The environment in which your employees conduct themselves largely is established by you, the employer. You set the example. In many ways, it is like raising children, since the need for consistent boundaries and expectations apply to both employees and to family.
I have a few examples of my own to share that will illustrate the point, as well as instances from around North America.
The first case hits too close to home, since, as the co-owner of an investigative firm, I recognized the need to set an exemplary standard for ethics and honesty.
We were hit with two significant cases, almost simultaneously. And, as a result of the direction our loss prevention business was heading, I sold my half of the company, at rock bottom pricing, just so I could extricate myself from the culture that was growing like mold.
The first case involved our best investigator. We normally would assign our floorwalkers to short shifts each day, with four shifts of 1.75 hours and fifteen minutes of travel time between. That way, even the smallest retailer could afford our floorwalking services.
Each investigator would attend at the assigned store, get signed in and out, and at the end of the two-week payroll period, submit those receipts to us for payment. So long as the client received approximately the correct number of hours of coverage for which he had contracted, everyone involved was satisfied. Exact times were not necessary, since, on occasion, an investigator may be waiting for the police to arrive for a shoplifter, or may be in the middle of an apprehension when he was due to go to the next store. The system relied on honesty.
Mostly, it worked.
However, we had one employee—our best all-round investigator—identified as having stolen merchandise from one of our clients. We notified the client and terminated the employee. However, he sued for overtime payments, as he had been accumulating assignments throughout each week and then putting in 12-hour days. This was expressly forbidden, but we had allowed a couple of people latitude when they had personal emergencies. They did not claim overtime. “Bob” intentionally did the opposite, and we were compelled by the Labour Board to pay him.
The second incident involved an undercover employee who stole from a convenience store right in front of me!
But why would these two people do so? It was, unfortunately, our fault, in part.
My partner had solicited the help of “Bob” to bundle mass mailers that we were sending out. It was up to us to document and scale each of the mailbags. My partner directed “Bob” to put extra weight into each bag, but claim the lesser volume.
He also directed other employees to add five minutes at the beginning or end of each shift if the client didn’t sign them in immediately.
In other words, he told the workers that dishonesty was ok. When I found out, I left the company.
David Milosevic, of legal firm, Milosevic & Associates, cites a case in which he got an admitted fraudster off on criminal charges, using the defence of condemnation condoning. He was able to show that there was an invasive culture of fraud and encouraging fraud at the company where his client worked.
In another of my articles, I talked about a client who owned five pharmacies. He had a severe gambling problem, using cash from one of his stores, almost daily, to feed his addiction. To cover the shortfalls, he directed two of his employees to neglect to ring up about $150-200 daily, so it would not show on his year-end books.
The cashiers obliged but pocketed an equivalent amount for themselves. “If he can do it, why can’t we?” was their mantra.
Last year, ten contract staff were caught stealing from Air Lingus airplanes, with the company estimating the losses at the equivalent of $280,000 CDA. There, the systems were so lax that employees felt the thefts were risk free. While the company didn’t encourage theft, it did not take solid steps to prevent it, either.
A client had a team of twelve forklift repair personnel, who spent their days looking after forklift repairs on site, across the city. They began their days with their first booked assignment but never knew how long each repair might take. When done with one client, they called in and were routed to the next one.
The foreman in charge specifically instructed the workers to pad their travel and labour time on warranty work and to pad their travel time on regular clients, so that the company could get a full eight billable hours out of the employees, even if they only worked a portion of that time.
But several of the employees went one step further: they padded their time sufficiently to allow for their breaks, diverted company tools and supplies and filled their own vehicles while claiming that they were filling company vans.
The foreman had opened the door to theft and fraud, but had not considered that it was his example that cost the repair company over $60,000 in identified losses.
In New York, 36 Long Island Railroad workers were charged with time theft involving several thousands of hours (with possibly hundreds of thousands of monetary loss). One supervisor bragged that he was sipping margaritas by his pool while claiming work hours.
This was more than a bad example. It was criminal leadership.
A friend was ostracized in his police force when he reported three fellow police officers who were selling drugs, The thin blue line seemingly covers a lot of marginal and even criminal behaviour.
In 2022, a study by psychology researchers, Mula & Pierro, determined that “employees with a strong work prevention focus have … a lower tolerance for workplace deviant behavior.” In other words, establishing a culture that discourages deviant behaviour fosters, in turn, a more cohesive environment against theft and fraud.
My favourite retail client also demonstrated exceptional devotion to its employees. With over 500 workers, it would have been simple to focus more on profit than people, but the owner often declared that it was his people that made the company a success, more so than his customers.
One of his managers aptly demonstrated that principle one day, when a belligerent customer insulted and demeaned a clerk over an innocent mistake. She demanded to see the manager.
The manager already had observed the last part of the interaction, where the customer had belittled the worker.
Firat, the manager apologized for the mistake. Then, he told the woman that she was barred from the store, and would not even allow her to complete her purchase. He told her, emphatically, “we (not the worker) made a mistake. But my people are my family, and I will not allow you to be rude and abusive.”
What made the incident more remarkable was that the woman was a relative of the owner and purchased a significant amount from the store regularly.
The owner congratulated the manager on having the courage to do the right thing and personally apologized to the employee. You can imagine the effect these actions had on the specific employee, her fellow workers and any customers who had witnessed the original incident.
A study from Montreal on workplace culture and management style says, “Our results suggest (that) instead of distrusting management, corporations should promote a healthy ethical culture as a means of preventing fraud. The primary way of achieving this is with an effective code of conduct.”
That code of conduct should not just be written. It should be lived and breathed, every moment, because, like a toddler, when someone sees the exception to a rule, and that exception suits their wants and whims, they see it as a legitimate path.
I close with one final example of how the workplace culture needs to be more than a code of conduct written in a manual. It needs active demonstration every day.
The same client as earlier, the one that defended the employee at the cost of a customer. In another of his stores, the owner experienced a stockroom receiver who was accused of sexually assaulting a female cashier. There was some circumstantial evidence to back up the female’s claim.
But this company had a very religious base, and the store was in a very devout community. Every employee who had been hired was subjected to the same screening, but it relied on honest disclosure. One of the questions was whether the prospect had ever been discharged from a prior position. The female had declared she had not.
I had investigated, and found that she actually had been fired twice, both on suspicion of theft.
When the assault allegedly occurred, the owner immediately fired the suspect. Then he called me to his office to talk.
“Bob, I just fired ___.” Was I right to do so?”
I explained the legalities.
“Would you have fired him?”
“Yes,” I answered. “And I would have paid whatever price if the employee was not guilty.”
“That was exactly what I was thinking. I can’t leave my people thinking they are unprotected, even for a moment.”
So far, we were on the same page.
“And what about her? She lied.”
There, I was less certain, even though I had the documentation. “I might wait a bit.”
“I fired her today, too. She lied.”
This employer would not tolerate abuse from any of his employees, nor even his family. And he would not tolerate dishonesty, regardless of the optics.
I spent a few hours talking to key employees so that they would spread the word about the real reason she was dismissed. I needn’t have done so. The employees already understood that their boss would only make the right moral choice. And it turned out that one worker knew of her priors but did not want to cause a disruption. She wasn’t dishonest, and there was no evidence that the terminated female had ever stolen from my client.
But the culture of ethics was so engrained in the company that no one doubted that integrity was essential, from top to bottom.
No Responses