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Here’s How Compliance Violation Leads To High Attrition

Compliance Violation

Employees who witness compliance violations are twice as likely to leave their company, according to a recent Gartner study, that sampled over 5000 employees in global organizations.

Needless to say, for companies today, a culture of compliance has become a requirement. Regulators demand that business leaders create and maintain a culture that actively promotes compliance. Despite this notion, a new Gartner report finds that 29 percent of employees observed at least one compliance violation at work in 2016 or 2017.

Fifty-nine percent of the sampled employees who observed a compliance violation were actively looking for a new job, compared with 29 percent who did not witness bad behavior.

“While attrition is not an obvious area of concern for compliance executives, it should be,” said Brian Lee, compliance practice leader at Gartner. “Employee misconduct and the failure of compliance to address it plays a considerable role in motivating employees to leave their current organization.”

Lee said this sensation is particularly prevalent among employees whose exodus comes with the gravest impact. Those employees who are willing to report misconduct are those with high standards of personal integrity as well as those who exhibit the most discretionary effort. In this Gartner survey, 67 percent of employees who exhibit superior discretionary effort and have witnessed noncompliance reported actively seeking a job with another company. This is compared with only 26 percent of employees who exhibit superior discretionary effort but have not witnessed noncompliance.

For compliance executives, the departure of employees — especially those who are among a company’s most mission-critical — should be deemed as a warning of possible underlying compliance-related issues, not simply as a generic human capital ebb and flow or an HR issue with little relevance for compliance.

Employee attrition costs large organizations millions of dollars each year and the loss of a particularly conscientious employee can be debilitating, not just to culture and morale, but to employee productivity.

This finding reinforces the mandate of leaders to create and promote a culture of integrity. Employees of organizations with low-integrity cultures are two to three times more likely than employees of organizations with high-integrity cultures to observe misconduct.

“Culture is contagious. If managers and executives demonstrate ethical behavior, employees see the importance of being compliant in their day-to-day workflow and their workplace as whole,” said Lee. “When leaders set a model example, they can communicate to employees with similarly high standards that their organization is in alignment with their ethical commitments.”

Turning compliance failure to success requires the right mindset, believe experts, and should provide opportunities to learn and adapt. Business leaders know that compliance is complex and ever-changing, requiring expert knowledge of an evolving regulatory landscape. Hence, they should ensure that effective compliance requires having the right systems, people and processes in place to do the job right, coupled with strong compliance training and communication. 

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