How can HR protect against employee fraud?

HRD talks to Robyn Conza, Country head - Australia and New Zealand at First Advantage, about pre-employment screening and the importance of rescreening to prevent ongoing employee fraud and mitigate risk.

HRD: How significant is the problem of employee fraud?
RC: Employee fraud in Australia is more common than most companies realise and consequences are wider than the obvious financial impact. Studies show fraud in actual dollar terms is costing the Australian economy approximately half a billion a year.

The non-financial impact manifests itself in organisational culture and morale with employees potentially feeling deceived and subsequently losing confidence in the organisation and management.

Pre-employment screening can help reduce the risk of financial and asset misappropriation, as well as further mitigate risk capturing potential misrepresentation of an employee’s experience and qualifications.

As one of the largest screening providers in the world, First Advantage helps customer stay on top of employee fraud in the workplace. Our robust combination of searches and services provide the insights to help reduce risk while dramatically improving the quality of talent. For these reasons, we have become a trusted partner to over 35,000 organisations worldwide.

HRD: What are the best ways of protecting against employee fraud?
RC: An efficient and thorough employment screening process that includes leading-edge technology can, above all else, help reduce overall workplace risk.

Identifying risk early, prior to hiring an employee, helps better protect the broader organisation from risk related to financial security, damage to corporate brand or reputation, legal non-compliance and also physical security.

It’s also critical organisations have strong internal controls. By developing documented screening policies, creating job-specific screening packages and leveraging a results adjudication matrix, organisations can create smart strategies for aligning background checks against risk tolerance to help lower employee-related risk and foster a more secure, diverse workplace. First Advantage partners with organisations to develop background screening programs to prevent risks specific to their risk management framework.

HRD: Why is rescreening particularly important?
RC: Whilst employees are an organisation’s greatest asset, they also represent a risk. Research shows over 40% of organisation fraud is committed between 1 – 5 years. The recent KPMG Fraud Barometer report found 26% of perpetrators are employees and these statistics only relate to reported fraud - so in reality the number is much higher. 

Circumstances can change overtime which may lead your employees to actions which are not legal. Rescreening helps businesses keep up with changes to life cycles of employees.

A consistent approach and process to rescreening should be adopted so employees do not mistrust the organisation’s intentions, but rather appreciate it as a measure to protect staff as well as the business.

HRD: Is there any other advice you would give to organisations to stay on top of employee fraud?
RC: Reducing employee fraud is the responsibility of everyone in an organisation, but particularly those in leadership roles.

To support the long-term success of an organisation with the most competent workforce, HR must know what information is and is not permissible to gather and use in the employment screening and hiring process.

It’s critical to uncover as much as possible about the background, skills and qualifications of job candidates in the hiring process, while carefully balancing each candidate’s rights to work, privacy and equality.

Implementing clear policies and internal controls coupled with promoting a transparent environment with clear structure can promote a positive culture reducing the likelihood of fraudulent behaviour.