Sunday, February 21, 2010

Good Culture = Reduced Fraud

An organisation can never underestimate the value a good culture within the organisation plays in reducing the risk of fraud. Having a good culture includes management and the board leading by example as well as employees and volunteers enjoying working for the organisation and believing in the organisation’s mission.

A poor culture where employees and volunteers feel that they are not part of the organisation, feel ignored and have low morale have less loyalty to the organisation and do not have the same, if any, feel of guilt at committing fraud against the organisation.

But how do you know if you have a good culture within your organisation. Using employee/volunteer surveys is one way to determine if the organisation has a good culture. Another way is to review retention rates and sick leave rates. If rates are increasing it may indicate a slide in the organisation’s culture.

The following are some issues that may detract from the culture within the organisation and therefore lead to an increase in fraud:
  • Management and the Board not leading by example, being autocratic, do not take action against inappropriate action and do not reward good behaviour;
  • Actual or perceived inequalities in the way staff and volunteers and managed;
  • Not being recognised either with appropriate promotion and/or market rates of pay;
  • Unrealistic budget expectations, both reducing costs and increasing funding or a combination of both; and
  • Poor training and lack of other employee benefits.

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