Ethics: It’s Not Just for Elected Officials

by Jeffrey Fanger

If you’re like most people, you’ve watched the unraveling stories of corruption by government officials with strong emotions, from stunned indignation to cynical despondency. When our elected representatives engage in extortion or accept bribes and favors in exchange for allocating public resources, we all have a right to feel cheated.

While most of us would prefer to think that this is somehow a characteristic of politicians, the truth is that our elected officials are just people with the same weaknesses as the rest of us. Ethical lapses in the private sector are just as common, and perhaps more common due to the lack of public oversight.

Simply identifying that a problem exists in your business can be difficult. It can take many forms, including embezzlement, misuse of company resources, abuse of authority, theft of physical or intellectual property, misreporting hours worked, and even industrial espionage. Businesses face significant challenges in managing their workforce at every level to provide adequate oversight. Usually there is no FBI wiretap to record incriminating conversations, or press corps to watch your employees’ every move.

We all have a natural desire to dismiss small signs of trouble in favor of giving “the benefit of the doubt” to people we have worked with side-by-side for a long time. Trusted employees have been known to hide their wrongdoing from supervisors and co-workers for years. I have even seen cases where one owner was stealing from the business they owned jointly with their spouse.

Financial theft can be detected and prevented fairly easily through tight fiscal management and controls. By implementing standard policies for handling money, regularly reviewing your books and bank statements, and submitting to an annual audit by a qualified outside accountant, your business might avoid any pilfering or catch it before significant amounts are taken. Without such policies and procedures in place, an employee who takes a small amount without getting caught soon becomes emboldened and begins to take larger amounts, more and more frequently.

Even more pervasive than theft, some forms of abuse by employees can result in huge economic loss to your business without “stealing” a penny. Falsification of hours worked, abuse of medical leave, and using work time for non-work activities are all classic examples of this. Lost productivity can never be regained, and the resentment such behavior generates among other employees can swiftly undermine entire companies.

As a final blow to small businesses, there is always the fear that an employee who is terminated or disciplined due to such egregious behavior will sue the company! Knowing when and how to discipline, what to say and what not to say, are areas we have advised our clients on for many years. If you are facing a situation where you believe an employee is abusing your policies or stealing from your company, call Fanger & Davidson, LLC or your attorney before you take any action so that an appropriate strategy can be developed to protect your business. We also recommend a legal audit of your HR manual and financial procedures to avoid problems now and in the future. A little preparation now can avoid devastating problems in the future.