It is a common belief in the leadership ranks of most organizations that fraud is not a problem and that they operate ethical cultures.
Nothing could be further from the truth as fraud is everywhere on some level, and cultures are never as ethical as they claim. No one has their arms around human conduct.
It is a fact that 42% of fraud is detected by whistleblowers who are current or former employees. Almost all of these incidents can be attributed to poor internal controls.
Building ethical cultures takes time and is the first key step to preventing fraud from taking place. It starts with leaders communicating their values, being honest, transparent, and creating a fair environment for all workers.
As we have previously discussed, the construction of moral compasses is a critical exercise for all individuals to undertake and should align in some way with organizational values.
What will you fall back on when faced with moral dilemmas?
How do you navigate the road map when ethical behavior is unclear?
There are some mandatory steps that organizations can take infrastructure wise that can protect you and your organization from fraud:
1) Have a written code of ethics or conduct that every employee reviews and signs.
2) Values should be written and clearly visible on web sites and in employee handbooks.
3) Create an anonymous employee hotline that permits easy reporting of violations.
4) Build a process that updates the whistleblower through resolution.
5) Regularly commit resources to ethics training for leaders and individual departments. People are your greatest asset and potentially your greatest liability.
6) Recognize employees and teams for ethical conduct.
No environment is fail proof and neither are the systems in place to catch unethical behavior or fraud.
Every individual must be responsible and accountable for their conduct.
Every individual enforces ethics and provides deterrence.
I have never been a fan of New Year’s resolutions; but am certain there is great benefit for all of us to review our moral compasses and stay on a meaningful track in our personal and business lives.
There is no better time than now and no excuses can be put forth that make any sense.
Be an ethical leader regardless of your position in the organization and strive to be your best each day.
The rewards are truly magnificent and immeasurable.
Best regards/blessings,
Mark
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