Avoiding the Silo Effect in Workplace Fraud Investigations

Collaboration between human resources and investigators is crucial to the case.

Posted by Joe Gerard in Human Resources on June 7th, 2011

When investigating workplace fraud, effective communication is critical. But the right people are usually not communicating about the investigation, and that can hamper the team’s ability to get results, points out expert investigator Ryan Hubbs.

“Human Resources staff are usually trained to deal with the majority of the workplace deviant behaviors, but they receive little to no training on fraud. Hence, they may miss some of the warning signs,” says Hubbs. “Conversely, fraud examiners are trained in the aspects of fraud, but receive very little if any training or exposure in workplace deviant behaviors. Hence, they may miss a fraud suspect because they don’t have knowledge of past deviant behaviors, or may not pick up on what witnesses may say during an interview.”

Two-pronged approach

The answer, of course, is collaboration between HR and investigators or the hiring of outside resources with experience in investigating both fraud and employee misconduct, says Hubbs, who is Senior Manager of a firm that specializes in both types of investigations.

Case management software is especially effective in either scenario. It’s a powerful tool for collaborating on investigations, allowing multiple stakeholders to access and populate case files with evidence and observations that could, ideally, bring the investigation to a close quickly and efficiently, with all the information securely stored in one place. Both HR and investigations team members can contribute and collaborate whenever they need to, from wherever they are.

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“I think that for so long we have compartmentalized how we handle these issues,” says Hubbs, “(with) HR or management usually handling the workplace deviant behaviors and investigators, auditors, and law enforcement usually handling the fraud piece.” Approaching investigations from both perspectives can yield much better results, whether it is done internally with the help of case management software, or through an external resource with experience in both areas.

There’s No Silver Bullet

No matter what method you choose to investigate, deviant behavior on its own can’t be relied on to predict every case of fraud.

“The fact is every person exhibits some degree of deviant behavior on a daily basis,” says Hubbs. “The person who drives too slowly in the left hand lane, the person who stays on the elliptical machine or treadmill for greater than 30 minutes when people are waiting, the person who talks loudly on their cell phone in an elevator or airplane,”

Hubbs warns against identifying workplace deviant behaviors as the silver bullet in fighting or finding fraud. “There may be an employee who sexually harasses other employees all day long and may never steal from their employer,” he says. “There may be people who are genuinely nice and pleasant to be around who may force an organization to have to close its doors due to the amount of fraud the employee has committed.”

Although deviant behaviors can’t be counted on to lead an investigator to every case of fraud, Hubbs sees great value in using it as a tool to increase detection levels. “Even if the correlation is 1 out of 10 or 1 out of 20, using this hypothesis could help us find 5 to 10 per cent more fraud than we are currently finding, or find the fraud earlier before it becomes too massive,” he says. With billions lost to fraud every year, even 5 to 10 percent represents massive savings to organizations and could spell the difference between prosperity and bankruptcy for some.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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