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Disengaged Employees Can Spell Trouble at Any Company

March 27, 2008
Related Topics: Corporate Culture, Career Development, Employee Career Development, Featured Article, HR & Business Administration
A costly scandal at a French bank raises the question: Why didn’t workers report suspicious activity? Poor engagement may be to blame.

    The recent turn of events at Société Gén­érale, where a low-level trader lost billions of dollars for the giant French bank through illicit trades, may seem like a one-off situation. But observers say the scandal highlights some of the cultural challenges facing employers with workers in France today.

    On January 24, Socié­té Générale announced that for years one of its junior traders, Jérome Kérviel, had been masking trades, which ultimately resulted in £4.9 billion ($7.2 billion) in losses for the bank.

    While only one other trader has been taken into custody for questioning over the scandal, an internal probe has uncovered that many back office employees failed to alert their supervisors of suspicious activity.

    For the most part, these employees didn’t do anything wrong, but they also didn’t go beyond what was expected of them as laid out in their job descriptions, according to a February 20 preliminary report issued by the committee overseeing the internal probe.

    "Operational staff did not systematically check in further detail, above and beyond the procedures in force," the report states.

    The fact that staff mem­bers didn’t go beyond what was expected of them points to a larger issue of employee engagement, HR experts say.

    "It’s hard to imagine that a group of engaged employees would be indifferent to the activities or situations that would create risk for their organizations because they would be too invested in the outcome," says Paul M. San­chez, worldwide partner, workforce strategies at Mercer.

    And it seems that employers in France in particular are battling with sizable employee engagement problems. A recent Mercer survey found that only 53 percent of employees in France said they would recommend their organizations to others as a good place to work.

    Forty-eight percent said they think senior managers do a good job of managing their workforce. And 35 percent said they believed the pay is good or better than pay offered by other organizations within their industries.

    In France, employers are battling a longtime mentality of labor versus management, Sanchez says. "I wouldn’t say that it’s adversarial, but it doesn’t have the characteristics of a highly unified group."

    As Société Générale creates policies and procedures to make sure a repeat situation doesn’t occur, it needs to address the incident from a cultural standpoint, says Steve Paskoff, president of Employment Learning Innovations, an Atlanta-based training company.

    "They can set up all the compliance procedures and employee hot lines they want, but they need to put mechanisms in place to encourage people to want to address problems."

    Encouraging employees to be whistle-blowers is a challenge for any organization, but in certain parts of Europe, like France and Germany, it can be particularly difficult, says Linda Treviño, a professor of organizational behavior at the Smeal College of Business at Penn State University.

    "It’s a vestige of World War II," she says. "Europeans still don’t like the idea of reporting people."

    One way to handle it would be for the bank to be open about the scandal, says Brent Longnecker, president of Longnecker & Associates, a Houston-based corporate governance consultant.

    "They should use this situation as a case study of what not to do," he says.

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