The Short Answer

Employee Frauds: A Common Organisational Reality

Frauds are a very interesting aspect of any organisational set up, and one in every three organizations faces some kind of employee fraud.

Predominant Employee Frauds in India

Predominant frauds that happen in India, our study shows are around,

• Travel, A travel fraud is one of the most common frauds that happen
• The other fraud that happens is in terms of your educational qualification or the qualifications to get into a role. That is the second highest fraud that happens in terms of fabricating experiences or education or exposure to get into a job.
• And the third fraud which is happens is of predominantly falsification of performance records from an employee perspective.

So, these are very common frauds which are prevalent. And then, one in every three company or organisation faces these frauds.

Organisational Patterns of Fraud

Organisations therefore need to have systems of managing these frauds.

As per our study, when we look at organisations within India, those which are purely of Indian origin would obviously have the least amount of frauds.

Multinationals come in second in terms of frauds and within multinationals, as we go east, you will have a high level of frauds, as we start going towards west, you will have low level of frauds.

Why Do Employees Commit Frauds?

Why do employees do frauds?

• One, to ensure that there is a way of additional earning.
• Second, when they see everybody around doing fraud, employees do fraud.

What we have observed is that if the culture of fraud is very prevalent in the organisation, it is not easy to resist something which everybody is doing.

if the culture of fraud is very prevalent in the organisation, it is not easy to resist something which everybody is doing

How Can Organisations Tackle Employee Frauds?

How as an organization do we tackle that?

The simplest way of adhering to or ensuring that employee frauds do not happen is by having preventive systems in place.

What Are Preventive Systems?

What are preventive systems?

Simple preventive systems is having a structured way of ensuring that you have a strong travel policy, you have a strong travel claim system, and you have an audit of that, either by your financial executives, the financial system, or the financial teams.

And when we say audit, we are not talking about a sample audit of 10-15%, we are talking of higher percentage audits.

Preventing Recruitment‑Related Frauds

The second key frauds, which are related to falsification of records to get into a job, is more in terms of having and building a structured recruitment process.

How do you interview?

What kind of interview mechanisms do you have?

And what kind of pre-check systems do you have in place to be able to erode that fraud?

would make a difference.

Using Employee Life Cycle as a Fraud Indicator

A very simple system of checking whether you have this fraud checking system working in your organisation is to look at what kind of a life cycle a employee is spending in your organisation.

An employee life cycle alert is not only triggered when you have somebody leaving an organisation in the first four to five months.

We also have an outlier, if a person is not exiting your organisation after five – six years, there is a reason for us to believe, that unless as an organisation, you have given them new goals, expanded their responsibilities, then we have a reason to believe that a person is stagnant for some reasons, fair or unfair, but there is a investigation warranted.

Preventing Performance‑Related Frauds

And the third system to have in place to prevent frauds of employees trying to ensure that their performance is not representing their true performance, is by having a very strong performance management system.

The Three Core Employee Frauds

If these three things are managed, it is going to be an organisation which can have at least the three most common organisational frauds taken care of.

There are obviously various other frauds which require an organisation to focus on, whether they be related to financials, whether they be related to your book-keeping, accounting or your products.

We are talking about employee frauds, and these are the three primary frauds which happen in India at the employee level and which need to be addressed by any organisation operating in India.

these are the three primary frauds which happen in India at the employee level and which need to be addressed by any organisation operating in India