Corporate scandals are hugely damaging causing anything from “mere” PR headaches, to irreparable damage that jeopardizes the future of the company and may even result in insolvency.
Irregularities come in many shapes, from the work of an unsupervised lone wolf, to systematic abuse at a department or management level.
While Volkswagen’s emission scandal was the headline news for corporate cover-ups last year, it was by no means the only one.
Here are four other business scandals that also came to light in 2015, along with some advice for protecting your company from them.
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The Biggest Scandals Of 2015
Goldman Sachs
Investment bank Goldman Sachs received a $50 million USD fine in October for failing to properly supervise an employee. The employee had previously worked at the Federal Reserve Bank of New York and had used confidential regulatory information for the benefit of a client.
Toshiba
The Japanese electronics giant was found to have “cooked its books” to inflate seven year earnings by nearly $2 billion USD. The practice was apparently done to achieve demanding profit targets and employees were discouraged from questioning their bosses.
FIFA
Soccer’s international governing body was (finally) accused of endemic corruption. U.S. investigator used RICO charges to accuse FIFA officials of accepting millions of US dollars in bribes for sponsorship contracts, FIFA elections and the World Cup selection process.
NYC Oil & Gas
Nine oil and gas companies in New York City and 44 people were charged in November of corruption and fraud for allegedly stealing and reselling around $34 million USD of heating. Customers were allegedly being delivered with a shortfall of up to 10 percent.
How To Avoid Scandals
It’s safe to say that each and every one of the aforementioned companies and organizations, would have been much better off had the steps and processes leading up to the eventual publicized scandal been detected and acted on before the final outcome. But how can an organization act to promote such a culture?
Incentivize Honesty
Rewarding honesty, rather than merely encouraging it, can be a very effective way to stop a chain of actions happening that will lead to a scandal from the very beginning. Base bonuses and performance reviews not just on tangible results but also on honesty and integrity as well.
Change The Culture
Dishonest corporate cultures can be very difficult to eradicate once established, and even honest employees will be under pressure to conform. A good way to ensure that a dishonest culture never takes root is to encourage and reward disagreement. Ensure that your employees know they should speak up and they’ll likely do so about any worrying developing practices.
Introduce Controls
To help stop fraud and protect your company, remove any possible opportunities to cut corners by introducing rigorous internal auditing and controls. For example, you could require a minimum of two employees to be involved in any major task to reduce the chance of work being falsified.
Monitor Effectively
Finally, one of the best ways to ensure your company is protected from scandals is to keep a close eye on all employees.
Employee monitoring software such as KnowIT allows you to monitor your employee’s attendance, software use, Internet usage and communications.
With the ability to set specific keyword alerts you can immediately be aware when potential irregularities are developing and act to nip them in the bud.
Furthermore, letting all your employees know that they are being monitored is a proven method for increasing the chance they remain honest and aren’t tempted to do anything untoward.
To learn more about KnowIT and the benefits it can bring to your company, click here.