Is Your Best Performer a Risk?

It’s happened again. Another news headline where you shake your head, wondering how the Board of a large organization could ignore reports that the CEO was sexually harassing and retaliating against female employees? The CBS debacle may be extreme, but it’s a clear example of leaders ignoring bad news about their best performer.

Les Moonvas was responsible for catapulting CBS from third to first in the network ratings and making a lot of money for shareholders. The argument against looking into allegations of his inappropriate, or even illegal, behavior seems compelling with so much money at stake. Could something similar be happening in your organization?

Ignoring that rules are being bent or broken, even by your best performer, costs your organization money and reputation. At the very least, it communicates to all your workers that inappropriate, or even illegal, behavior is tolerated and will not be stopped by leadership. That’s a very dangerous message to send. Some of your workers will take advantage of the situation. Others who cannot tolerate a lax ethical environment will leave.

Organizations have three weapons to avoid financial or reputational risk from unethical, inappropriate behavior:

  1. Codes of Ethics, Policies, and Procedures

People don’t do the right thing just because you have expectations written down in your policies, procedures and codes of ethics. But if expectations aren’t written down, people can’t be held accountable for knowing what they are. Monitoring and enforcement are essential for documented procedures to be effective. Above all, leadership must set an example and a tone that inappropriate behavior and acts will not be tolerated.

  1. Organizational Structures and Defined Roles and Responsibilities

Reporting relationships and defined oversight roles within your organization must be set up to ensure that independent reviews and approvals can be established. One person with too much unchecked control over a contract, transaction, or other financial decision could commit fraud by misdirecting funds or altering key information. Review and approval roles can be configured in systems, such as payments and payroll, to control the activity.

  1. Compensation and Other Incentive-Based Policies

Commissions and other performance-based pay programs are intended to reward workers for achieving specified goals. Those intentions can end up backfiring and giving workers the incentive to pad their numbers or reverse a transaction after the commission is paid. Designing policies that do not incent dishonest behavior and system controls that prevent or alert a manager about certain activities can safeguard your organization from fraud.

Don’t ignore the warning signs that a worker is a risk to your organization, even if that person is your best performer. Learn from the mistakes of others…use these three weapons to avoid the cost and reputational embarrassment that comes from ignoring allegations of inappropriate, or even illegal, behavior.