After a fraud or scandal occurs, stakeholders ranging from employees, boards, investors, to regulators will question how it could have happened. The causes and contributing factors can often trace back to problems with the organization’s culture. A strong ethical culture is a defense against all the conditions identified in the fraud triangle—pressure, opportunity, and rationalization. A robust and positive culture centered on integrity and ethics is key to deterring and detecting fraud.
Companies that were able to quickly shift to a remote environment at the peak of the pandemic are now seeking ways to bring workers back to the office full time or are puzzling out the best approaches for setting and maintaining guidelines for remote, hybrid, and in-person work. Amid such significant changes in the work environment, companies and their employees face the risk of losing touch with the culture that once defined the organization.
Culture may be a moving target, however, as companies navigate changing work environments and different employee expectations, many organizations are radically retooling the ways they do business, leaving many employees, including managers, stressed and disconnected. In addition to looking for flexibility with respect to where they work, employees are seeking greater empathy, more autonomy, and control over other areas of their work life.
Managing changing employee expectations and work arrangements continue to be a critical component of managing corporate culture for many organizations. Long periods of time working from home and the entry of a new generation into the workforce have changed employee attitudes. Attempts to impose return-to-office mandates have been met with mixed success including pushback from some employees and tension in the workplace as a whole. In addition to the potential increase in turnover and decrease in job satisfaction, there may be other unintended consequences arising from the growing trend of return-to-office mandates that have yet to be recognized.
Remaining flexible is clearly an important success factor in tackling employee expectations and demographic differences. Many organizations will have to address the attitudes of both workers who do not have the option of remote or hybrid work because of the nature of their jobs, and younger employees who began their career working remotely. Recognizing these complexities and being aware of the range of employee attitudes will be key to rebuilding a strong and ethical corporate culture.
Several human resources processes (e.g., recruiting and hiring, onboarding and training, performance management, offboarding) provide opportunities for organizations to introduce their culture in a remote, hybrid, and/or in-person work environment to new employees, and to remind existing ones of its significance and relevance. Companies should also pay attention to the unique impact that new working models may have on their governance, risk, and control processes to keep a pulse on organization-wide culture shifts.
In a strong ethical culture, pressure to commit fraud can be offset by sound risk management practices and appropriate incentives. However, in a time of constant disruption and changing work environments, management will have to step back regularly in order to identify new and emerging risks and how to most effectively monitor and address those risks. Organizations should consider a variety of tools or techniques that can enhance culture and deter fraud and misconduct in a changing work environment, including but not limited to:
Controls, processes, and policies
The fraud triangle
Employee surveys and culture metrics
Use of technology
Teamwork
Tone at the top
Whistleblower and ethics hotlines
Transformation and change management
There is not a one-size-fits-all approach, nor a silver bullet solution, for establishing and maintaining a strong ethical culture, whether in a remote, hybrid, or a more traditional in-person work environment. However, through using the various tools and techniques mentioned herein, companies can create the foundation necessary to foster, reinforce, and enhance a strong ethical culture in a changing work environment.
