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Editor’s Note: This is Norman Katz’s third post as a regular contributor on Sourcing Innovation. Norman, who has published dozens of articles on the subject, is a supply chain fraud and supply chain risk expert and will be covering these topics in his new column, which is indexed and archived here.
A friend and collaborator, Doug Ross, a corporate integrity consultant among other talents, asked me to write an article on supply chain fraud that he would send to his contact base. He wanted to see what the reaction was to this subject and what nerves would be struck. And oh boy – did we strike a nerve and get a reaction!
In the article I wrote about how an otherwise honest employee could be forced to commit fraud due to organizational pressure when faced with what I describe as a variation on the response (by humans and animals alike) to an adverse situation. When facing danger there is a choice: fight or flight. When an organization pressures an otherwise honest employee to commit fraud or lose their job, the employee has a choice: fraud or flight – commit the fraud (which will contradict their ethics, morals, and values), or suffer from flight (be fired or be forced to quit their job). And when flight is not an option – when losing one’s job is not possible – the only response left is to commit the fraud to save oneself. Not much of a choice, is it?
Doug forwarded me the response from one of his contacts: this person is in mid-to-high level management at a $6B per year corporation. Let’s call him Sam.
Sam fired back at us with both barrels: He found the topic of fraud to be disgusting, and the suggestion in the article I wrote that an otherwise honest employee could be forced to commit fraud by his/her employer was something out of the realm of possibility. The insinuation that such a situation could even exist was repulsive to Sam, let alone that an employee would cave in and commit the fraud.
Quite frankly readers, I had trouble sitting for the next day or two as I had felt that we had been severely spanked. And my name was attached to the article when Doug sent it out! So much for my sterling reputation!
A few days later, Doug forwarded another e-mail from Sam, this one in a completely different tone.
Sam had some time to think, and one of the first things he did was to offer an apology for his prior response. In thinking this through, Sam openly admitted that if he were forced to make a decision between providing for this family – food, shelter, comfort – and committing a fraud that was forced upon him, he would commit the fraud to protect his family’s well-being and lifestyle.
Wow – what a turnaround.
What does this tell us about Sam’s ethics, morals, and values? They are right on track where they should be. Sam is an honest person of integrity who cares deeply for his family. Sam is a provider, a husband, and a father. Sam is a protector of the persons he loves.
So readers, if this scenario had actually played out in Sam’s workplace, who would be responsible for perpetrating the fraud: Sam or his employer? What would you do in a similar situation: would you commit the fraud or leave the company? Does the current economic recession – with record levels of unemployment and few jobs available – alter the choice you would make in an otherwise robust economy?
I look forward to your responses.
Norman Katz, Katzscan