It’s hard to ignore the headlines and updates as the News of the World phone-hacking scandal story unfolds and Rupert Murdoch’s company unravels. It’s as juicy as it gets—you have tycoons, politicians and their aides, members of the royal family, a kidnapped and murdered teenager, 9/11 victims, and others as the subjects and victims of fraud, theft, and violence.
As the head of parent company and media empire News Corp, Rupert Murdoch has been called on to testify before Parliament about his knowledge of hacking into voicemails by reporters and editors, a practice which apparently goes back years. While prosecutors were looking to assign blame or expecting Murdoch to assume full responsibility for the actions of his employees – he didn’t.
According to the Los Angeles Times, "The News of the World is less than 1% of the company," Murdoch said. "I employ 53,000 people around the world … and I'm spread watching and appointing people whom I trust to run those divisions."
Do you think that Murdoch should be held accountable? Or is he too far removed to be held complicit for the hacking and resulting actions that took place?
All companies and industries carry some measure of risks either to themselves, their customers, their suppliers, or the environment in which they operate. For example, pharmaceutical companies must follow explicit clinical testing regulations to get their drugs approved; banks and financial institutions must secure their customers’ data from both employees and outsiders; waste management companies must ensure against disposing of harmful materials into the environment.
An ethical, above-the-board operation can still be brought down by individuals who are careless or who intentionally try to profit or gain from their work.
Think about your company: What are the vulnerabilities in your process or operations? If this or a similar scandal took place where you work, would you expect your CEO to be liable for what happens five levels below? And what are the risks and liabilities in your company for fraud, theft, or violence?
Keep theft from derailing your business by following these five prevention steps and best practices:
Step 1. Set the example.
Start by creating a work environment that defines and reinforces anti-theft behavior. Owners and senior managers lead the way by clearly communicating to employees, customers, and vendors that the company is committed to honesty and ethically sound decisions. If leaders cut corners or shade the truth, there is no reason to believe those who follow will behave differently.
Step 2. Write clear policies.
Establish clear, written policies for all procedures and processes. Include an Ethics Policy that specifies how the company defines theft and the actions management will take when it is discovered. Make sure all employees have a copy of the policies so that no one can claim ignorance later. Then enforce the policies fairly and consistently.
Step 3. Check backgrounds.
Make a background check and pre-hire assessment a routine part of the hiring process for all employees. Check vendors’ dealings with other companies before approving them. Require references and check them.
Step 4. Set up a system of internal controls.
Segregate duties such as making deposits and reconciling statements, approving and paying invoices, authorizing and signing checks, keeping payroll records and writing payroll checks, and receiving payments and posting them to accounts receivable. Monitor controls and their effectiveness, and have an outside CPA review them annually. Make unannounced spot checks periodically.
Step 5. Increase the perception of detection.
The single most effective way to prevent theft is to make clear that it will not go undetected. Cross-train employees to cover vacations and illness, and make all the internal controls visible.
Download The Leader’s Guide to Managing Workplace Fraud, Theft and Violence, which examines effective solutions and tools for identifying and preventing workplace fraud, theft, and violence.
This isn’t the first corporate scandal and certainly won’t be the last. Take a hard look at what could go wrong in your company and take action now, not after you make the wrong kind of headlines.
Murdoch rejects blame in phone-hacking scandal
By Henry Chu, Los Angeles Times; July 20, 2011
"The News of the World is less than 1% of the company," Murdoch said. "I employ 53,000 people around the world … and I'm spread watching and appointing people whom I trust to run those divisions."
Britain's David Cameron says he regrets hiring tabloid editor
By Henry Chu, Los Angeles Times; July 20, 2011, 9:33 a.m.
“British Prime Minister David Cameron tells Parliament he would not have hired former News of the World editor Andy Coulson as a top aide if he knew then the extent of the paper's phone hacking.”
Image Credit: http://www.flickr.com/photos/worldeconomicforum/374716426