Risks in Human Resources – Part 2

This article is a continuation of Risk in Human Resources - Part 1, which covered fraud risks such as fraudulent credentials and certifications, time fraud and resume fraud. 

Build a Culture That Values Integrity

As Forbes stated, fraud is an intentional act to deceive, so having a labor force that prioritizes honesty and integrity can help reduce the risk of fraud. However, to attract and retain talent like this, your organization needs to build a culture that values integrity. Building this culture is more than adding the word to your organization’s values list, it must be a clear priority that is demonstrated through actions. This can come with some growing pains, such as dropping a client who is encouraging dishonest conduct or terminating the top salesperson for unethical practices. However, in the long run, this demonstrates that your organization doesn’t tolerate unethical behavior and there will be consequences if discovered. Leaders should encourage acts of integrity and organizations should celebrate actions that support building an honest and fair work environment.  

Effective Hiring Practices

While it can be tough to keep up morale and productivity when there are open roles, it’s essential to take the time needed to find highly qualified candidates who are the right fit. As stated above, hiring individuals who value integrity can help build an honest culture. This is especially important when the opening is for a position that involves higher levels of fraud and risk exposure, such as IT professionals, financial, and leadership roles. These will be the individuals on the frontline combating fraud. Along with having the technical skills needed to do their jobs well, they need to have strong integrity, encourage the same from others, and be vigilant in spotting and addressing concerns. If a new hire is found to have lied throughout the hiring process, it’s important to take action to demonstrate that the organization doesn’t tolerate any form of deception. Verifying credentials, running employment verifications, and performing skills tests can help ensure an applicant is truthful in their stated qualifications. Lastly, having at least one in-person interview can ensure an applicant is real and serious about the open position.

Continued Reinforcement

It’s wise for businesses to have continuous reminders about their organization’s policies regarding fraud. This can be done through email reminders, during company-wide meetings, by providing compliance training, or even having employees sign a yearly code of conduct form. This supports the idea that your organization prioritizes integrity, reminds employees of reporting procedures, and continues to set expectations. It’s also a great way to update employees on both new and old risks they should be aware of. 

Invest in Training

As technology continues to open new doors to risk and fraudulent behaviors, it’s important to keep employees updated and trained in best practices for identifying and addressing risk. Investing in training will ensure employees stay updated on what is out there, how to spot it, and how to best handle the problem. Educating employees will reduce risk and potentially save the company from liabilities down the road. All employees should be trained in common fraud risks, but specific departments may have unique risks to be cautious of. Some positions and departments will benefit from more training than others, especially if their role encounters risk more frequently or seriously than other roles. 

In conclusion, there are many fraudulent behaviors employers need to be aware of and organizational leaders should be strategizing on how to combat these risks. Technology is not only making some fraudulent behaviors easier, but it’s introducing new types of fraud as well. While you can’t stop every deceptive action, there are multiple ways organizations can help protect their organization against fraudulent activity. 

Need advice or assistance in HR matters, risk management, or accounting practices? Please contact Herbein + Company, Inc. Our mission is to be your single source solution for successfully attracting, retaining, and developing your human capital. Our expert team is ready to partner with you and passionate about helping your organization achieve its goals! 

Article contributed by Jessica Keck

References:

1. Blum, K. (2022, September 2). How to use a mouse jiggler to make it look like you're working. CNBC. https://www.cnbc.com/2022/09/02/how-to-use-a-mouse-jiggler-to-make-it-look-like-youre-working.html 
2. Capterra. (2023). AI in job applications survey {Survey Data], as reported by HR News.
3. Martinez, A. (2024, July 25). North Korean fake IT worker dupes security firm: A wake-up call for employers. Forbes.  https://www.forbes.com/sites/alonzomartinez/2024/07/25/north-korean-fake-it-worker-dupes-security-firm-a-wake-up-call-for-employers/ 
4. Resume Builder. (2023). 1 in 3 Americans admit to lying on their resume [Survey Report]. https://www.resumebuilder.com/1-in-3-americans-admit-to-lying-on-resume/ 
5. Sommer, B. (2023, June). The dark side of new HR tech [Webinar]. HR Executive. https://hrexecutive.com/the-dark-side-of-new-hr-tech/ 
6. U.S. Attorney's Office, Southern District of Florida. (2023). Fraudulent nursing diploma scheme leads to federal charges against 25 defendants [Press Release]. https://www.justice.gov/usao-sdfl/pr/fraudulent-nursing-diploma-scheme-leads-federal-charges-against-25-defendants