Internal Controls

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Fairness Doesn’t Matter

Another update from the Jungle….

Alyssa is a lawyer in the corporate legal department of her employer. She was hired because of the scope of her experience. Or so she was told.  It doesn’t take Alyssa too long to figure out that her prior experience is irrelevant, even a handicap.

Alyssa is1 assigned to work with the HR department because the other lawyers don’t want to. She inherits a file cabinet full of pending EEOC discrimination claims.  Another giant file cabinet contains investigation notes of employee theft cases. Apparently anything not too big or nailed down tight is carried off by employees.  

Alyssa sees immediately that the employee problems arise from the attitude of the 4management team. Most of the senior managers are related to the owner and take their cue from him. He brags of paying rock bottom wages while simultaneously complaining that he’s stuck with stupid employees who lack initiative.

Alyssa’s prior experience with corporate risk programs leads her to believe that the company needs more insurance to cover employee problems. She recommends an increase in their employment practices liability insurance coverage.  That’s when Alyssa’s own employment problems begin.

3Alyssa receives an email from Tess, the company owner’s daughter and newest senior executive.  Tess is a wicked witch who bullies subordinates with obscenity-laced tirades and hates anyone she suspects is more knowledgeable than her. Now Tess insists that she will make the final call on the new insurance limits.

Alyssa gives Tess a summary of the current insurance coverage, the recommended new limits, and the renewal deadline. Tess repeatedly asks for new quotes while ignoring the insurance broker’s and Alyssa’s reminders of the deadline for binding new coverage. Hours before the old coverage 6expires, Tess finally agrees to the new coverage limits.

The next day, Tess accuses Alyssa of endangering the company’s insurance program by deliberately delaying information from the insurance broker.  When Alyssa points out that the insurance broker copied both of them on all emails, Tess launches into her usual obscenity-laden meltdown.

What should Alyssa do next?

  1. She can continue arguing with Tess that the accusations are unfair and unjust but will never win the argument.
  2. She can walk away from Tess and immediately make a complaint to the HR department about the bullying incident.   
  3. She can accept that she was never the right fit for the company and move on to a new employer.    

In the actual situation, the accused employee used her employment law knowledge to negotiate a severance package and moved on to a happier workplace.   

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

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Outside Employment

unnamedKelly is glad to be back at work after a couple of weeks of family togetherness at the holidays. A few more days of vacation and she’d be ready to disown her parents and her in-laws, write the kids out of the will and talk to a divorce lawyer about her husband’s fate. It’s good to be back in the office where her job as HR Director suddenly seems simple.

Of course, that happy mood wears off before her first cup of coffee is finished. She’s still sorting through her email in-box when the company president barges into her office. He’s called a meeting to discuss a problem employee.

Kelly refills her coffee mug, sighs, and trudges to the president’s corner office to join the chief information officer and the CFO. The CIO explains that a misdirected phone call to her key lieutenant uncovered proof that Dan is running a side business. Dan is an IT department employee.

The misdirected phone call is from an individual who says he outsourced his company’s IT department to Dan. A quick investigation reveals that Dan has a personal IT business complete with a website advertising the same services he does for his employer. Dan has helpfully listed his company-issued cell phone number as the contact number for his side business.

The company president wants to fire Dan immediately, preferably by firing squad in the parking lot. The CIO and CFO also want to fire Dan but are worried about delicate negotiations on an IT contract. Dan has a small, but critical part to play in those negotiations. If Dan is fired he might take revenge by trying to screw up those negotiations. The management team looks at Kelly for her recommendation.

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What’s best for the team?

What should Kelly recommend to the management team?

  1. She can agree with the company president that Dan should be fired immediately, but without the firing squad since that would create a mess in the parking lot, not to mention violating company employment policies.
  2. She can ask the CIO if there is a replacement for Dan so that he can be placed on administrative leave pending the outcome of the negotiations.
  3. She can suggest that they proceed as usual, keeping the matter confidential until after the IT contract negotiations conclude and then fire Dan.

In the actual situation, the company decided to go with the third option because there was no replacement option. Immediately after the IT contract negotiations ended, the employee was fired with a note that he would never be eligible for rehire.

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

Join the HR Compliance Jungle today. Click here!

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Visit us: http://www.complianceriskadvisor.com/

 

 

School Zones Made Me Late

Another update from the Jungle….
image001Jane is the HR manager for a company with about 200 employees. The company runs a lean operation which means that Jane is the sole HR person and handles pretty much every situation that arises. Jane likes the variety of issues that she faces because it keeps everything fresh and interesting.

A major problem for the company is time and attendance. The owner of the company is obsessive and compulsive about details and it drives him nuts to see a few employees chronically showing up late. He told Jane to fix the problem.

Jane reviewed the time and attendance policy which clearly states that chronic tardiness may subject an employee to progressive disciplinary action. The policy is included in the employee handbook. Jane checks the personnel files for each laggard employee and finds that each of them has signed the acknowledgement form. That means that each employee received a copy of the employee handbook and promptly tossed it aside without actually reading it.
image004This week, Jane began meeting individually with each employee who is chronically late. Jane tries not to yawn as she hears the usual excuses. One employee says she was stuck in traffic due to an accident. Another says his dog got out of the fenced-in backyard and he had to find the mutt and lock him in the garage before leaving for work.

Jane’s favorite excuse of the week is the employee who says she was late due to the school zones. The employee recently moved so that her children could attend a more highly rated school. This means the employee must now travel through three more school zones on her route to work. That caused her to be late.

What should Jane do next?

  1. She can explain to each employee that the excuse du jour doesn’t make up for chronic lateness. She can then move to the next step in progressive discipline.
  2. She can encourage each employee to make a greater effort to arrive on time and let them off with a verbal warning.
  3. She can ask herself why she never thought up so many creative reasons for being late to work.

Time and attendance issues are a perennial problem. Perhaps it’s time to think about the underlying reasons for tardiness. Employees who enjoy their work tend to show up on time.

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

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I’m In Over My Head.

Another update from the Jungle…
image017Cindy is the HR director for her company because she is a good listener and she can handle obnoxious people. She got the job because the owner hates conflict (and he’s one of the obnoxious people, although no one likes to mention this). Cindy listens patiently to her distressed co-workers, dispenses Kleenex and aspirin as needed, and generally puts an optimistic spin on the worst calamities.

The company is a manufacturing facility that is still fairly low tech. Most of the employees are God-fearing, gun-toting, self-described “rednecks”. They are good people but the stress of living paycheck to paycheck means there are often conflicts. As the company has grown, employee conflicts have multiplied.

Just this morning, Cindy rushed to the women’s bathroom to break up a fight between two employees. The women were fighting over the shift mechanic who has been trysting with both of them. Cindy arrived in time to see one of the women flashing a pocket knife at the other woman. The employee who pulled a knife has to go immediately. Cindy and the shift supervisor escort her off the premises. The other employee must be suspended for fighting at work.

Cindy feels overwhelmed. She has no formal training for her HR duties and she worries that she may violate employment laws due to lack of training.

What are Cindy’s options?

  1. She can continue to worry about her lack of HR training and hope for the best. After all, she’s good at putting a positive spin on dire circumstances.
  2. She can ask the owner to reimburse her costs to take HR training classes so that she has the appropriate certifications to do her job. The training will be beneficial in the long run but have no effect on her immediate concerns.
  3. She can ask the owner to hire an HR consultant to review their existing policies and practices to identify areas that need to be improved to avoid violating the law. This will fix the short term concerns she has.

The above scenario is a composite of actual situations I faced while working at several former employers. If your company is struggling with similar issues, Corporate Compliance Risk Advisor can help. Corporate Compliance Risk Advisor can create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

Join the HR Compliance Jungle today. Click here!

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Sex & the Business Woman.

Another update from the HR jungle….

Julie is a woman of a certain age. She steadily climbed the corporate ladder until she reached the C suite. She likes her job but it’s all gone a bit flat lately since she attained the goal she set years ago. She feels entitled to reward herself for all the hard work.

image001

A few months ago, Julie met Javier at a business networking event. He’s a young man with gleaming teeth, a good body and he laughs at all her jokes. She tells her husband that she has to work late and then skips off to meet Javier.

Julie pays for their dates since her income is considerably higher than his. But sex on the side costs a lot of money, so Julie resorts to padding her business expense account and sometimes uses her company credit card for personal expenses.

Now Julie has been served with divorce papers by her angry and vengeful soon-to-be ex-husband. At the same time, Julie is trying to convince her employer to allow her to reimburse the company rather than face termination for cause with a possible criminal charge for theft. Worst of all: Javier won’t return her phone calls.

What could the company have done to avoid this employee theft?

  1. The company could change how it reimburses expenses of senior executives, requiring more documentation or oversight.
  2. The company could set tighter limits on the use of company credit cards, such as a maximum dollar limit per day.
  3. The company could do more random internal audits of company expenses to spot patterns of fraud earlier.

Julie resorted to employee theft to cover the cost of her love life. She engaged in the fifth motivation for employee dishonesty which is to pay for a boy toy or mistress.

All employee theft comes down to one of the following five motivations: (1) greed, (2) revenge, (3) gambling habit, (4) drug or alcohol habit and (5) having a boy toy or mistress. If your company is struggling with this issue, Corporate Compliance Risk Advisor can help you create internal controls and HR policies that mitigate your risk.

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In Lieu of a Pay Raise, I’ll Take What I Want.

Another update from the HR jungle…. 
image025Howard works for a small manufacturer that makes steel-toed work boots and fancy stitch cowboy boots. He’s been with the company about six years and worked his way up to the lowest rung of management. That’s where his career stalled.

Howard is convinced that his advancement is stalled because he’s not family. The husband and wife owners use the company to ensure that assorted children and relatives will never be a burden on the unemployment insurance fund for the state. Howard knows this because over the years he’s trained most of the family idiots only to see them get pay raises and promotions ahead of him.

Howard threatened to quit a couple of times, but the owners begged him to stay and made promises that they haven’t kept. So Howard has decided to get even. A couple of times a week he helps himself to some of the leather which he uses in his side business making customized knife and gun holsters. The supply closet has helped him set up his home office and he sometimes uses the office postage machine to cover his mailing expenses.

Lately the owners have complained about rising costs but Howard’s not really worried about being caught. He knows he’s not the only one raiding company property. Besides, the owners treat the business like their personal piggy bank.

What could the owners have done to avoid this employee theft?

  1. They could create an inventory of company property and periodically update the inventory through audits.
  2. The owners could initiate internal controls such as requiring authorizations to take leather from the store room or supplies from the supply room.
  3. They could reconsider some of their employment practices which are causing employee dissatisfaction.

These owners are learning a hard lesson about employee relations. The second most common motivation for employee theft is revenge. Employees who believe their contributions are ignored or undervalued can wreak havoc before they finally leave for the last time.

Need help with HR issues? Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff when the policies are implemented.

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I Was Going to Pay It Back….Honest!

Another update from the HR jungle….

image021Sam leads the IT department for his company and is the head of their internal security team.  As part of his duties, Sam has administrative rights to all electronic and computer-based systems at the company.  He ensures that new employees are issued security clearances to use the company computers. He sets the dollar limits on company-provided credit cards as authorized by the owners of the company.

But Sam has a problem. He likes to gamble. It started years ago quite innocently when he participated in a sports betting pool with co-workers at a former employer’s office. Then he started spending his weekends at casinos. Sam began using his company credit card to get cash advances at the ATM in the casino.

At first, he paid off the credit card balance each month and no one discovered what he was doing. When he couldn’t pay the credit card balance, he raised the credit limit on the card using his administrative rights as the head of internal security.

Sam’s basically a decent guy and the stress of his situation has finally gotten to him. This morning he walked into the owner’s office and confessed all. As he sat sobbing and promising to reimburse the company, the owner stared at him, stupefied with shock.

What could the owner have done to avoid this employee theft?

  1. The owner could have regularly reviewed all company expenses, including credit card charges, to ensure they were used only for valid company business.
  2. The owner could have required regular reports from Sam’s department showing the authorized limits on all company credit cards.
  3. The owner could have hired an outside auditor to do an annual audit of the company’s financial records in the hopes that the fraud would have been uncovered.

Employee theft arises from five basic motivations, including a gambling habit. Another closely related motivation is a drug or alcohol habit. Employees experiencing any of these addictions may decide to steal an employer’s property in order to feed their habit.

Need help with HR issues? Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff when the policies are implemented.

Join the HR Compliance Jungle today. Click here!

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Visit us: http://www.complianceriskadvisor.com/