If it could happen to EY, could it happen to you?

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If it happens in a company like Ernst & Young LLP (EY), do you think it could happen in your company?

EY admits a "significant number" of its audit professionals cheated over many years on the ethics part of the licensing exams required for work in their industry. This breach of trust became public two weeks ago.

The irony is spectacular, as the SEC pointed out.

“This action involves breaches of trust by gatekeepers within the gatekeeper entrusted to audit many of our Nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division.

“And it’s equally shocking that Ernst & Young hindered our investigation of this misconduct," said Mr. Grewal

Yes, that's right: EY cheated on the ethics exam and covered it up. They had internal reports about the cheating but did not stop it, did not report it, and did not respond clearly about it when the SEC investigated it.

The SEC imposed the largest penalty in its history on EY: $100 million. EY agreed to pay the $100 million penalty and agreed to "undertake extensive remedial measures to fix the firm’s ethical issues."

EY has all the resources in the world available to it. Yet, they had a "significant number" of their people cheating on the ethics exam requirements and covering it up.

The exact count of people involved was not reported, but think about it. It went on for years. The number must be hundreds. Thousands maybe?

Cheating on the ethics exam and covering it up became part of the culture for years.

Is it possible to cheat only on one thing? Or, if you're a cheater in one area, isn't it likely you're a cheater in others too? It is such a slippery slope, isn't it?

An EY spokesman said in various media releases about the cheating and penalty, "At EY, nothing is more important than our integrity and our ethics. These core values are at the forefront of everything we do."

Really? No, not really. It was widespread and went on for years.

EY has all of the trainings, Global Code of Conduct (talks about integrity), management oversight, systems, legal support. Yet, it did not live up to its own standards for years.

That failure happened at EY, with all their resources...could it happen in your company?

Reflect on it and be sure before it's too late. A gigantic fine would ruin a lot of companies. So would the damage to the reputation. If you need help ensuring your company does a better job living up to its values than EY does, give me a call.

Sources:
SEC press release
NPR article

How a mid-year strategic review can help you sprint ahead of your competition

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Have you reached the mid-point of your 2022 destination yet? We end the first six months of the year this week. Is the progress toward your goals aligned with the timing of the calendar?

Did you just gulp at the realization that half of 2022 has flown by?!

It seems like 2022 is flying by. Maybe it's because the two prior years were so odd and isolated. Perhaps it's because the VUCA'ness will continue going forward.

Whatever the reason, now is time to get a grip on 2022 and give it a boost.

Do a mid-year strategic review to check your progress and plan for the rest of the year.

Understanding the current picture provides many benefits for you. It enables you to…

  • Adjust for changes to your stakeholders' needs and expectations.

  • Leap ahead of competitors who are waiting for year-end to adjust anything.

  • Reallocate resources to current priorities.

  • Align culture for what's ahead instead of behind.

  • Builds resilience, especially if the first six months weren't your favorite.

You can do more than the commonly used strategy of cross-your-fingers-and-hope. While your competitors remain flummoxed by the complexity of the year, you can assess quickly then propel your company forward. Assess now to understand what's going on so you can empower and arm your team with the view and vision.

The basic review should include a summary of where you are now, where you want to be in six months, and what you will do to get there.

Voyage VIP Members get access to a newly designed, more robust, mid-year strategic review. If you would like it too, you are invited to become a member.

3 Ways to improve how your culture drives performance

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Your company’s culture is driving performance or departures right now. Every day, the words and actions taken throughout your organization impact whether people bring their A game to their work or whether they return recruiters’ phone calls. As a leader, you can influence how your culture impacts the organization, but you have to be intentional about it these days.

Long gone are the days of letting the culture take care of itself.

It’s just not that simple when times are tough and changing. Your culture will be challenged, and you will have to decide whether your culture is what you say it is or not.

For example, you may lead the HR team when a colleague in Accounting confides about another colleague who has repeatedly lied on expense reports. Your company declares integrity as one of its core values. What would you do? It’s not about the words on the core values list or in the Mission Statement.

Another example was shared recently by the head of sales. The top salesperson is not a great teammate. Extra effort is required to work around the salesperson to complete the client work. Morale is low too, as the rest of the team is discouraged by how poorly they are allowed to be treated. While the person brings in a lot of revenue, they also cost more to get the work done. The sales leader has worked with the salesperson for several months to improve the interaction within the team, yet nothing has helped. The salesperson is not interested in being the teammate needed or the one the rest of the sales people are. Should the salesperson remain on the team?

What does keeping the person say about the culture? What does a respectful termination say? (Yes, terminations can be respectful and agreed upon.)

It’s all about the actions.

People decide how to treat their jobs based on the actions of their leaders and others around them.

Here are three ways culture drives performance of people and companies:

#1 Respect. Culture decides what/who is respected.  One potential client I visited years ago had a customer respect problem. Customer service people hollered to each other over cubical walls rude things about customers after their calls ended. That was allowed to continue, so disrespecting customers became part of the culture. The same thing happens with coworkers, managers, leaders, and suppliers too. How are you influencing what/who is respected?

#2 Decisions. When decisions are made out of alignment with espoused core values, people lose trust in the decision makers. For example, when an employee asks their operations leader about the frequent practice of under-bidding to win work then over-billing clients, and the leader admonishes them for the question, trust dissipates. How can the employee trust the leader to be truthful about anything else? How do you ensure your decisions align with core values of the company and yourself?

#3 Vision. Leaders need to have a vision for the company. They need to picture it in five, ten, even twenty or thirty years or more. Give people something to rally around and work toward together. Without a commonly shared vision, people become self-centered. They will make decisions accordingly. For example, without something bigger to rally a team around, the leader might just be working toward their bonus. People have no interest in working hard so someone else can get big bucks off their backs. How are you sharing a vision for the future to give your people hope and something to work toward together?

Respect, decisions, and vision impact retention and attraction of top talent. You can impact those three drivers. You can drive the culture. Be a responsible driver and take care of yourself and others.

The 5 best ways to prevent the poaching of your top performers

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Poaching…it’s not just for eggs. It’s for your people. Poaching talent is on the rise as recruiters seek to fill vacancies caused by the “Great Resignation.”

Do you know what poaching costs your company? SHRM estimates the total cost to hire a new employee to be three to four times the position’s salary. For example, someone paid $60,000, could cost $180,000 or more to replace them if they get poached. (Source: https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/the-real-costs-of-recruitment.aspx)

In addition to direct costs, think about the indirect costs such as morale of the rest of the team when the person leaves, productivity when a role is vacant for several months, productivity and morale when someone has to add responsibilities to their plate until the role is filled, reduced or changed level of service…and more.

Think about the dollars, time, energy—all impact the company’s ability to serve, innovate, and grow.

To combat the poachers, I wrote a few weeks ago about making your top performers less susceptible to poachers. I suggested you keep woo’ing them throughout their employment journey. https://voyagecg.com/observations/2022/4/21/beware-your-top-people-are-being-poached

Here are five more specific things you can do to keep your top people:

  1. Cement their bond with you, the team, and the company. When people feel part of something special, it is harder for them to exit.

  2. Review your compensation practices. Re-evaluate salary ranges, ensure consistency of pay for the same work, and reward strong performers. Non-performers will probably leave if they don’t get bonuses strong contributors get, so be prepared for their exits. Also consider what it costs you to keep non-performers around.

  3. Update the interview process. Interview people before they start, during their time employed there, and as they exit. Pay attention to the answers so you can be as flexible as possible and so you can fix the issues stifling the bond employees have with the company.

  4. Empower people to lead and grow. Give responsibilities that align with growth opportunities and goals. Ensure the employees have the authority to execute the responsibilities too; otherwise, it’s just dumping work and is not empowering.

  5. Develop your managers at all levels. People exit because of how their direct supervisor treats them. Reduce their openness to poaching by ensuring managers treat people with basic manners and in alignment with the company’s core values. Develop management consistency for difficult conversations, feedback, rewards, and development.

  6. Bonus Strategy! Care. Genuinely care about people. Employees today want their companies to care about them beyond just their performance at work. One of my clients spoke so lovingly about their people this morning. In fact, it’s how this team of leaders has spoken of their people in every conversation. They speak about helping people live a zest for life—within and beyond their jobs.

You can reduce poaching with intentional actions to connect, bond, and engage your people. The six strategies can help.

There are additional strategies in the resource 127 Ways to Influence your Company Culture, available with Voyage VIP membership at the bottom of this page.