Generational differences can have a big influence on compliance and behaviour, argues Len Gainsford. But deeper understanding of how generations interact is key to developing a compliance culture
Generational differences can have a big influence on compliance and behaviour, argues Len Gainsford. But deeper understanding of how generations interact is key to developing a compliance culture
In recent times, generational differences have been of interest to a number of groups, including demographers, marketers and politicians. This seems to be not so much for its own sake but rather to discover how differences in the generations can be identified and how they can be sold to. But what we really need now is to better understand the generations and how they relate to each other. This is a subject crying out for more research. With compliance, for instance, generational differences may involve a different approach to training. It is important to develop an understanding of what it really takes for people to “do the right thing” under the law. Across the generations, there is nothing to fear from doing the right thing.
People can be categorised according to their dates of birth: Three generations are the baby boomers (1946-1962); generation X (1963-1978); and generation Y (1979-1988). Recent demographic and related research endows members of the baby boomers, X and Y generations with particular attitudinal and behavioural characteristics. As people age and their level of participation in society changes, characteristics such as generation X’s distrust of authority start to move to the forefront. This is new, not only because of who generation X and generation Y are, but also because being “technology enabled”, the rate and pace of change has accelerated. How the generations interact and re-balance their participation will determine the shape of things to come, especially as the first baby boomers turn 60 in 2006.
Intergenerational characteristics also influence how compliance works. Organisational compliance statements such as codes of conduct that have been written, approved, read and understood by baby boomers may not hold the same meaning for later generations. Compliance statements should be tested against the new realities of generation X, generation Y and intergenerational understanding. Statements need to be regularly reviewed to ensure that compliance gaps between organisational expectations and compliance behaviour by and between the different generations are minimised.
The subject matter of compliance changes over time as statutes and common law are amended and workforce composition and behaviour varies. Getting it wrong on compliance may have a huge impact on organisational liability and business reputation; getting it right, therefore, is crucial. On the one hand, the words in compliance statements should be timeless, but on the other hand they need to express a contemporary motive of getting the right interpretation and understanding. Some workforce trends and predictions are:
• Workforce dwell times: Globally, the average fertility rate, which impacts workforce participation rates, has fallen from 5 to 1.6 over the past 30 years.
• Workforce replacement: In Australia, the average fertility rate, which eventually impacts workforce replenishment levels, will reach 0.85 by 2016.
• Workforce responsibility/support: By 2030, there will in Australia be two people working for every person who is 65 years and over.
• Workforce replenishment: Between 2020 and 2030, 125,000 new entrants will enter the Australian workforce each year, compared with 170,000 now.
There are a number of lifestyle as well as career characteristics. For a start, the term ‘career’ is associated with baby boomers. Generation X looks more to a series of work-related experiences interspersed with ‘lifestyle’events such as cross-cultural learnings. Generation Y employees begin and may stay with part-time employment. Generation Y sees the multi-scheduling of personal priorities and work experience as the expected state of affairs over a working life. What this means is that compliance programs that have been designed for career-minded, full time employees may need to change. Baby boomer directors and senior managers should understand that compliance program elements such as education and training need to be adapted to meet the lifestyle and availability-at-work preferences of generations X and Y.
The ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations provides guidance to listed public entities in areas such as ‘Principle 3: promoting ethical and responsible decision-making’, and ‘Principle 10: recognise the legitimate interests of stakeholders’. Many corporate compliance programs aim to reflect these principles in the adoption of concepts such as ‘accountability’ and ‘responsibility’. Preliminary research suggests that the word ‘accountability’ has a different meaning to baby boomers, generation X and generation Y. The contextual understanding of words in compliance statements such as codes of conduct may be different, depending upon which generation is reading them.
With accountability, some academics refer to a “myriad of approaches that have been taken to its definition”. They cite the traditional view of accountability as a “relationship involving the giving and demanding reasons for conduct”. This view assumes that some individual or small group or organisation has certain rights to make demands over the conduct of another, as well as to seek reasons for actions taken. According to some, defining roles and responsibilities provides a mechanism to clearly assign accountability to those responsible for carrying out a task at all levels of the organisation. Although not covered, the corollary is that ill-defined roles and responsibilities lead to confusion over which intra- and extra-organisational groups have preferential rights to demand accountable conduct.
Some observers believe the clear definition of roles and responsibilities promotes autonomy, ownership and self-accountability. When individuals are confident about what is in their control and what is not, they can step forward to accept responsibility or self-accountability, with the full knowledge of what is expected from them. Roles and responsibilities exercised out of a sense of ownership inspire commitment. Defining roles and responsibilities identifies specific benchmarks for performance and creates boundaries around the work to be done, both of which foster self-accountability.
A clear definition of roles and responsibilities needs to be highlighted in compliance statements. Baby boomers, generation X and generation Y should be able to cut through the rhetoric and decide on what they need to do in their compliance activities.
What we really need now is to better understand the ways in which workers from these different generations interact with one another. Important differences may exist, for example, between the way in which the baby boomers and generation Y perceive key HR-related concepts such as management. Compliance is one of the most important concepts in this respect.
Non-compliance in business entities often arises from a lack of understanding of the meaning of words in organisational compliance statements. Irrespective of the generation to which they belong, it is now clear that people need both better guidance and the opportunity to learn, discuss and share interpretations to ensure that they are compliant in their normal course of work.
Len Gainsford is director, audit and assurance, at the Department of Infrastructure in Victoria
