The Ethical Costs of Deception in the Workplace
Fraud can be defined as a deliberate misrepresentation to gain an advantage over another party. If you were to apply for a home mortgage loan and include a source of income as part of your earnings but it doesn’t exist, you have committed fraud. Your goal was to qualify for the loan even though you didn’t meet bank standards. Your actions add risk to the bank that the loan may not be paid back on a timely basis.
Fraud comes in different forms, including fraud in financial statements, the misappropriation of assets (occupational fraud) and subsequent cover-up, and disclosure fraud. In each case, a deceptive practice is used to mask the fraud and internal controls are either nonexistent or overridden by the perpetrator of the fraud.
The Association of Certified Fraud Examiners (ACFE) studies the costs and effects of occupational fraud and abuse on a global basis and issues a report on their findings. The 2020 Global Study on Occupational Fraud and Abuse looked at 2,504 cases from 125 countries and found total losses of more than $3.6 Billion and an average loss per case of $1.5 Million. Certified Fraud Examiners estimate that organizations lose five percent of revenue to fraud each year.
Some organizations experience two or more kinds of fraud. Asset misappropriation occurs in 86 percent of the cases and occurs through billing fraud (20%) , noncash fraud (18%), expense reimbursements (14%) and others. Corruption represents one of the most significant fraud risks for organizations (43%) causing a median loss of $100,000. This includes conflicts of interest, bribery, illegal gratuities, and economic extortion.
Financial statement fraud is the least common (10%) and most costly ($954,000 median loss). These occur through understatement of liabilities and expenses, overstatement of revenues, and improper asset valuations.
The most common way to detect fraud is by tip (43%). Organizations with hotlines detected fraud by tip more often (49%) than those without a hotline (31%).
Acting With Integrity
A person of integrity will act out of moral principle and not expediency. That person will do what is right, even if it means a loss of a job or client. That person will not shy away from blowing the whistle when improper activities exist. They are willing to put their job on the line for the greater good.
I have previously blogged about the issue of taking credit for someone else’s work and used the following case.
"Assume you have worked for an organization for five years. Your work has been exemplary by all standards, including performance evaluations by your supervisor. The department head just announced that one of two workers will be promoted to the position of assistant supervisor to replace a departing employee, which carries a $10,000 higher annual salary. You believe you deserve the promotion and need the extra money to help pay for your child’s medical expenses. You and a co-worker up for the promotion recently finished a project with three other team members. You were in charge of the project. The ethical question is whether you should submit the report under your name and simply acknowledge the team members participation or submit the report as a team effort. Assume in the former case, you are likely to increase your chances of getting the promotion."
Bearing in mind that taking credit for someone else’s work is a fraudulent act because you are deceiving your supervisor by taking credit for something you didn’t do and not giving credit where credit is due. Here are some ethical considerations in deciding what to do:
- You might take credit for the report if you believe there is little chance of being caught and punished.
- You might take credit for the report if you believe it will lead to your promotion with no negative effects on your position within the organization.
- You might take credit for the report if you believe others in the organization act similarly.
- The needs of the work team may be seen as taking precedence over one’s own self-interest so that you would not take full credit for the report; otherwise you risk your relationship with others.
- Your decision might be motivated by following the law, which means not taking credit if, for example, it’s prohibited by the code of ethics.
If no such laws exist, your decision should be motivated by ethical values including honesty, integrity, and personal responsibility. Here, we could say: Just because you have a right to do something, that doesn’t mean it’s the right thing to do.
Each person who contributes to the report has a right to receive equal credit, assuming each had about the same role.
One useful perspective is to ask yourself how you would feel if your decision to take sole credit for the project was discussed on social media. Would you be proud to defend it?
Rationalizing unethical actions sometimes occurs in the workplace when an employee wants to deflect from their responsibilities. An employee might say that taking credit for others’ work is the way things get done over here; it’s part of the culture. That may be but we should consider that: Just because you have a right to do something, that doesn’t mean it’s the right thing to do.
Posted by Steven Mintz, aka Ethics Sage, on July 30, 2020. You can sign up for our newsletter and learn more about Dr. Mintz’s activities at: https://www.stevenmintzethics.com/. Follow him on Facebook and on Twitter .