How Your Company Culture May Be Increasing The Chances of Fraud

Following the arrest of Patisserie Valerie’s Financial Director, revelations about accounting irregularities, missing cash reserves and secret overdrafts have sent shockwaves across the business press and any number of boardrooms alike.

 Whilst it’s still too early to speculate about the future trading situation of the company, or the outcome of any criminal investigation, it does raise a bigger question about how organisations end up in such dire straits and how potentially fraudulent behaviour can go unchecked.

It’s true that when fraud occurs it is sometimes the result of rogue individuals acting alone, motivated, perhaps, by personal circumstances or simply to benefit or ‘cover up’ by any means, fair or foul.  It’s certainly easier to look at it this way. The ability to identify the culprit, isolate the problem, attach blame and eliminate it immediately is a much more palatable solution for leaders of a business than having to look more deeply at what’s happening inside their organisations that might have enabled fraud to flourish.

If they did take a closer look, they may discover some cultural features that are counterintuitive to openness, honesty and fair play such as aggressive performance targets, intense competition, cavalier attitudes to ‘rules’, low levels of accountability and visibility, command and control leadership, subservience, poor communication and high levels of stress and overwhelm amongst employees.