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dishonest employees

What Causes People to Commit Fraud?

Employees aren’t born dishonest, yet many find a justification to break the organization’s rules to steal, cheat or otherwise engage in wrongdoing. I’ve always be fascinated by why this change occurs.

Business Insider recently published some research by Dr. Muel Kaptein of the Rotterdam School of Management that investigates some of the common psychological traps that cause people to fall into fraud. Here are a few of them:

Tunnel vision. When people within a business become so focused on achieving a particular goal, they can often become blinded to the moral implications of their decisions.
Social bond theory. According to Kaptein, this is the idea that employees in large organizations can begin to feel like “just another number” or “a cog in the machine.” This is a feeling that may resonate with you if you have ever dishonest employeesworked for a huge company. For some people, that feeling of detachment can lead to feeling like they can steal from the company without it having any real effect.
The Galatea Effect. Self-image determines behavior. People who have a strong image of themselves as individuals are less likely to do unethical things. Alternatively, employees who see themselves as determined by their environment or having their choices made for them are more likely to bend the rules as they fell less individually responsible.
Needle in a haystack. Especially within large companies, it’s so easy for small theft to go unnoticed or to even feel accepted. Pencils, paper and other supplies often go home with employees. Because small thefts are generally ignored, people may begin to feel as though they can push their boundaries. What starts off as taking office supplies may, for some people, lead to claiming slightly more money than they’ve earned for a given period.
Reactions against strict rules. This is what Kaptein refers to as “reactance theory.” The idea is that when people begin to feel that rules are overly strict or oppressive, they begin to fight back by breaking certain rules as a way to exercise their freedom.
Moments of weakness. People who are overly worked, overly tired or suffering from depression are more likely to commit fraud out of a moment of weakness and desperation.

These are merely a few reasons why people might consider committing fraud within a business or organization—there are dozens more that could be discussed. What’s important is that you realize that there is no such thing as a “classic” fraud case—anyone is capable of committing the crime, which makes it important to constantly conduct reviews of your business.

 

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

John Hall, SPA Speaker, Author & Consultant

The Three Secrets of Any Presentation

Just as I was about to start a recent full-day seminar on business presentation skills, David walked up, looked me in the eye, and said, “I hate making presentations. I’m just no good at it. I hope you can fix me today.”

Well, that’s a tall order – considering there were over 100 in attendance. How could I ‘fix’ David while simultaneously meeting everyone else’s unique needs?

Fortunately, I was given outstanding advice when I was starting my speaking career. This advice has remained consistently on target through over 2,100 presentations spread over 25 years. And it’s a simple formula anyone can follow in any setting.

“Every presentation must contain the Three E’s.”

Here’s what they are.

John Hall, SPA Speaker, Author & Consultant

John J. Hall’s highly customized “Do What You Can!” keynotes and workshops outline his unique, 6-step system to help leaders and teams clarify business goals, measure their progress, and achieve those goals. It’s simple. It’s powerful. And it works. These programs captivate your audience while delivering substantive information. Participants are inspired to step up, take action, support their organizations’ goals – and take leaps to reach their own professional and personal goals.

#1 – Educate. Every presentation must contain information that’s useful to the audience. “How to” ideas work best, but even background information on why something works might meet the need for useful educational content.

When preparing for your next talk, concentrate on the information needs of the audience. Never forget: It’s always about them. Always! Teach them something useful in every presentation.

#2 – Encourage. Outstanding presenters encourage their listeners. Even the most technical business presentation must help audience members believe that the work they do every day is important and makes a difference to the success of the organization. Long ago I ran out of fingers and toes counting the times that business technical speakers lost their audience simply because they did not take the small step of finding a way to encourage the audience members.

Employees crave encouragement. Why not give them a healthy dose. It’s free and it works.

#3 – Entertain. Now I acknowledge that ‘entertain’ might not be the best word to apply here. Singing, dancing and juggling are not the recommended style of business presentations especially in the Boardroom (although it may help in a pinch!).

How about if we pull back and use the softer idea that all presentations must be ‘interesting’ if not outright entertaining. And the easiest way to accomplish making dry technical points interesting is with the two magic words, “For example.” Relevant examples make concepts come alive. Examples provide color, context and flavor.

Hmmm…maybe the ‘Third E ‘ should be Examples!

Try these ideas in your next presentation. Plan your content to include information that educates. Include comments that encourage the audience, and hold their attention by being entertaining through the use of relevant examples and quick stories.

Of course you have to practice and maybe even find a coach. But there’s no substitute for focus, repetition, and the Three E’s. Keep them in mind the next time you are in the audience of a business presentation. Analyze what you see and hear as you plan your own next outstanding presentation.

 

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

Selling Ideas and Driving Action

“Production minus sales equals scrap.” That’s the simple formula for all business entities according to the powerful book “The One Minute Salesperson” (Spencer Johnson, MD). Produce whatever you want, but if you don’t sell it and others don’t buy it, to the scrap heap it goes.

Well, like many of you I’m not primarily in the business of selling goods from inventory storerooms. I sell ideas: ideas for personal and business results improvement.

Ideas are sold when someone else takes action from our suggestions, So tailoring Dr. Johnson’s business formula for your world and mine might be: “Ideas minus action equals scrap.”

Here’s an example. Right now I am blessed to be away for a few days of R&R. Recharge time after a grueling three-month stretch of constant business travel and almost daily speaking events. I started the morning by making a pot of shutterstock_210452404strong coffee and then opening emails after a two-day blackout period. It’s Monday morning at 6:30 AM and there are already 106 new messages to return. (Sound familiar?)

In the demanding work that ‘experts’ like you and I perform, we all need to get away and recharge. To think, to write, to create new lists of great ideas that jump into our conscious thoughts. To stare at the sky as the sun comes up and to read junky police novels or whatever else you prefer. Time to put the juice back into our efforts before climbing back into the battle of business and resuming the demanding job of helping others improve their results on their terms.

Even as I write this brief post to you, I am distracted by two new ideas that I must remember to act upon when I return. That’s what happens when you are recharging. Improvement ideas fly into consciousness from out of nowhere. In an interesting play on words, first these thoughts are ‘nowhere’ then they are ‘now here’. And the big risk is that they will float away just as quickly if I don’t capture them in writing immediately.

So here’s what I do when inspiration strikes, and hopefully these ideas will work for you as well.

Step One – Write it down. Not on a Post-It Note or other scrap of paper. Keep a simple notebook of your ideas. Dedicate this space to be used only for new ideas that might justify action or further exploration on your part. I use a $2 dollar notebook from the local office supply store. The kind with the black and write patterned cover you may have used in grammar school. Great new ideas are all that go into that notebook.

Step Two – Take just five short minutes to add color and context to your idea. Write out how you see your ideas coming into reality. Make notes aboutwho might benefit and how. List names. Add bullets about specific benefits that others will realize when they use your idea. The more visual details you add (names, faces, locations, specific measurable results), the better.

Step Three – Add just one very specific action you will take to move this idea forward. Write out exactly what you will do and when you will do it. Keep this first step simple. Something like, “Schedule five minutes with Joe to discuss how we might…” This step is crucial and becomes the foundation for a broader plan of action you’ll take. Never forget: If it’s not written, it’s not a plan.  

Step Four – Take that first step. That’s so obvious it hurts to say it. But it’s also obvious just how many great ideas die on the vine simply because that critical first step doesn’t happen.

How many of you have daily thoughts about how to improve your own results or those of your business or clients? Incredible ideas that could really move the needle on your goals? Let’s put some discipline around your efforts to capture and act on these ideas by implementing these four simple steps starting today. Let me know what you think.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

employee theft

How to Deal With Employee Theft

Anti-fraud efforts usually lean towards managing external threats. But your largest exposure is from employees simply because they are already inside of your circle of trust.

When we find out that a trusted employee has been stealing from the organization, it can be really difficult to know how to proceed. The theft in question could be anything from taking inventory or supplies for personal use or for resale, adding fictitious costs to travel and other out of pocket reimbursement requests, putting false information on time sheets, engaging in intellectual property theft, or profiting from shadow deals with suppliers, customers or contractors.

Simply put, there’s no one size fits all solution to addressing theft and other fraud by employees. But you have to act. You simply can’t employee theftafford the disease of deception to exist in your business. Here are three suggestions to get you pointed in the right direction.

  • Get Help. It’s a rare business leader who has sufficient background in fraud issues to handle cases of employee theft by themselves. Get the help you need to protect all involved, including honest employees. Start with the legal, accounting, human resources and technology experts who are already part of your core business support team. Get advise from qualified professionals – ideally before you’re faced with a fraud event. Outline a comprehensive response plan now before it’s needed. Then execute it objectively should an event be detected.
  • Don’t Delay. It’s time to park your disbelief and anger, and get started on taking care of the problem. Employees who steal have no place in your organization. It’s time to stand behind your policies of zero tolerance for cheaters. You’ll need to proceed efficiently and professionally towards a solution that balances the facts of the case with the desire to get it all behind you. But be careful not to let uncertainty and indecision get in the way of what needs to be done. Get help, then take action.
  • Learn from What Happened. OK, you got taken by a trusted staff member or manager. It happens, so it’s important to get past the issue at hand and move forward having learned important lessons. Think about how controls could be tweaked without getting in the way of efficient business practices. Analyze how you could be a better overseer of transactions and activity without holding up progress. Recruit your honest employees into a stepped up campaign to make sure it never happens to you again.

When trusted employees steal from the organization, it violates everything you and the many other honest team members hold dear. Out of respect for them, get help, take action, and adjust daily practices based on lessons learned.

I can help you put a balanced Fraud Risk Management campaign in place in any sized organization. Just say the word and we can get the discussion started.

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

While there are many prevention and deterrence steps you can take, here are three critical components of any business anti-fraud program.

3 Key Components of an Anti-Fraud Program

Somewhere out there, your business is probably being targeted for fraud. Internet-based hackers, international organized crime organizations, and even a small percentage of employees all see your business assets and information as too tempting to ignore. But what should you do to deter these barbarians at the gate – or already inside your business?

Managing business fraud risks requires your daily attention. It’s a ‘cat and mouse’ endeavor where the smarter we get, the harder they have to work to get us. While there are many prevention and deterrence steps you can take, here are three critical components of any business anti-fraud program.

  • Build a culture of honesty within your organization. Ethics starts and ends with the actions of leaders. From the boardroom to the factory floor, every leader must not only talk, they must demonstrate exactly what ethical While there are many prevention and deterrence steps you can take, here are three critical components of any business anti-fraud program.behavior looks like in their business habits.  Formalize the rules of acceptable behavior in a code of conduct. Be clear about what is not allowed as well. Address confidentiality, harassment, use and protection of intellectual property, avoiding conflicts of interest, and other ethical issues. Be clear about relationships with third-party suppliers, customers and contractors.
  • Perform a meaningful fraud risk assessment, and brainstorm how to mitigate fraud risks. Fraud risk assessment starts with an open discussion of what can go wrong. Recruit every employee into the brainstorming process. Address theft, manipulated financial and operating results, and shadow deals with third parties. Make sure every employee knows what can go wrong in their areas of responsibility, and tell them it’s their job to make sure fraud doesn’t happen on their watch. Help them implement or strengthen anti-fraud controls. And openly recognize their positive deterrence behavior.
  • Provide useful anti-fraud skills training. Creating a culture of honesty and ethics is step one; step two is fraud risk brainstorming. But none of it matters without useful anti-fraud skills training. Many organizations speak to their staff about fraud awareness. But if you are expecting them to fight fraud, you have to go much further and show them exactly what fraud looks like in the transaction records they see every day. There’s simply no short cut to meeting this essential need. Yet this is the one step that most business organizations skip. Provide anti-fraud skills training in a classroom setting, in small staff meeting discussions, in organization newsletter articles, and using webinar, conference call and other simple technology (Skype, Apple FaceTime and others). Most effective of all but often overlooked is one-on-one coaching of staff by supervisors at every level. Don’t keep fraud examples hidden from your team; bring what can go wrong out into the light where all can learn and react appropriately. Help them be successful in meeting your fraud risk management objectives. Encourage them to speak up and make it as safe as possible to report suspicions.

Obviously these three ideas are just part of a comprehensive anti-fraud campaign. But they are three critical components you must have in place.

If you have questions about what you should do to fight fraud exposures in your organization, just let me know and we’ll talk it through. Call me at (970) 926-0355. Or email John@JohnHallSpeaker.com and we’ll get the discussion started.

 

John J. Hall, CPA

John J. Hall, CPA

John J. Hall, CPA, is an author, speaker and results expert who presents around the world at conventions, corporate meetings and association events. Throughout his 35-year career as a business consultant, corporate executive and professional speaker, John has helped organizations and individuals achieve measurable results. He inspires audience members in corporations, not-for-profit organizations and professional associations to step up, take action and “do what you can.”

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