01/17/2015
If you have ever heard a Certified Fraud Examiner or Forensic Accountant speak, you may be familiar with the Fraud Triangle that outlines three dynamics for fraud to occur – Pressure, or Need / Greed, Rationalization and Opportunity. Common rationalization themes include: I’m underpaid, overworked; others are doing it, etc.
Ever consider if the employer or decision maker rationalizes bad behavior? Ask any risk management or loss prevention professional if any of these responses sound familiar.
“This is my fault; I didn’t explain the policy clear enough.” – Senior Director of a multi-billion dollar company after a manager used a company credit card to expense personal items.
“He lost his job; there’s no reason to rub salt in a wound.” – Manager’s response after refusing to seek prosecution for employee theft.
“It was a stupid thing to do, but he was just joking around.” – President of a $1B company after an employee wrote a fake hold-up letter and handed it to a bank teller.
“Perhaps he would perform better under someone else’s leadership?” – He falsified documents and misled investigators.
“Yes, she was deceptive in her statement, but she’s a single mom and I believe we failed to train her properly.” – While being a single mother has pressures, why excuse bad behavior? What signal does it send to a married mother?
Perhaps the most common:
“He did violate company policy and lied about certain details, but he’s our best sales person.” – If he was a subpar sales person, would you look at it differently?
For loss prevention professionals that hold the Certified Fraud Examiner designation, our investigations must be without bias or pressure to slant results. Often, it is not our place to offer recommendations but to report and record. Still, from a risk management and loss prevention perspective, we can sometimes see a train wreck coming.
Of course, every case can be different and unfortunately you must put the obvious in writing (don’t steal). A number of factors can tip decision making one way or the other; but often situations are over-analyzed or indifference enters the picture due to uncomfortable variables.
Here are a few common rationalizations:
"He’s our top sales producer. My bonus depends on him."
"How will this look on me?"
"The position is very difficult to replace."
"What if he/she sues us?"
"His father (and my friend), works here."
"She is so nice. What will the staff think?"
What if he takes customer’s with him when he leaves?
"He was best man at my wedding."
"Will he disclose past cases of misconduct on others…or me?"
"If I do nothing at all, will the risk management or loss prevention department find out?"
A View from a Certified Fraud Examiner/Forensic Accountant -
As a Certified Fraud Examiner conducting investigations, I often identify rationalization on part of the offender and victim organization. While you shouldn’t throw caution to the wind, perhaps a strong dose of leadership which includes ethical behavior, legal knowledge, consistency and knowing your pitfalls, can negate additional problems. Routinely review your risk management program and don’t be afraid to ask for help. A Certified Fraud Examiner or Forensic Accountant can offer a unique perspective.
We understand the compassion felt for a well thought of employee; but history shows if incidents are not handled decisively, the offender often returns. We end up investigating the same people again and usually for something far more serious. Someone once said, “Pay me now or pay me later, but if you pay me later, the cost will be greater.”
