Employee misconduct: Five steps to reduce risk

The financial strain of COVID-19 is taking its toll

Employee misconduct: Five steps to reduce risk

COVID-19 has posed many challenges for HR, among them the heightened risk of employee misconduct.

With increased financial strain and less visibility while working from home, employees are more likely to break the rules.

Like the period following the GFC, the pandemic has opened the door for fraud and serious misconduct.

A KPMG survey of ASX200 companies in April last year found employees and suppliers were regarded as the most likely sources of fraud.

More than three quarters of businesses (83%) said they were vulnerable to fraud because of COVID-19 working conditions.

Speaking to HRD, integrity risk expert Darren Murphy, CEO of Core Integrity, said the increased financial strain on workers should be a real concern for HR professionals.

“Financial pressure is hitting home with people and it increases the risk of them looking for opportunities to commit fraud,” he said.

“I think it's really key for HR leaders and employers to re-engage with their employees, make sure they're feeling connected to the business and then start training them on those fraud risks so they can speak up when they see them.”

Murphy outlined five steps for HR leaders to take to minimise their fraud risks:

Take a zero tolerance approach

It sounds simple but Murphy said reinforcing your company’s zero tolerance approach to employee misconduct and fraud is a good first step – especially for a remote workforce.

For those working from home the majority of the time, it can be easy to feel disconnected from their employers and the rules that are ingrained into a physical workplace.

“I think restating the company policy and realigning that to your cultural values is key,” he said.

Read more: Manager jailed for resume fraud

Don’t underestimate the risk assessment

Murphy said while big companies undertake regular risk assessments, small and medium firms often overlook their value.

He said assessing and understanding your risks as a business is the best way to get ahead of them before they materialise.

“It’s about being productive, trying to assess the business you're operating in, the environment, your suppliers and your production risks so you can be proactive about reducing or minimising those.”

Encourage employees to speak up

Culture plays a huge part in managing fraud risks, fostering a workplace where employees have trust in the system.

HR should be communicating those safe speak up channels to ensure employees know where to turn if they suspect misconduct.

Murphy said creating robust internal reporting channels through HR is a minimum, but many major employers are complementing that with external speak up hotlines too.

“The statistics show that when it comes to a large fraud or corruption or an issue like systemic bullying or sexual misconduct, people feel safer reporting it to an externally managed hub,” he said.

Read more: Free Whitepaper: Tips to prevent payroll fraud

Act!

This is one of the most important steps, Murphy said, and timing is critical.

“Your people are looking at the way you respond to issues so if you're not responding in a timely manner or you're not responding at all, then that will erode trust in the organisation,” he said.

Reporting channels and a strong culture go down the drain if serious misconduct is ignored.

It’s important to communicate clear, decisive action from the top down to maintain that zero-tolerance approach.

Go one step further

“The fifth step is about building capability across your organisation through education and training,” Murphy said.

“We’re starting to see people thinking about how they can reengage people as they return to a new normal,” he said.

“They’re looking for opportunities to do more face-to-face training and get people back in the office, or connecting with their other employees to reaffirm their workplace culture, policies and procedures.”

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