Paul Holmes 01 Dec 2002 // 12:00AM GMT
More than nine out of ten employees (91 percent) of public companies in the U.S. consider the recent corporate accounting scandals to be a serious problem for the nation’s economy, according to results released today of a survey developed and conducted by Fleishman-Hillard, which polled employees in 40 states throughout the country on issues relating to corporate governance and recent scandals.
But despite their concerns about the economy and companies in general, employees have more positive feelings about their own companies.
Over 80 percent of the public company employees surveyed said they believe that “executive greed is driving corporate wrongdoing,” while three out of five (60 percent) believe the stock market forces companies to focus on short-term profit and performance and forces dishonest corporate accounting practices. In addition, a large majority, 72 percent, felt corporate America was focused more on meeting stock market demands than customer needs.
However, less than half of employees, 41 percent, said that investor demands have lately reduced their own companies’ focus on meeting its customers’ needs. At the same time, 47 percent agree or strongly agree that they now feel more encouraged to raise questions about their company’s corporate accounting practices than before this issue became a national concern.
“Employees have been motivated by the high-profile problems of a few companies, and by the overall economic and financial market concerns, to take a hard look at the organizations they work for and their leaders,” says Don Etling, co-chair of Fleishman-Hillard’s internal communications practice. “It is clear they are holding their management, and their CEOs in particular, more accountable.
“These findings reinforce the need for organizations to conduct an ongoing dialogue with their employees—truly engage them—on the issues of greatest importance to the company, including their values and business strategies, and how to deliver greater value to their customers ...all factors that drive sustained performance.”
Despite a general environment of concern regarding corporate governance, corporate earnings, and the economy, there is no clear trend about the amount of additional communication employees are receiving about the financial performance in companies in which they work. Thirty-nine percent of employees agree or strongly agree that their company is communicating more financial information to them now, while 40 percent either disagree or strongly disagree and 23 percent had no opinion.
“As they lead change in their organizations in pursuit of greater value, despite the economic environment, CEOs need to be thinking about three aspects of their relationship with employees,” says Peter Verrengia, regional president of Fleishman-Hillard’s Eastern region and co-head of its corporate credibility advisory practice. “First, employees need to be informed and motivated, and want to be engaged. Second, many are long-term investors in the companies they work for and have a long-term stake in the company’s performance, and third, they are also members of a larger American public that now doubts the motives of corporate decision-makers.
“Although the need to rebuild relationships with investors has been clear, this survey indicates that equal weight must be given to explaining corporate goals, strategies, and results to employees. In the past, communications with these two audiences have been seen by some organizations as unrelated tasks, carried out by different parts of an organization.
“But with the rise of 401(k) plans in place of defined benefit plans, and with the dramatic increase in individual investing—and recent disappointments among investors—employees are more likely to be investors, and think like investors. That shift in perspective means that even employees who view the actions and communications of their own company favorably today will approach information about financial performance and goals with greater skepticism than in the past.”