In this edition of Executives On-The-Go we look at what organisations can do to reduce the risk of corrupt behaviour in the workplace and the potential financial and reputational impact that it entails.

It has been hard to miss the relentless media coverage over the past few weeks related to incidents of corruption and fraud in the workplace.

Whether it be allegations of corruption and organised criminal activity on large building sites across Australia or cases of theft by employees, the headlines have provided a timely reminder for organisations of all sizes to think about the protections they have in place against acts of fraud or corruption.

Companies need to be mindful that this is the time of year when some people might be feeling financial pressures more acutely after having overspent at Christmas time.

A KPMG survey into fraud, bribery and corruption in Australia and New Zealand last year found financial pressure (36%) was ahead of greed (31%) as the main motivation for employees to commit fraud.

It also found that 43% of the organisations that participated in the survey had experienced fraud and that 47% of major frauds occurred where there were “deficient” internal controls.

It will never be possible for corruption or fraud to be completely stamped out of a workplace. Unfortunately, it is part of human nature that some people will sometimes do the wrong thing.

Organisations can significantly reduce the risk of illegal behaviour and the potential financial and reputational impact that comes with it if they have the right protections in place.

While many organisations will have key financial controls in place to monitor potential fraud and corruption, there are a number of key non-financial controls that they should also consider in order reduce these risks. These include:

  • Employment contracts. There is no better anchor point from which to lock in expectations in an employment relationship than in the employment contract itself. Employment contracts should include provisions that clearly state what type of behaviour is considered serious misconduct and the consequences for this (e.g. summary dismissal). Provisions should also cover conflicts of interest, confidentiality obligations and duties owed by the employee to the organisation but to name a few.
  • A comprehensive HR program that will add weight to the protective measures through policies and procedures that cover conduct in the workplace. These should cover recruitment; conflicts of interest; gifts policies; procurement; standards of behaviour in the workplace; and discipline and termination procedures for misconduct.
  • A Fraud and Corruption Control program built to AS 8001-2008 is relatively common and mandatory in certain industries. Such a program outlines the steps to be taken in minimising the risk of fraud and corruption, in detecting it and then responding to it appropriately.
  • An Internal Grievance program. It is essential that employees have a number of avenues through which they are able to raise issues that might be lead or lag indicators of fraud and corruption.
  • A Whistleblower program which enables employees or others to communicate, in good faith, conduct they believe to be corrupt, unethical or illegal. Information may be reported anonymously and the whistleblower is entitled to certain statutory protections against persecution.
  • Perhaps the most important non-financial control that can help to mitigate the risk of fraud and corruption in the workplace is Culture. Culture should not be thought of as ‘what we do around here’, but rather, as ‘what we do around here when no one is looking’. Having symbols, programs and tools in place such as those mentioned above, and ensuring they are adequately trained, tested and maintained so that all employees (from CEO to mailroom) know what expected of them is the best way to instil and promote a positive culture of compliance in a workplace.

How can CompliSpace help?

CompliSpace has recently published an upgrade to its Bullying, Equal Employment Opportunity and Harassment policies and training courses.

CompliSpace’s comprehensive range of cost effective human resources policies, procedures, training and testing modules, ensure that managers and staff know what is expected of them and have key tools and information at their fingertips at all times.

This enables a business to meet its workplace relations obligations while building a positive corporate culture, capturing knowledge and saving time. For more information, contact us on the details below:

P: 1300 132 090

E:  contactus@complispace.com.au

W:  www.complispace.com.au

This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on (02) 9299 6105 and we will be happy to assist.