A Cautionary Tale

Added On: 9th August 2010

A Cautionary Tale

Twice in the last nine months we have been involved in disciplinary investigations into allegations of dishonesty by employees. Both cases have resulted in Police prosecutions and potentially significant financial losses for the organisations concerned. Dishonesty doesn’t have to result in direct financial loss it can result in other consequences which have a negative impact on the company such as poor recruitment decisions as a result of favouritism/nepotism or contracts being awarded inappropriately as a result of contractors being able to influence procurement officials



In addition to the obvious costs of dishonesty there are a number of other potential negative consequences including:



– The impact on the motivation of other employees

– External perceptions of your organisation

– Management cost of dealing with the issues



Although it is never possible to totally eliminate the possibility of dishonest activity, there are a number of steps that can be taken to reduce the opportunities and risks and/or spot things happening as soon as possible. Here are our top tips.



1. ALWAYS check references when recruiting



Some companies will only provide a standard reference giving basic details relating to employment such as job title, employment dates and absence record. If that isn’t enough, persevere. There are a number of options open to you such as:



– Always make offers of employment conditional on receipt of satisfactory

references – satisfactory can refer to the amount of detail you require,

as well as whether the content is good or bad

– go back to your candidate and explain that you require an alternative

reference if the initial ones they have provided do not produce the

information you require;

– ask for contact details of their line manager so that you can request a

personal reference

– contact the referee by phone – people are often more willing to give

information verbally



A candidate who is keen to accept your offer and who is confident of the quality of their references will be happy to work with you to ensure that you get the information you require.



2. ALWAYS check qualifications and professional memberships



If these are pre-requisites for the role, ensure that proof is provided – ask to see certificates and evidence of professional memberships



3. Make sure that your systems – financial and non-financial – are robust



Companies are sometimes worried about giving offence to staff by insisting that their actions are audited or checked, or that systems include mechanisms which prevent one person from making decisions in isolation. Honest employees will not have the slightest concern about this as they have nothing to hide and will appreciate that this gives them as much protection as it gives to the company; people who do object may have misunderstood the intent behind the system, or may be the wrong person for your job!



At the end of the day you have a responsibility to protect the company’s assets and the majority of honest employees.



4. Consider providing counselling/advisory services or discretionary loans



Employees will only usually steal for one of two reasons – desperation or inherent dishonesty.



Where an individual is faced with a desperate situation, the existence of a facility to talk things over with someone and access expert advice on possible courses of action could be the ‘lifeline’ they need. This doesn’t need to be anything complex or expensive, but it could prove highly effective.



Another option is to provide discretionary loans to staff. It should be clear that these are only available in exceptional circumstances, and should have stringent criteria applied to them – which must be enforced; they must not be seen as the easy option, but as the last resort.



Where someone is driven by dishonesty your only real defence is to ensure that you are operating robust systems in order to protect yourself.



5. Have a clear policy on gifts and hospitality



Ensure that staff are clear what gifts and hospitality they can accept from potential contractors. This will protect the company from the risk that the awarding of contracts being influenced inappropriately, and will protect staff from accusations of unprofessional or inappropriate behaviour.



6. Make it easy for staff to report concerns



In both the cases we dealt with the issues came to light as a result of other employees reporting concerns. However, it had taken a great deal of courage for these individuals to come forward, and they only did so when they felt they had no alternative. Employees can be reluctant to do anything because of a fear of repercussions either from the person against whom they are making allegations or from the organisation.



A good ‘Whistleblowing’ policy can make it much easier for staff to report concerns without fear of repercussions – unless of course their reports are maliciously founded.



Remember, the vast majority or employees are honest and loyal, but nevertheless you need to be alert to the risks you company can face from inside, as well as from the external environment.