The Problem With Squeezing Employees Too Hard

These are still tough economic times, which means business owners are asking employees to do more with less. It might be logical or even necessary, but be warned: It creates risk for fraud and corruption, according to a new study by Ernst & Young.

In surveying 3,000 board members, managers and their teams in 36 countries, the study found pushing your team to meet tough targets with fewer resources and less compensation raises the risk for unethical behavior including bribery and number fudging.

The report also found businesses are feeling the strain of meeting their goals. With market conditions holding steady at best, and the pressure to cut costs mounting, this isn't terribly surprising. But the effects of this squeeze might shock you:

• One in five respondents have seen financial corruption in their companies.
• 57 percent believe that bribery and corruption are widespread in their country.
• 42 percent of board directors and senior managers are aware of some type of irregular financial reporting in their company.

It's easy to shrug these findings off as only being relevant to businesses in other industries where shady dealings run rampant. But plenty of people think their firm is squeaky clean and are clueless as to what's going on.  

For example, the survey shows business leaders are aware of the problem, but also show a gap between how rigorously they think they're clamping down on the problem and how seriously employees take their efforts. 

Sixty-seven percent of directors and senior managers believe that their commitment to anti-bribery and anti-corruption policies has been communicated strongly, compared with 44% of other employees," says the report. "Sixty percent of directors and senior managers believe that their company would support people who reported cases of suspected fraud, bribery or corruption, whereas only 34% of other employees agree."

If you're thinking of shrugging off the risks of squeezing your employees, take comfort in the fact that you aren't alone. Many companies do, but the costs alone should prove it's not worth it.