Workplace crime was probably best described by Jacoby’s statement, “whenever you have something that’s worth something, a certain percentage of people will steal. It can be anything, – copper in a junk yard, computer software, office appliances, accounting books, stationary, petty cash, high-tech information that competitors would buy and everything in between.” Other examples of workplace crime include: corruption, extortion, bribery, data security breaches, breach of confidentiality, forging signature, removing money from customer accounts, and falsifying documents and cyber crime.
Workplace crimes are prevalent, insidious, on the rise and are costing business in Africa a fortune.
This is frequently, because many employers fail to notice or ignore the symptoms of these crimes and fail to put sufficient ‘checks and balances’ in place to combat the situation. Dishonest employees and employee fraud have now reached critical proportions. Executives are often reluctant to acknowledge that fraud will occur in their company; however, no company is immune to workplace crime and fraud.
WORKPLACE RELATED RISK FACTORS
With workplace crime already widespread and escalating, employees who take on behaviours like faking compensable on-the-job injuries, stealing from employer’s books, engaging in elaborate schemes to embezzle funds, or pocket trade secrets, are a huge liability. So how, as an employer, do you identify the risk factors?
Risk indicators that may facilitate workplace crimes can be divided into two broad categories, namely: Management business and Individual/ Employee Risk factors.
Risk indicators for management and businesses
The following risk indicators stand central to the core business of a company and / or at management level of business practice and may place your company at a high risk for workplace crime.
Operating and financing decisions should never be dominated by a single person. Key employees having too much control or authority without audit checks, creates an ideal opportunity for crime.
When middle or senior management act in an unethical manner the risk to any company increases.
Management that has a very negative attitude towards financial reporting should sound alarm bells as should a high turnover of management and senior personnel. If the competence of top management or the auditor committee is questionable, vulnerability is increased. Management’s ability to override internal controls should be curtailed through proper procedures. Businesses with weak internal controls are at increased risk. Another red flag are management who exhibit an attitude of power and have little trust of others.
A high staff turnover is often an indicator of risk especially where newly appointed staff resign hastily after being employed.
Companies with many contentious and difficult accounting issues are at a higher risk. Further significant risk indicators are irregularities in audit processes, delays in the audit, frequent changes of auditors as well as the disclosure of many extraordinary losses at audit. Payments to executives which are not disclosed as taxable are also problematic at audit and increase risk.
All incidents involving dishonesty and deceit should be treated as serious. The assumptions by management and supervisors that certain incidents or conditions in the workplace are the result of carelessness, incompetence or inexperience create an excuse for unacceptable behaviour. Companies where there are signs of deceptive behavior in staff should be more vigilant. Management who are too reactive in the day-to-day handling of disciplinary processes associated with employee transgressions in the workplace i.e., conducting disciplinary hearings, going to court to defend a dismissal, find themselves on the “back-foot” most of the time, thus increasing risk.
Companies where there is none or almost no supervision of employee performance and behavior create opportunities for crime. Specifically where there are no rules and punishment against criminal actions such as fraud, theft, embezzlement and bribery. Managers who deem that certain wrongdoings do not require disciplinary action, are seen as, condoning these types of behaviours.
Organisations where there is a tolerance of cozy relationships with suppliers / contractors place themselves at risk, as do suppliers / contractors who persist on dealing with just one individual.
Organisations that put excessive pressure on employees to perform resulting in burn out or marked personality changes are at greater risk with reference to workplace crime. Employees who appear to be under stress, without a high workload should also raise concerns.
Risk Indicators at individual / employee level
The following indicators might place employees at risk for involvement in workplace crimes:
Employees living beyond their means and focused on materialism and wanting to live the life of the wealthy, places financial pressure on them and increases their risk of offending. Employees trying to maintain their current lifestyle on a tighter budget or where a spouse has lost his or her job are also more inclined to supplement their income illegally, especially those with increased family responsibilities that cannot be met on a personal or financial level. Employees who have substantial debt or are going through a difficult time financially, for example vehicle repairs or medical bills that cannot be financed by the employee, pose increased risk.
Getting divorced is another risk indicator. The financial strain of maintaining two households coupled with emotional stress of the event can trigger criminal behaviour that the employee would not previously have engaged in.
Employees with external business interests pose increased risks to employers as allegiances may be compromised. This would depend on the employee’s personal integrity or willingness to take the risk to commit a crime with the associated consequences. Employees with an opportunistic nature ÔÇô the readiness to take opportunities when and as they present themselves pose significant risk to employers.
Employees with a history of economic crimes as well as those with organized crime syndicate associations pose huge risks to companies in all sectors.
Employees who exhibit problems in socialization – those with undeveloped values or a history of delinquency are more likely to offend, as are those who are unreliable, irresponsible, impulsive and careless. Employees who have problems with authority relationships and have difficulty conforming fall into the same category.
Individuals who have more favourable attitudes towards theft and delinquent behavior, thus, pro-criminal attitudes and thinking patterns commit more crimes.
Employees with low self-esteem and low job satisfaction experience the company as large and impersonal and feel little or no loyalty to the organization. They often have the perception that they are underpaid, or are frustrated because of lack of promotion or lack of salary increase. They use this perception to justify criminal behaviour and assuage feelings of guilt. Similarly employees with low levels of work motivation might steal because they are bored with the job or frustrated because promotion seems unlikely.
Employees who perceive the employer as unfair or feel that they have been unjustly treated are more likely to become involved in workplace crime based on a revenge motive.
Any addictive behaviour is a risk indicator. Drug and alcohol abuse or addiction is a direct cause of high risk behaviour in employees. Substance abuse lowers inhibitions, facilitating criminal behaviour. These habits are also very costly to maintain, particularly as they escalate. “Gambling addiction not only damages individuals and families, but can put employers and entire companies at risk. It’s a scary thought to think that one single employee can be the collapse of your entire organization”. It is probable that 95% of the people gamble, while only 1% of the gamblers are perceived to be compulsive gamblers that have an inability to control their gambling. Employers need to be conscious of any employees where gambling could be a risk.
Other social risk indicators for workplace crime include employees with unstable family lives and circumstances, youthful and unplanned pregnancies, a troubled marriage with money problems, a decline in morality, religion and old-fashioned values, the lack of good discipline and values mounted within the family and schools, employee selfishness / self-absorption, only ‘looking after and caring for the self’, a need for instant gratification and a growing sense of entitlement in the youth, and peer group susceptibility – those who are easily swayed or influenced by syndicate members. This combined with society’s daily dose of corrupt role models (including political figures), encourages perceptions that criminal behaviour is acceptable, especially where there are no consequences for these actions.
According to research “employees rarely steal because they need to, it’s often vindictiveness (to get even), they see other people doing it and believe that they can get away with it too.” International research on workplace theft and fraud found that only 8% of perpetrators indicated that they stole money because of need; 49% said they stole out of greed, while 43% reported that they stole in order to get back at their employers.
Combating Workplace Crime
In order to truly tackle workplace crime a multi-faceted approach is required. The “school of thought” that simply toting up technology by installing CCTV Cameras, biometric access control and sophisticated alarm systems to solve or reduce workplace crime is clearly failing. This may keep outsider attacks curtailed but what companies fail to recognize it that the highest risk to them is from their own employees.
To this end employees should be properly assessed and screened before they are employed. Thereafter frequent re-testing and re-screening of behaviour and activities is necessary on an ongoing basis. Employee attitudes and behavior need to be continuously monitored and managed.
Total senior management commitment to integrity and ethical behaviour is necessary. It is important to create the perception that no worker will be able to succeed with unacceptable behaviour.
Employee and supervisor education is critical to prevention. Educating employees on the negative impact of workplace crime is important and assists in attitude adjustment. To this end a communication strategy should be developed with the goal of promoting honest behavior and bring both dishonest and honest acts to the attention of personnel.
A fraud prevention policy and a fraud response plan should be developed, preferably one where penalties are severe enough to deter criminal activity. Sturdy emphasis should be put on powerful internal control systems and internal audit, as these tools are your ultimate weapons.
Criminologists, due to their extensive knowledge of the causes, explanation and prevention of crime, have an imperative role to play in the control of crime in the commercial environment. To this end Attorney Tshepiso Lediretse and I have established a consulting firm – Expert Profiling contactable on Tel: 390 9957 which is ideally placed to assist.
