Ethical Intelligence: Leveraging Employee Attitudes to Strengthen Retail Investigations
Let’s start with a question:
In the last year, what percentage of your teams’ internal investigations originated from employee tips/whistleblowing?
Generally, most investigations within the AP/LP umbrella are either discovered by the investigators themselves or they arise from a response to an incident (high-shrink, ORC event, missing deposit…etc). Whether data mining exception-based reports for questionable transactions, responding to an unfavorable inventory result, periodically auditing cycle counts, or conducting surveillance on the loading dock during a truck day—retail AP investigations tend to be generated by the hard work and diligence of a well-trained investigations team. It makes sense; organizations spend millions of dollars every year on quality training programs and high-tech investigative solutions to assist their teams in finding the bad apples. And – for the most part—this plan works.
Let me ask you this though—do you think there is more fraudulent activity going on within your stores/DC’s than what can be found by using the conventional tools you have at your disposal? Hopefully you responded with a resounding “yes” to that question. There is no way to catch it all—there are far too many variables to consider that allow people to operate under the radar. The objective for the standard suite of investigative tools is simple—to aid the investigator in finding what they are looking for. Read that again—to aid the investigator in finding what they are looking for. If you are looking for fraudulent activity on the register—you scan your exception-based reporting system for outliers. If you are looking for merchandise theft during a truck day—you monitor the crew while the truck is being processed. If you are looking to find the manager who is skimming cash deposits—you monitor CCTV and review the paperwork. These types of investigations would be considered reactionary in nature and tend to make up most cases worked within the retail landscape.
What if we could totally up-end the way retail investigations were initiated? Rather than employee tips accounting for the vast minority of cases—what if they contributed to the overwhelming majority of your investigations? The Association of Certified Fraud Examiners (ACFE) conducted a study that found the majority of corporate fraud investigations were generated via leads from internal tips/whistleblowers. Internal tips generally bring investigators intelligence that, had the tip never come forward, likely would have forever remained a mystery.
It’s a safe bet that most of the people reading this article work for an organization that utilizes some type of internal tip line. While we could write an entire article on what makes an effective employee tip line/whistleblowing program—the important point here is most companies already have some type of structure in-place to receive this type of intelligence.
So, why are your teams not getting inundated with leads?
Because you have an attitude problem. Well, not you—but your employees.
Research into what makes employees more likely to report unethical/criminal behavior has skyrocketed in recent years. One common theme to these studies centers around the idea of, “it takes a village” to promote a culture of transparency and information sharing within an organization. “It takes a village” refers to the notion that it’s not enough to simply have an internal tip line in place. It’s not enough to have a poster in the breakroom with the hotline number listed in large red letters. It’s not even enough to offer a reward for credible leads. What does make a difference, however, is when the culture in the store, office or distribution center is ripe with a “sound ethical tone”. Meaning, the norm in the workplace is that both leadership and co-workers have strong ethical attitudes, which are more likely to translate into strong ethical behaviors.
When someone works in an environment where the leadership is dishonest, unpredictable, and hostile—they will be less likely to report. When someone works in an environment where their co-workers display unethical behaviors and attitudes—they will be more likely to accept this type of behavior as the norm, rather than the outlier, resulting in a lower willingness to report. When someone is working in an environment where both scenarios are playing out—unethical leadership and co-workers, the odds or reporting are reduced even further.
Research has consistently found when employers are able to create a culture of “positive ethical behavior”, both within leadership and amongst co-workers, there is a direct and substantial impact on the willingness of employees to report instances of counter-productive/criminal behavior in the workplace.
Addressing employee attitudes has a direct impact on: DECREASING counter-productive workplace and criminal behaviors in the workplace and INCREASING instances of internal tips/whistleblowing leads.
What do I mean when I say, “employee attitudes?” Gaining insight into how your employees feel about the following:
- Theft in the workplace
- Inappropriate behavior
- Workplace violence
- Adherence to company procedures
- Trustworthiness of leadership and co-workers
- Drug use in the workplace
How does your team gain insight into your employees’ attitudes surrounding these topics (and many others)? How is your team using this type of intel to inform their store visits, investigations, and targeted priorities?
If you want to make a substantial impact on the quantity and quality of your investigations—the answer isn’t to keep doing more of what you’ve been doing. The answer is to ask, “how can I tap into a new pool of information/intelligence?” That “new” pool of intel has been right under your nose the entire time—it’s the people, the employees.
- Learn the attitudes/opinions of your people.
- Create/implement strategy to positively impact change.
- Promote/implement resources for employees to report unethical behaviors.
If you would like to learn more about how your teams can leverage technology to collect valuable intelligence surrounding your employees ethical attitudes and behaviors, reach out and schedule a call today!
Sources:
Baird, J. E., & Zelin, R. C. (2008). Understanding employee perceptions of fraudulent activities and their propensity to report those activities using anonymous tip lines: The influence of fraud type, perpetrator gender, and observer demographics. Southern Business Review, 33(1), 1-14.
Bolin, A., & Heatherly, L. (2001). Predictors of employee deviance: The relationship between bad attitudes and bad behavior. Journal of business and psychology, 15, 405-418.
Mayer, D. M., Nurmohamed, S., Treviño, L. K., Shapiro, D. L., & Schminke, M. (2013). Encouraging employees to report unethical conduct internally: It takes a village. Organizational behavior and human decision processes, 121(1), 89-103.
