To manage the risk of fraud, is honesty the best policy?

Do you encourage honesty among your employees?

Fraud occurs where employees or others lack honesty.  I have written several times about various ways you can protect your business against fraud. Barry Zalma’s Insurance Fraud Letter has provided many examples of frauds and has shown that anti-fraud measures pay for themselves.  I recently advised you to involve employees and others as allies against fraud, but now you need to think about one other important individual. Yourself!

How does your own honesty affect others?

Most of us believe that two wrongs don’t make a right. Yet many people think they are justified in defrauding someone if they consider him or her to be dishonest. Even people who wouldn’t defraud you might not be quick to expose someone else’s fraudulent activity, if they think you are getting your just deserts.

Where does your honesty show in your business?

Are you honest and transparent in your dealings with:

  • Clients?
  • Prospects?
  • Partners and colleagues?
  • Employees?
  • The public?
  • Regulators?
  • The taxman?

Employees notice, and they develop an image of you and the business, which affects how they treat you.

Is honesty the same as openness?

Not necessarily, but I mentioned openness because people’s perception of you matter. If you are secretive about everything, people are likely to use their imaginations to fill in the blanks in their knowledge of your dealings. This seldom works in your favour.

Happy and sad masks. Do you display honesty to your employees?
Happy and sad masks. Do you display honesty to your employees?
Are you evenhanded in you approach to honesty?

In some organisations you are more likely to be sacked for fiddling your car allowance than for large-scale misselling. There’s an old rhyme, dating from the time when common land was being enclosed by landowners to the detriment of small farmers:

The Law will punish man or woman

Who steals a goose from off the common

But lets the greater felon loose 

Who steals the common from the goose.

Does that apply in your business?