• eLoomina

When Freedom to Operate Goes Bad

One of the main factors contributing to employee misbehavior is the opportunity to engage in it. Unwittingly and out of the best intentions, some organizations might be contributing to it.

Freedom to Operate

Many organizations pride themselves on granting a high degree of freedom to operate to employees, enabling them to cultivate decision-making and other capabilities. For many employees that freedom will promote loyalty and positive conduct. But for others, there is a significant downside. That very freedom might actually contribute to intentional acts that violate core organizational norms that define proper work conduct. These improper acts can be small, but they can also end up costing the company millions.

By definition, autonomy grants to employees a great deal of latitude in performing tasks, scheduling, and evaluation of output. But when employees consider their position as autonomous, their perception may facilitate misbehaviors such ‘cutting corners, avoiding corporate policies, looking for opportunities for personal gain which if not prevented in time may lead to fraud and severe types of misconduct.

Unintended Consequences

In fact, Organizational Misbehavior (OMB) might actually be an unanticipated consequence of management’s good intentions. Certainly, autonomy is considered a desirable job characteristic, but only if and when an employee is interested in and capable of handling it.

Contrary to what many believe, based on our research, we believe that job autonomy and OMB are positively correlated: The higher the degree of job autonomy, the stronger the temptation to misbehave. Not everybody can handle that.

Freedom to Commit Crimes

Here are two cases of very serious OMB that are the result of too much job autonomy:

Case 1

A woman who had been convicted on charges relating to embezzlement from her employer was sentenced to two years and eight months in a California women’s prison. She was accused of falsifying corporate books and evading state income taxes, as she failed to report the embezzled income on her tax returns.

Working as a long-term bookkeeper for a Stockton, CA company and with a high degree of autonomy in her job, the woman was arrested in June, 2017 for the crime of embezzling nearly $500,000 over nine years. She pilfered the money from the company in a number of calculated ways:

1. She set up an electronic debit to make her monthly home mortgage payment

2. She forged checks for personal expenses

3. She created electronic debits and drafts that covered her personal spending

In prosecuting the case, the district attorney said that it should serve as a reminder to companies to implement strong accounting controls that can detect fraud, embezzlement, and misuse of funds.

Case 2

A former California credit union CEO (who has more day-to-day job autonomy than a CEO?) committed one of the industry’s largest embezzlements in recent years. Upon being caught and charged with defrauding his own credit union of more than $40 million, the CEO accepted a plea bargain with federal prosecutors whereby he admitted to his crimes and agreed to forfeit ill-gotten assets and properties in California and Nevada.

In both cases, the perpetrators enjoyed a high degree of freedom to operate in their positions only to abuse it for personal gain.

Identifying When Autonomy Leads to OMB

With decades of research and subject matter expertise in employee-misbehavior analysis and the factors that contribute to it (autonomy as well as many others), eLoomina has developed sophisticated algorithms backed by advanced AI technologies to put a highly effective OMB Model at the service of organizations. The goal is to identify and mitigate fraud and other types of misbehavior before they can cause harm.

eLoomina’s unique solution automatically discovers often-overlooked signs of improper behavior while in its infancy and raises red flags early enough to enable organizations to significantly to catch it. The solution automatically looks at company data from HR, Finance, IT, and Operations, and maps it to eLoomina’s proven library of indicators derived from the highly researched OMB Model.

The integration of the Model with eLoomina’s extensive data analysis and AI-based software brings tremendous value to organizations. As we deploy the eLoomina solution at more organizations, the AI grows in capability and makes us front-runners in the fight against the growing and costly plague of Organizational Misbehavior.

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