Business psychologist, Adrian Furnham, gives insight into expense fraud
In response to Webexpenses survey on Expenses Fraud, Professional Business Psychologist, author of Bad Apples and writer for the Telegraph explains what he thinks could be going wrong in society and says "It’s time to talk about expense fraud openly; and do something about it."
Theft at work is a serious issue. It goes under many names: stealing, fiddling, knock-offs, perks, pilferage, or shrinkage. However you dress it up, it is still theft.
The evidence is growing that employees regularly steal from their employers. They steal goods and they steal time. Some steal cash but there are more subtle ways of stealing money, for that is what expenses fraud is.
Current estimates of expenses fiddling alone are hitting £3.5 billion per year. It is hurting companies and organisations. It can lead to organisational collapse.
A recent independent survey commissioned by Webexpenses on expenses fiddling; nature or culture makes for some sobering reading and provides some alarming statistics.
What is it? Fiddling your claims, claiming for money you did not actually spend. Things you supposedly did, places you went, transport you paid for; hotels you stayed in, food you consumed, that are really essentially fabrications, porky-pies, massive exaggerations.
Why do people commit expense fraud?
A harmless way to make a bob or two? Even acceptable because everyone does it? That is called normalisation. What about our esteemed MPs; wicked greedy bankers, snake-oil salesmen? That is what fraudsters say: it’s called rationalisation.
Over 15% of respondents in the survey admitted that they did it. Most on mileage and petrol (40%), then food and drink (38%), then transport (24%) and finally carparking (16%). And how much do they add on each time: most said not more than £50.
The researchers did their maths based on their results: the average expense over claim is around £30.00, and the average number of claims is around 15 per year. The average worker over-claiming £450 per year and that is probably a very conservative estimate. Start the arithmetic in your organisation and be prepared to be shocked.
Around a third expressed no guilt for doing this: 13% very guilty and 57% only a little bit guilty. Older people expressed less guilt which may surprise those who believe the baby boomers to be a very moral lot. Not so common among all those self entitled, “I deserve more” younger types.
And what did they argue: everybody does it and they deserve the extra cash. It is not wicked. They are, it seems, in their view not bad apples doing something somewhere between a fun activity, entrepreneurship and a way to make an extra-bob.
There are some obvious reasons why people do it: it is easy to do and easy to get away with.
82% said they had never been caught, and two-thirds pointed out that the repercussion was pretty light (ticking off by a cross boss). So why not?
The organisation does not take it seriously so why should the staff. It is a bit like “liberating” stationary. In most people’s eyes “it doesn’t really count”. It is quite different from stealing from the till, though in effect it is not.
So is fiddling your expenses a socially acceptable white and blue collar crime? Is it a sign about our moral decline as a country? What can businesses do to stop the bad apples multiplying?
For some it is retaliation: getting a sort of revenge on a company that it seen to be dishonest, mean and unfair. For others, it’s simply restitution of what is owed. And for some it’s a sport like affair or tax dodging. People have different motives. But it is more common in some companies and sectors than others. Not just the odd bad egg, but rather whole rotten barrels.
So what to do about expense fraud?
First, let people know how uncommon it is. It is NOT the norm: everybody is not at it. It is a minority who fiddle like this. Give some stats. They are the exception and a group that will not be tolerated.
Second, explain the consequences of being caught with some “case studies”, but do not go over the top. Spell out the first warning to sacking sequences. Beware the possibility of unintended consequences where making the punishment so severe that it simply makes people take bigger risks with the amounts they claim.
Third, explain the systems and methodology by which people are caught. Let them know that there are reliable and fair methods in place that will show up those trying to beat the system.
Fourth, conduct a few in-house programmes where employees at all levels discuss the company’s code of ethics and how, when and why fraudsters should be dealt with. Get all people involved: let them know the fraudsters are costing everyone who works for the company.
Fifth, review compensation and benefit programmes that look at internal and external equity meaning how people “stack up” against others in the organisation as well as those working in similar jobs in different organisations. Don’t allow expense fraud to be seen as a way of reconciling proper pay differentials. Some supervisors turn a blind eye to it because they feel unable to reward staff in ways they think equitable and just.
It's time to talk about expense fraud openly and do something about it
Download the full survey results here or view our survey infograph here