Blog

Cultural and reputational risks are becoming more and more common for enterprises today. As companies across business sectors find themselves suffering reputational damage over some form of toxic behavior or unethical business decision, a growing number of executives are starting to see culture as a direct contributor to the bottom line. While the increasing awareness around these issues is encouraging from a social standpoint, many executives are still unsure how to tangibly improve their company culture. According to Deloitte’s Human Capital Trends Report, 82% of executives say that culture is a potential competitive advantage, yet only 12% believe they’re driving the “right culture.”

How is it possible that only 12% believe they’re driving the right culture? In part, it’s because the processes that executives and board members have in place aren’t giving them the signals they need. Despite the fact that information is essential to understanding and managing culture risk, especially in a digitized and media-driven business environment, 65% of CEOs and 62% of board members today say they lack a process for identifying signals of potential culture risk. This leaves companies prone to a range of negative consequences ranging from consumer backlash to a spike in turnover.

How can there be such a lack of process for identifying signals of potential culture risk? At its core, the reason we’re not sure whether or not we are driving the ‘right’ culture is because many of the processes that we use to obtain relevant information rely on good intentions. Specifically, many of us rely on self-reporting and the moral character of leadership to improve organizational culture and reduce corporate risk. But as the research around organizational psychology and leadership suggests, neither of these approaches are enough to help businesses get the information they need.

As HR professionals, we do everything in our power to ensure that productivity stays high. To keep our employees engaged, we offer remote work options and competitive perks. We double down on diversity and inclusion programs to make sure everyone can enjoy a safe and welcoming workplace. But when it comes to social media, we’re often not sure what to do. More and more sources say that to see real success, leaders need to let go of “culture control” and enable a culture that yields productivity instead. But how does social media impact productivity—and how do you make it work for you?

It’s not exactly straightforward. On the one hand, social media without restrictions can be a source of genuine distraction and, by some estimates, make up 13% of an organization’s lost productivity. On the other hand, cracking down on social media for the sake of output can be a serious hit to morale. To be among the most innovative and agile companies in the market, we need to figure out a way to balance the benefits of social media to productivity while minimizing potential risks. But what’s the approach?

There’s a simple way to think about it. No matter how large your organization or how versed your team is in managing social media, the key to thinking about social media is to remember that as with culture in general, social media increases productivity when it builds connection and trust.

Three years ago, we wrote a blog focused around a segment by John Oliver on “Last Week Tonight” surrounding the inaccuracy of background checks and the impact this can have on your business and workforce. This past Sunday, John Oliver took another dive into the working world, this time around automation and the fear that improvements in technology might lead to replacing humans with machines. This topic has been of growing concern for professionals in a variety of functional roles, and HR is no exception. 

In light of the impact that movements such as #MeToo and #TimesUp have had on the business world, more and more companies are looking to AI to help tackle increasingly important issues around corporate culture. However, as AI moves into the conversation, many HR professionals have raised concerns. In addition to the potential for AI to create bias and discrimination, many HR professionals are wondering: will new technologies officially replace the HR function?

The short answer is no. If the recent bots created by Microsoft and Amazon are any indication, few technologies can effectively replace the “human touch.” Despite the fact that the bots created by these companies had breakthrough automation capabilities, they also ended up reinforcing bias and discrimination and undermining corporate culture.

There’s no underselling how important professors are in our society. We rely on them to shape the next generation and instill the knowledge students need as they prepare to head into the workforce. However, it’s becoming clear that when they’re not careful, their personal biases can overshadow the education their institutions had promised and create a toxic environment for students.

Millions are talking about a professor and administrator at Duke University who recently sent an email asking students not to speak Chinese. The incident, circulated by Bloomberg, The New York Times, and the BBC, has spurred discussions worldwide around bias in higher education. It has left people wondering what colleges are doing to protect students from individual bias and harassment, and just how much a professor or administrator can damage their institution’s brand through the things they say.

Duke will likely withstand this PR incident. However, many institutions see much larger repercussions when a scandal breaks loose. A paper from Harvard Business School shows that colleges that receive long-form news coverage about a high-profile scandal can experience a 10% drop in applications for over two consecutive years. This is equivalent to losing 10 ranks in the U.S. News and World Report college rankings. As a college or university, your reputation impacts both the quality and quantity of donations, enrollment, and funding. Though your school’s overall reputation is made up of many components, it hinges largely upon the administrators and faculty members you hire to build your image.

Socially responsible marketing is on the rise. If the recent consumer controversy over Gillette’s ad on masculinity wasn’t enough, everyone in the business world is also talking about the new marketing trend. In the last 12 months alone, Deloitte, McKinsey, and the World Economic Forum in Davos have all noted that more and more consumers are looking to businesses to take stances on important social issues. The numbers are talking as well: 66% of consumers will pay more for products from companies committed to positive social impact. With millennials, this number is even higher. 73% will pay more for sustainable products, and 81% expect companies to take a public stance on social issues.

That means that there is an enormous opportunity at hand. Brands that can properly connect their brand with relevant social causes have grown their audience and revenue by as much as 200%. However, you can spend millions on marketing in hopes of winning favor with the public without realizing that it takes as little as one person to erode the goodwill you’ve built. While socially conscious marketing is helpful and even necessary today, a single revelation of toxic employee behavior can render all of those marketing efforts fruitless. Yes, the numbers suggest that socially conscious marketing pays dividends—but take a closer look and you’ll see the costs of toxic behavior are even greater.

I am grateful to have had so many positive experiences in the workplace. I worked at my previous company for six and a half years, during a time of tremendous growth in which the company grew from 3,000 to 25,000 employees and became one of the most highly recognized brands in the world. Throughout this time, the focus on culture and community was apparent from the top down and instilled a genuine feeling of family amongst my colleagues and myself. Even after leaving the company a year and a half ago, I still feel it. Four people on my former team became some of my best friends, and I think of my former colleagues as extended family.

So when I discovered that more than a dozen young women – my extended family members – all experienced the predatory behavior of another male colleague through a systematic and premeditated series of inappropriate conversations via an internal company chat tool, I was furious and heartbroken. I discovered this one night at our company’s annual sales conference, where thousands of people in my work family gather each year to connect, learn and grow together. After one of the sessions, I was catching up with friends from other offices when a teammate shared a story about his team dinner from the previous evening.

During that dinner, a manager on another team had reached out to a young woman and innocently begun conversation. The discussion eventually turned to personal stories, gaining trust and testing the waters, and ultimately landed on a hugely inappropriate story of sexual nature. The entire conversation was designed to make this woman feel comfortable and trusting, only to entrap her in a conversation she never intended to have and could not easily escape. It is classic predatory behavior, and it has no place in the workplace–least of which, my workplace.

As more and more of our lives move onto the public web, businesses are becoming aware of the degree to which publicly available online information can help them stay ahead of potential risks. Previously, we discussed how online screening can help organizations manage their mergers and acquisitions. However, as the landscape of risk continues to grow, we’re also seeing companies leverage online screening to prevent insider threats—malicious threats to an organization’s security, data, and computer systems that comes from the people within.

Traditionally, businesses have mitigated insider threats by identifying and troubleshooting technical vulnerabilities in the enterprise or responding after the fact. But as more and more employees collaborate with criminal and activist groups, and the cost of the average insider threats reaches $8.7 million per incident, the success of your business can also hinge upon your ability to catch more emotional and qualitative vulnerabilities. How do these “emotional warning signs” indicate a potential attack, and how do you find them before it’s too late?

In this blog, we’ll discuss how employees’ interactions with social media and the public web can lead to costly data breaches. From there, we’ll break down the difference between negligent and malicious insiders, and why companies need sophisticated online screening solutions to safeguard themselves from the full set of potential vulnerabilities.

Mergers and acquisitions are at an all-time high. In the last five years, the total financial value of mergers has increased by 250 percent and there are no signs that things will slow down in the coming year. While this is good news for dealmakers, it puts HR teams in a precarious situation. As an HR leader, you are more likely to deal with an acquisition than ever before. Additionally, you’re also up against the fact that 20 percent of dealmakers cite cultural alignment as the root cause of failed mergers. This means that even though mergers and acquisitions (M&As) are decided largely on financial projections, your department carries a disproportionate amount of responsibility for its ultimate success or failure.

The good news is that a collective 34 percent of dealmakers now consider effective integration and sound due diligence as the most important factors in achieving a successful M&A. But even though study after study shows that success in mergers and acquisitions hinges on people, culture too often gets lost in the shuffle. As an HR leader, what can you do to make a case for an effective cultural audit and steer your company towards success?

In this blog, we’ll break down why culture has historically been an afterthought in M&As, why that can no longer be the case, and how online screening can help ensure cultural fit with the speed and specificity executives rely on at each stage of a merger or acquisition.

The last 18 months have been transformative for the way companies do business. As people pushed corporations to adopt new policies through movements such as the global walkouts at Google, companies that were once driven purely by sales and revenue are starting to change. They are beginning to realize that they will need to take a stance on issues such as harassment and bigotry to remain in good standing. In an age where authenticity and accountability are key, empathy has become a driving force for business success.

However, as sexual harassment lawsuits and global anger reach record highs, and headline after headline continues to rock corporations across industries, the fact remains that companies must actively prove to consumers and employees that they care.

Today, employees and customers look to companies to understand where they stand on major social issues. Many businesses have responded to this trend with well-intentioned PR statements around their corporate culture and policy. However, the bar today has been set far higher than before. Customers and employees often feel that companies can’t gauge their emotions and are increasingly frustrated by well-meaning statements with little follow through. That means that to assuage consumer anger and combat a growing possibility of reputational loss, companies need to demonstrate emotional intelligence, not just a political stance.

>> Today's blog comes from Fama’s former Head of Product, Jordan Lincenberg, who has managed the development of solutions and products that have helped Fortune 500 enterprises mitigate people, culture, and reputational risks. In this blog, Jordan discusses why companies must adopt new tools and methods of collaboration to solve their challenges around people risk management in 2019.

In the age of social media, anyone can be a journalist. In a recent article about bad employee behaviors gone viral, Erik Deutsch of the LA-based ExcelPR group said that the ability to post anything in real time and make it accessible to the entire world has forced companies to rethink risk management. “If someone was mistreated in a store 15 years ago, they might make a scene and tell their friends, and that would be it,” he says. “Now, they post it online and it can become a sensation.”

As this year’s headlines around workplace harassment, bigotry, and violence suggest, individual departments are struggling to mitigate people-based risk on their own. HR is overwhelmed with paperwork. PR is scrambling to react quickly enough to control the narrative when bad news breaks. Security teams are often ill-prepared to handle allegations that boil down to “he said, she said” disputes. IT is asked to manage a growing set of channels not necessarily optimized for security. The new reality of people risk is exposing major cracks in traditional organizational structures. Unless companies adopt new approaches to people risk management (PRM), it will be increasingly difficult to stay ahead of potential threats.

So what’s on the horizon for people risk management? Moving forward, we will see significant shifts in structure, process, and technology to promote deeper collaboration between HR, risk, digital communications, and IT. While organizations will take a variety of approaches to mitigate these new threats, we predict three general trends: