ADVOCATE COLUMN 2nd WEEK MAY 2016
Even when business is going well how many Northland businesses could afford to have hundreds of thousands of dollar taken off their bottom line? Seldom a week goes by where there is not some news article relating to a trusted, well respected employee in a position of responsibility within a company, going before the court on a matter of employment related fraud or theft. This remains one of the top attributors to business failure, generally has been going on for between 14 and 18 months before being detected and various surveys show that nearly 80 percent of workers admit they have stolen, or would consider stealing, from their employers.
Overseas experts have identified that there are three elements that lead to this kind of fraud or theft. One is pressure, where some external influence of the workers life such as bankruptcy, gambling, divorce, separation, death or grief creates pressure resulting in that person thinking about committing crime. Obviously this can be difficult to detect as it relies of the owner or manager knowing what’s going on in their workers personal life and this is sometime difficult or impractical. Another which is also difficult to counter because it requires the capability to develop the right workplace culture is rationalisation. This is where the theft occurs in response to some perceived or real grievance or entitlement. To reduce the likelihood of these two things becoming an issue the owner or manager requires a level of capability to engage with and understand their workforce as well as the necessary HR skills.
The third cause is opportunity. This is the one that the owner can have the most control over and generally involves having the right systems are in place and once again the owner having the capability to understand the critical processes that take place in the managing, monitoring and recording of that business. Whoever is in charge of the day-to-day running of the business must be honest and competent. They must have a sound understanding of the basic principles of business and HR management. This capability is essential not only to reduce the chances of fraud happening in the first instance but also for resolving the matter in a timely and correct manner if any such behaviour is discovered. After all there is the potential for the costs of resolving the matter, to terminate the workers employment, to pursue the matter through the courts and to recruit a new worker to be almost as costly as the theft itself.