Feb 15, 2016

Trust as a Fig-Leaf of Poor Compliance and Management

The following guest post is by Oliver May. 

Trust is an important, nurturing presence in the workplace. There is a level of trust inherent in all controls, and NGOs are often dependent on trust, especially in emergency operations, distant field offices, and when working with volunteers. Untrusting workplaces feel austere, and create additional stress among those who work in challenging environments.

But trust can be abused. Research has suggested that non-profits are very trusting environments (link here), and that elevates their vulnerability to fraud and corruption (link here & here). This creates a challenge, as there is little to justify the perception of workers in this sector as trust worthier than others. Career choice is not an indicator of honesty, and neither is honesty absolute – people are complicated, the sum of internal and external factors acting upon and through them.

Thus, there are good reasons to look again at the extent of our cultures of trust – especially for NGOs, non-profits, and charities.

Fraud and corruption hide and masquerade, so if we are too trusting, we never dig deep enough to find out when something dishonest is afoot. Meanwhile, research suggests that the majority of detected occupational fraudsters are usually without prior convictions nor previous dismissals for fraud-related conduct (link here).

Furthermore, when managers describe a ‘culture of trust’ in their organizations, they need to ask themselves – is this really part of an intentional and managed organizational culture, or a phrase being used to cover mismanagement including conflict-aversion and/or complacency?

Trust is important, but fraud and corruption can be enabled when:

  • The organizational culture is not deliberately focused, articulated, monitored and reviewed;
  • Trust is used an excuse for failing to maintain adequate controls and asking questions;
  • Trust becomes a cover to avoid training staff and volunteers to manage resources properly;
  • Trust is allowed to morph into complacency, including the absence of risk management.

The first step to striking the right balance is to recognize that a culture of trust must not be at the expense of vigilance. Ways we can foster trust, without sacrificing our resilience to fraud and corruption, might include:

  • Robust vetting. Prevent the wrong people from getting into the organization – sampling claims in resumes, ensuring that criminal record checks are conducted, and conducting online searches are among a few recommendations.
  • Know when trust is being abused. What do ‘red flags’ look like? Trust does not preclude asking questions, probing anomalies or taking prompt action when they are identified.
  • Have proportionate internal controls…. A culture of trust does not negate the need for controls. It means having just enough to manage the risks.  It also, of course, means having a holistic organizational counter-fraud and corruption framework.
  • …And follow those controls. It is often the failure to follow procedures and systems that corrodes trust in the workplace. Following some, but not others, makes staff feel untrusted, often wondering, ‘why am I being checked on thisbut he isn’t on that?’. And when the routine non-compliance of their colleagues goes without management challenge, staff can be left suspicious – is something dishonest and collusive afoot? When that happens, uneven enforcement leaves staff uneasy and confused, the norms of their workplaces unclear. To feel safe, secure and successful, we all need to know that boundaries apply to all employees without discretion.
  • Articulate the value of policies, procedures, and systems. People often see them as ‘red tape’ – whereas they are often better framed, for example, as teamwork– following them enables colleagues in other teams to do their job, knowing what to expect and when.
  • Develop internal culture and do so intentionally. We can defend against the use of a ‘culture of trust’ as a fig-leaf for poor management by defining the culture we want, and how we intend to measure it. Poor behaviors are then easily compared against this standard.

Remember. organizational culture exists, intended or not.  Taking hold of it and shaping it can make it a really powerful enabler of our missions.

Trust can be a great asset to NGOs, non-profits, and charities – as long as it is within an organizational culture that also actively reduces the risk of fraud and corruption, and consciously strives to maintain the right balance.

This article was adapted from a blog post at SecondMarshmallow.org

Author Bio

Oliver May is a consultant, speaker, and writer on reducing fraud and corruption in the humanitarian and global development sector. He was Oxfam GB’s Head of Counter-Fraud and is a former officer of the UK’s Serious Organized Crime Agency. Oliver’s book, Fighting Fraud and Corruption in the Humanitarian and Global Development Sector, is out in June 2016 and he blogs at SecondMarshmallow.org. Oliver can be contacted at [email protected], and he tweets on fraud, governance and compliance issues at @oliverbmay.

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