What does this have to do with employee loyalty? Just like a frog, a company that lets the small things go will eventually crumble when the large ethical violation inevitably happens. We have founnd a strong relationship between perceptions of the organization being highly ethical and employee loyalty.
In the May 2007 issue of HR Magazine, an article referenced a working paper titled, "Slippery slopes and misconduct: The effect of gradual degradation on the failure to notice others' unethical behavior." Don't be intimidated by the title, the premise of the paper is quite simple – small ethical violations can slowly turn into major ones. For example, an employee might cheat slightly on an expense report or sale. If that behavior goes unnoticed (or more likely noticed but not reprimanded), it becomes a slippery slope. Gradually larger and larger ethical violations will follow until the violations become so large others are entangled, and an entire organization is brought to its knees. Just like boiling a frog starts off in cool water, ethical violations usually start off as something very small. Eventually though the heat gets turned up just like ethical violations eventually get larger and larger, either to cover up the previous violations or because the employees pushes to see what they can get by with.
Everyone understands the business implications of what a major ethical violation can do to an organization. However, most people don't turn it around to understand the positive impact ethics can have on employee loyalty. For example, in the 2007 Walker Loyalty Report for Loyalty in the Workplace, 91 percent of employees who were truly loyal to their company felt their organization was highly ethical. Conversely, only 35 percent of high-risk employees felt their organization was highly ethical.
Walker also has found one of the top reasons employees leave their job is because of an ethical situation. Having an ethical organization is not only beneficial from a PR and reputation standpoint, but it directly impacts employee perceptions and ultimately employee behaviors. This can have a direct impact on customer relationships, and ultimately the bottom line.
In these difficult economic times, people may feel even more pressure to cut corners to save their job or the company. However, any short-term gains from this behavior will reap significant, long-term consequences.