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5 Ways to Minimise your Misconduct Risk

  

  • 14th April 2021

5 Ways to Minimise your Misconduct Risk

Crime in the Workplace 

So you’ve received a concern relating to criminal behavior by an employee.  This can be one of the most challenging aspects of an HR Professionals' role.  Criminal behavior, wrongdoing and misconduct are legally complex and emotionally charged topics, often resulting is disciplinary action and sometimes legal proceedings.  It is important that organisations do all they can to minimise their exposure to this type of employment risk.   

 

Vicarious Liability 

The first issue to address is whether the organisation can be considered liable for the criminal conduct.  This should be considered when the illegal act(s) are closely linked to the employment of the perpetrator.  For example in the case of Wallbank v Wallbank Fox Designs Ltd an employee assaulted a manager that had asked him to complete his duties.  The Court of Appeal concluded that giving and reacting to instructions is a normal part of employment, and that the possibility of a violent reaction to an instruction, was a reasonably incidental risk created by the employment.  The employer was therefore found to be vicariously liable for the assault.   

While it is not always possible to control all employment risks, efforts should be made to be aware of, and proactively manage these risks wherever possible.  It is important therefore to maintain an zero tolerance approach to employee misconduct to protect themselves as far as possible. 

The Cost of Workplace Crime 

There are several direct costs associated with Workplace Crime, including but not limited to; 

Acquisitive Crime 

Including theft and fraud the worker acquires cash or stock from the business for personal gain.  It has been suggested that on average 10% of an organisations revenue is lost to fraud each year[1], and this number is growing.  This does not include the indirect costs, including the cost of investigation, disciplinary costs, replacement costs, insurance costs and other intangibles such as reputational damage and employee morale.  Once accounted for these factors can drive up costs by up to 100%[2].   

Interpersonal Crime 

This covers misconduct including bullying, harassment and discrimination.  These behaviours often result in absenteeism, attrition, management time, investigation costs, reputational damage and employee morale.  Due to an increased public focus on issues such as sexual harassment and racial discrimination attempts are being made to measure the impact of these more social crimes.  Early estimates suggest that the cost of this type of crime is around 2% of revenue[3].  Another study found that firms deemed to have sexual harassment issues underperformed their peers by up to 20%[4]. 

 

5 Ways to Minimise your Exposure to Misconduct Risk 

1. Policies, Processes and Procedures 

You should make it very clear to your workforce the standard of behaviour that is expected.  These standards are typically described in a Code of Conduct or Employee Handbook.  These documents will vary based on your organisations risk profile, for example a manufacturing firm may place more focus on health and safety, whereas a financial services firm may put more emphasis on financial propriety.   

You should also document your triage and investigation processes to help employees understand what will happen should there be a breach of your established conduct rules.  In addition to having clear and concise policies, processes and procedures it is equally important to ensure that these are well publicised and widely accessible.   

Once in place it is also of utmost importance to follow your own processes closely.  If a process turns out not to be fit for purpose it is far better to change the process rather than deviate from it.  This will help your cause if the case goes before an employment tribunal.  

 

2. Education and Training 

If you train your workforce on the basics of workplace misconduct they can be in no doubt as to what is required from them, and they will be better equipped to identify impropriety throughout your organisation.   

It is also important to ensure that the individuals responsible for managing misconduct are appropriately trained to detect, triage, investigate and resolve workplace wrongdoing.  This will minimise the risk and impact of the poor handling of a case. 

 

3. Leadership 

Senior leadership play an important role in cultivating the culture of an organisation.  Senior leaders must therefore lead by example, demonstrating ethical behaviour and a zero tolerance approach to misconduct.  Conduct matters must be taken seriously and investigated and resolved swiftly. 

To proactively support this senior leaders should be vocal in their support of activity designed to discourage, detect or resolve wrongdoing within their organisation.  For example many leaders write a signed foreward endorsing their code of conduct.   

 

4. Ask the experts 

Because serious incidents occur fairly infrequently, and no two cases are the same, it is not economical for most organisations to employ experienced specialists in misconduct management.  

There is a great deal of value in independent 3rd party involvement in your disciplinary processes.  3rd party assessment of, or involvement in, your processes helps challenge assumptions relating to company culture.   

Many people believe for example that effective recruitment is key to minimizing misconduct risk, however the majority of fraud is committed by people who have been with their employer for more than 5 years.  Personal circumstances are a significant contributor to workplace crime and are very difficult to plan for an mitigate.  For example the breakdown of a relationship can create financial difficulty increasing the propensity of employees to commit acquisitive crime such as fraud.   

 

5. Provide means to report potential violations confidentially or anonymously. 

The first people to become aware of impropriety are typically people that work closely with the perpetrator.  They may be the victim of the behaviour, they may be coerced into taking part in the behaviour, or they may simply observe the behaviour.   

When an honest and loyal employee becomes aware of wrong doing it is important for their wellbeing that they are able to raise their concerns, safe from retaliation.  It is vitally important that these sources are protected and their concerns are investigated effectively and acted upon where appropriate.  Safecall provide a means of employees to raise conduct concerns to the appropriate people safely and securely. 

If misconduct is tolerated it will typically spread, further damaging productivity and morale.  Concerted decisive action is required to maintain a healthy working environment. 

 

Summary 

Left unchecked workplace crime could be depriving your organisation of an average of 12% of revenues.  This being an average the cost to an individual organisation can be far higher, and in some cases misconduct can destroy previously thriving businesses.   

There are many ways of protecting your business from misconduct risk.  While its impossible to eliminate misconduct risk you can mitigate and minimise by proactively putting in place the processes, training, help and tools in place before this risk materialises.   

So when someone raises a concern about an employee’s conduct you have what you need in place to respond to the situation with confidence, and hopefully avoid a few late nights in the office. 

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