A Dangerous See-Saw Effect for Employers: As Joblessness Rates Hit The Roof, Employee Ethics Head for The Basement, Recent Survey Finds

A recently released survey by Association of Certified Fraud Examiners (ACFE) contains sobering findings for employers. Intense financial pressure during the economic crisis has led to a sharp increase in workplace fraud. Results of the survey have been published by ACFE in a report entitled "Occupational Fraud: A Study of the Impact of an Economic Recession.”

The survey was sent to 6000 certified fraud examiners working in-house at companies or as consultants. More than half those who responded said the level of fraud they are detecting in the workplaces they examine has increased in the past 12 months. 49.1% of respondents cited increased financial pressure as the biggest factor contributing to the increase in fraud, compared to increased opportunity (27.1%) and increased rationalization (23.7%).

“The message to Corporate America is simple: Desperate people do desperate things,” said ACFE President James D. Ratley, in a press release announcing the survey results. “Loyal employees have bills to pay and families to feed” he noted. In a good economy, such employees “would never think of committing fraud against their employers” but now “matters are dramatically different and organizations must be vigilant in ensuring that proper prevention procedures are in place.”

Other findings of the survey:

• Employees pose the greatest fraud threat in the current economy in the view of most fraud examiners. Employee embezzlement was ranked as the most significant among a range of current fraud risks.

• Layoffs are affecting organizations’ internal control systems. In companies which have experienced recent layoffs, 35 percent had eliminated some controls.

• Fraud levels are expected to continue rising. Almost 90 percent of respondents said they expect fraud to continue to increase during the next 12 months.

Occupational Fraud: A Study of the Impact of an Economic Recession" may be downloaded from ACFE.com for free in PDF format: www.ACFE.com/occupational-fraud/occupational-fraud.asp

Also, emTRAiN launched its new online course, “Promoting an Ethical Workplace” last week. For more information on the new course, click here.

From blogs to Facebook to Twitter to Linkedin, the use of social media is exploding. Increasingly, marketing and sales employees are using these social media tools to capture leads, boost sales, and talk about their company.

However, as employees began using these tools on a consistent basis, HR departments should keep a careful eye on the potential legal and HR ramifications. You may need to not only revise your corporate communications policies but also retrain your employees with these new tools in mind. Before the rise in popularity of social media, many companies only allowed their C-level executives to speak on behalf of the company. But now, sales, marketing, customer service and individual employees are talking about the company and/or its staff on public, social websites.

Electronic Communications Policies Need Updating.

About 10 years ago, many companies implemented electronic communication policies to reflect issues posed by email, Internet surfing and instant messaging. Additionally, most companies have corporate communications policies that designate specific individuals as the only people authorized to speak for or about the company. Corporate communication policies evolved, in part, as a matter of good corporate governance so that a company could control its messaging and limit its risk or liability for statements stemming from the company.

Corporate communication policies usually address the following topics:

• Restrictions on communications between employees and the media, investors and other third parties;

• Requirements to keep company information confidential;

• Limitations on securities trading by employees;

Electronic communication and corporate communication policies may predate the explosive growth in social media over the last year or two and if so, they’ll fail to address the potential for an employee’s blog, tweet or post to place a company in a difficult position.

Personal and Professional Lives Are Blending Online And Discretion Is Required.

However, determining a corporate policy on social media is complicated as many people are finding their personal and professional lives blending online and it’s becoming harder to separate the two. If a customer sends you a Linkedin invitation – do you accept? What about an invitation to be a friend on Facebook? What projects can employees Tweet about? Is it OK to blog about a business or customer issue?

Generally, code of conduct policies allow an employer to evaluate any action that brings ill-repute or embarrassment to the company – regardless of whether the action occurred on or off-duty or at the workplace or not. That type of broad workplace rule would allow an employer to review any and all communications that employees send to social media sites, and which impact the company or the company’s reputation.

For example, employers probably have legal cause to fire an employee who disparages his or her manager or the company on a discussion board or website. Or how about when employees post items on Twitter or YouTube about their company? Or, how about when your sales and marketing employees use Linkedin and your customer list gets blended into their personal contacts? The lines between personal and business are becoming more blurry, and therefore, HR departments need to have well thought out policies that leverage the power of social media but also give some guidelines for social media communications. Some people are starting to filter out social media tools and use some for work and some for personal. While that’s one option, it’s the role of HR departments to offer the company some guidance on those decisions. Regardless of the communications policy you ultimately decide on, the most basic and easiest rule to follow is still: Don’t say anything you wouldn’t want televised to everyone. Unfortunately, getting people to think before they speak is still one of the hardest HR jobs around.

According to a recent story in the UK Telegraph, the Council for the Borough of Turnbridge Wells in Kent has pushed the political correctness dial past readable levels by instructing staff to cease using the term “brainstorm.” Council chiefs feared the word might offend persons with epilepsy and other seizure disorders. Memos were sent to council staff asking them not to use the term “brainstorm” at work and encouraging the use of the alternative term “thought shower.” Some workers have been given training on this change.

Charities representing epileptics seemed bemused by the council move and most said the ban was un-warranted. Margaret Thomas, of the British National Society for Epilepsy, told the Telegraph that "Brainstorming is a clear and descriptive phrase. Alternatives such as “thought shower” or “blue-sky thinking” are ambiguous to say the least. Any implication that the word brainstorming is offensive to epileptics takes political correctness too far." Richard Colwill, of mental health charity SANE, agreed. "This ban goes too far.” he said. “Few would be genuinely offended by the word brainstorming in the context of council meetings." A spokesman for Tunbridge Wells Borough Council in Kent, however, stood by the change, saying "We take diversity awareness very seriously. The majority of our staff have taken part in training and been asked to use the term thought showers."

While we encourage all employers to launch diversity training in their workplaces – sometimes the quest for political correctness can seem a bit over the top.