According to the Institute of Business Ethics (IBE) the most commonly reported ethical topic in 2015 was executive pay, in third place was fraud. This probably isn’t surprising given the link between the two.
Our guide on Senior Management Accountability makes it clear:
“There should be an appropriate relationship between executive compensation and company performance with reward packages designed to promote long-term reputational goals vs. short-term “Investor” targets. Performance assessments should focus not just on what has been achieved but how it has been achieved in accordance with ethical business principles.
Poor compliance with policies and controls should also be reflected in performance assessments.”
In second and fourth place according to the IBE were staff mistreatment and customer mistreatment respectively. Again the link between these two aspects and fraud risk management shouldn’t be ignored.
Again our guide on creating an anti-fraud culture states:
“Poor working environments provide a motive and rationalisation to commit fraud.
When employees are in a positive work environment, they will be more reluctant to commit fraud that will hurt the organisation.”
The Fraud Advisory Panel argues that ‘trust is a vital weapon in the fight against fraud and financial crime. Their message is simple. To restore trust, companies and individuals must demonstrate that they are trustworthy.
Our guide on Executive Support also covers the link between the treatment of suppliers and customers and the risk of fraud:
“Deal fairly and honestly with those you do business with and apply the same principles to external suppliers/contractors. Poor attitude of management towards staff/sub-contractors; unreasonable financial targets; and inconsistency of approach to conduct issues all increase the risk of unethical behaviour.”
Our Resource Centre also contains a number of resources to help you manage these risks and of particular relevance here are:
- Fraud Checklist for Directors and Senior Managers;
- Why Tackle Fraud (powerpoint presentation for senior managers and the board)
- Key Messages for contractors and staff (handouts)
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