and let us know what you think via Twitter or LinkedIn.

[1] hrmagazine.co.uk; “Employee voice” is a key to a successful business, says Nita Clarke

[2] Armstrong, 2006

[3] William Khan, 1990 [4] Albert Hirschman, 1970

[5] Blessing White, Employee Engagement: Research Update, 2013

[6] Dale Carnegie, Employee Engagement