The average company loses five percent of annual revenue due to employee fraud. While any amount of financial loss is devastating, it can come with much more serious consequences, such as leaking sensitive client data and compromising the good reputation that you’ve worked years to build. Additionally, as many as one third of company employees would commit fraud given the right opportunity, and as many as two thirds would commit it under substantial pressure (i.e., fear of losing a job) if they had the right opportunity[1]. Taking the time to recruit the right staff can make or break the success of a company. The following hiring process steps will get you on your way to recruiting this staff and then maintaining an optimal corporate environment.
Recruitment screening
Implementing a solid recruitment screening process is the first step in reducing employee fraud. Not fixing a hiring error quickly is always more harmful than taking the time to hire the right person the first time around[2]. You want individuals who have proper skills as well as a high level of honesty and integrity. When push comes to shove, personality traits and attitude are more important than qualifications and experience[3]. If you can train the right person to do the job at hand, you should hire that individual.
Many businesses make the mistake of not using the same recruitment screening process with all employees. Most companies focus on screening lower level employees thoroughly while letting senior management and directors take a pass. As executives often have more extensive access to sensitive company information and are less likely to be suspected, there is a higher likelihood that they will commit fraud. Don’t forget about contract and temporary workers with access to sensitive information as well, such as an organization brought in to consult for the IT department.
Establishing office culture
Once you’ve recruited and hired the right staff, you need to lay out the company guidelines upfront and then review them on a regular basis. Discuss performance early on in an honest, direct fashion and offer diplomatic support to adjust as needed[4]. Employees are more likely to adhere to the protocol right from the start when they know that the company takes it seriously and when there are no questions about specific rules. Set up a code of conduct or ethics policy in writing and present it to new staff during their initial training or induction[5]. Then review the guidelines with the entire staff periodically.
Heightening awareness
It is not uncommon for fraud to get passed over because employees are afraid to come forward. Employees must feel safe coming to their executives about issues, knowing that they have full support[6] from the company and that they will not become victims for exposing fellow employees. Encourage your staff to stay vigilant and approach the proper authorities if they believe that there is fraud or other foul play.
Finally, it is important to remember that even with the best precautions and protocol in place, companies can never eliminate all possibility of fraud. You never know when problems may arise. The best way to head off issues is to take action in a timely fashion[7]. Executives must be prepared to respond right away to minimize financial loss and maintain a strong reputation.
For more articles about protecting your business from employee fraud and other fraud click the links below:
- Three Most Common Fraud Schemes to Watch Out For
- Banks Are Managing Data For Improved Fraud And Crime Prevention
- Catching Social Security Disability Fraudsters In The Act
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Veriti Consulting LLC provides professional forensic accounting and fraud examination services across the U.S. Veriti is also a licensed private investigation agency. Learn more about our fraud investigation services by calling 855.232.4410 or contact us via email.
Footnotes:
[1] https://business-reporter.co.uk/2014/08/why-its-vital-to-recruit-the-right-staff/
[2] https://www.inc.com/michael-alter/the-importance-of-hiring-right-.html
[3] https://www.marketingdonut.co.uk/marketing/customer-care/understanding-your-customers/the-importance-of-recruiting-the-right-staff
[4] https://www.marketingdonut.co.uk/marketing/customer-care/understanding-your-customers/the-importance-of-recruiting-the-right-staff
[5] https://business-reporter.co.uk/2014/08/why-its-vital-to-recruit-the-right-staff/
[6] https://www.marketingdonut.co.uk/marketing/customer-care/understanding-your-customers/the-importance-of-recruiting-the-right-staff
[7] https://business-reporter.co.uk/2014/08/why-its-vital-to-recruit-the-right-staff/