When codifying their desired culture, companies also formulate core values including the corporate governance/ethics issues expected of each employee. Even so, economic crime occurs in various companies and often this is not an isolated incident only.
In February’s issue of Shanghai Business Review, the nuts and bolts of economic crime in China were covered along with advice on how businesses can protect themselves. Key ideas presented include:
• Ensure that ethical culture emanates from the top,
• Provide regular training with real world scenarios,
• Establish a confidential hotline for whistleblowers,
• Make a public example of wrongdoers,
• Investigate reasons behind employees’ refusal of a promotion, employees’ unwillingness to take holidays for fear of replacement (possibly exposing a scam), and employees’ access to files that are unnecessary for their job,
• Introduce control systems to prevent a “Fraud Triangle” (motivation, opportunity, and rationalization), and
• Talk with customers to ensure that employees are conducting themselves ethically.
Notably, all of these activities fall underneath the field of HR. Indeed, HR’s job is to establish guidelines for ethical behavior and constantly reinforce them. However, overcoming a systemic problem with unethical behavior by leaders in certain industries (e.g. health care) or countries (e.g. China) may be out of HR’s reach and relates more than anything to Don Quixote’s Fighting Windmills. Nonetheless, I believe HR’s responsibility for designing a strong ethical culture translates into their partial responsibility for economic crime.
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