• How would you feel if someone said the same thing about you? Good workplace relationships rely on the golden rule.
• Why are you telling this? If the reason is to make yourself look better, or to build a reputation as a raconteur, be aware that it might backfire on you and have the opposite result.
MEMO TO MANAGEMENT
Gossip is virtually impossible to control. It’s human nature. Attempting to crush every little bit of chatter is a losing proposition, and will likely only result in everyone being careful that no gossip reaches your ears. (Admit it, you probably enjoy an amusing anecdote as much as the next person.) Focus on the talk that is potentially damaging to the business, and make it clear to your employees that that kind of talk is not acceptable.
CHAPTER 5
Crime Doesn’t Pay Biweekly
It continues to amaze me how many employees attempt to supplement their paychecks through criminal activity, most commonly by stealing from the company. And it never fails to amaze them how easily they get caught.
Just in case no one has said this to you explicitly: No matter how much time you spend at the office, or how much your employer makes you feel at home, company property (and money) belong to the company, not you. If you are not happy with your compensation for your job, you don’t get to solve that by helping yourself to anything on the company dime.
CASE FILE
Thief-in-Chief
Recently, we audited our accounts and found a problem. A seventy-thousand-dollar problem. Upon further investigation, we discovered that the only person who had had access to those funds—and who had attempted during the investigation to explain it away as a calculation error (because apparently he thought no one else could do arithmetic)—was the chief financial officer, Lou.
In fact, Lou had been funneling funds into personal expenditures to support a luxury lifestyle that included the kind of very expensive bottles of wine that you read about in wine specialist magazines, enough jewelry from Tiffany’s to have a stockpile of those signature blue boxes, and elegant designer clothing. Naturally, people knew him as well-turned out, as one would expect of a senior executive, but we didn’t realize how well until we saw the numbers.
You won’t be surprised—if you’ve read the previous chapters—that we were able to access his browsing history on his office computer. You won’t be surprised—if you’ve read about stupid crooks before—that our thief-in-chief was making these luxury purchases on the company credit card from his desk in his office during business hours.
The real kicker? He’d started stealing from the company three weeks after he started the job. Pretty much as soon as he got settled in, he started helping himself.
I summoned the thief-in-chief into my office to show him the evidence and give him his walking papers. I also demanded that he pay back the seventy grand immediately.
Lou claimed he didn’t have that kind of money—it was all spent. Now if you work in a company of any significant size, you know that chief financial officers aren’t earning minimum wage. It’s bad enough that he violated the trust placed in him as manager of all the company finances, but he also felt that his already generous salary required supplementing out of company coffers. I told Lou that he could deliver the money to me by Monday morning, or he would find himself wearing a different kind of silver bracelets.
Miraculously, Lou was able to find the money after all. When I walked into the building Monday morning, he was already there waiting, cashier’s check for seventy thousand dollars in hand.
MEMO TO MANAGEMENT
In a situation like this, you don’t have to offer the employee the opportunity to make restitution in order to keep out of jail, but with such a high-profile employee, it may make sense to do so. The bad press that comes of a senior financial manager tapping the till may reflect poorly on the company’s reputation.
A high-level thief may, however, be counting on that. He’s figuring he’ll get away with a very quiet slap on the wrists and a corporate memo about him departing to “pursue other opportunities.” Don’t be afraid to involve the authorities if the thief doesn’t make things right. There may be a flurry of bad press, but it can be managed by focusing on the fact that your systems were robust enough to catch him, and you are taking action to be sure that the company and its stockholders are compensated for the loss. That will blow over faster than if the crook gets away with it, goes somewhere else and does the same thing, and gets caught and it comes out that he scammed your company as well—right out from under your nose.
CASE FILE
Junk Mail
Not all employee thefts are in such high amounts. Sometimes, it’s just a little bit here, a little bit there . . . but eventually it adds up enough for the employee to be caught.
Liz was one such employee. She was an old-timer—in fact, the second employee the company had hired at its founding. As the company had grown, so had her responsibilities, until her title was operations manager.
Employees and colleagues appreciated that Liz, despite advancing, was still hands-on. She wasn’t above helping open mail from customers.
What we found out, and confirmed through video surveillance, was that Liz wasn’t just pitching in to be a team player. Some of the money coming into the company from customers was disappearing into Liz’s pockets.
Needless to say, she was fired.
Motive, Means, and Opportunity
What makes a person do something like this? In many cases, it’s simply easy access to money and the thought that it will not be missed. It usually starts as “just this once.” That was the case with Liz—we later learned that she had fallen prey to a serious drug addiction. She took a little money at first when she needed a fix “just this once.” But it was easy because of her position, and she wasn’t caught because it was (initially) a small amount of money--and the monkey was still on her back. Just as the drugs became a habit, the stealing to fund the drugs did, too.
We were never able to find out for sure exactly how long it was going on or how much she stole over the years.
CASE FILE
Friends in High Places
Chief financial officer is a position with a high level of responsibility. With great responsibility comes great temptation, as we’ve seen. Sometimes, the temptation isn’t just to help yourself; it’s to help out your friends.
Another financial executive I worked with had control over salaries. The company was riding out difficult financial times (as so many companies have in recent years), and one of the measures in place was a salary freeze. Most employees were understanding of the situation—better to have a job but no raise than to have no job. The best employees know that when the situation improves, they will be rewarded for their hard work to help keep the ship afloat. And if that doesn’t happen, once the economic landscape improves, a good professional reputation is a highly marketable commodity.
This financial executive held the line on salaries for everyone. Well, almost everyone. Throughout the freeze, a couple select people, his trusted deputies, found their paychecks a little fatter as the executive unilaterally granted them raises. He was rewarding their personal loyalty to him, and he was confident that they wouldn’t tell anyone. He was also assuming no one would notice the salary bumps amid the changes in the overall company salary budget that happen when people leave, temporary help is hired or let go, and so forth.
What he didn’t count on was the fact that other people do look at those long, dry, detailed reports that senior managers are required to produce and share with their fellow executives. He assumed his colleagues would focus on the bottom line and leave the minutiae to him.
He assumed wrong.
Like many financial executives, this man was a CPA (certified public accountant), and as a CPA he should have detailed professional knowledge and should observe certain professional ethics and fiduciary responsibilities. He failed to meet the obligations not just of his position but of his profession and lost his job over i
t.
TIPS
Financial Ethics Test
Whatever your level of responsibility, if you are tempted to do something even a little out of the ordinary, here’s a quick set of questions to ask yourself:
• Is it my money or the company’s?
• Is there a company policy that covers this? If so, is this in keeping with that policy?
• If someone I hated did this, would I want to rat him or her out?
The last one is often the most helpful. If you’d consider it illicit if that annoying jerk down the hall did it, you shouldn’t do it, either.
CASE FILE
Only the Good Fly Coach
It’s not just management who travels for work: sales reps, staff who set up or host exhibits at conventions or meetings, personnel sent to other locations for conferences or training, all may find themselves traveling on the company account, hanging on to receipts and filling out expense reports. All but the smallest companies have clear policies on what may or may not be spent during company travel. And virtually every company deals with employees trying to evade the rules.
We had one fellow, a spiritual cousin of luxury-loving Lou whom I will call Todd, who believed business travel was a hardship, and to mitigate the pain and suffering of being away from home, he should have deluxe accommodation on the road. He turned in an expense report that included first-class air travel (at three times the coach fare) and a hotel that cost $850 a night. (The intern who prepared Todd’s expense reports for him—obviously, such a delicate flower could not be expected to bear the hardship of doing his own expense report—commented that what the hotel cost for a night was more than she paid for a month’s rent.) Yes, there are cities in the world where hotels, even chain hotels, are quite expensive, and we don’t expect businesspeople to stay in truck stop motels, but $850 was extremely high for the cities Todd traveled to. He must have had to work hard to find somewhere that pricey. I hope the amenities were worth it, because we asked him to reimburse us for the difference between the standard rate our other traveling employees were paying and the luxury rate he charged to his expense report.
By the way, when Todd was on vacation on his own dime, he paid for the whole trip with frequent flyer miles and guest points from his business travel. That dime of his own? He didn’t spend it.
Another manager used the company credit card to buy a pair of airplane tickets to Hawaii. He and his wife were celebrating their anniversary. When it was called to his attention that the company had no business in Hawaii, and his wife was not an employee, he claimed he’d “mistakenly” used the company card to make the purchase and “forgotten” to rectify the mistake and reimburse the company. Funny thing; we discovered the error and brought it to his attention a year later—when he attempted to buy tickets for another trip, this time to the Bahamas.
Another employee followed all the rules for her business trip: cheapest flight, company-approved hotel, no fancy restaurant meals. Unfortunately, she fell asleep by the pool and missed the client meeting she had been sent for. She wasn’t with that company much longer.
And then there was the salesman who ordered X-rated pay-per-view movies and charged them on his hotel bill, then stopped by the drugstore for condoms and spent the evening with a fellow sales rep at a strip club—and put it all, neatly documented with receipts, on his expense report as business expenditures. That might have flown if he were in the adult entertainment industry, but not so much in any other business.
TIPS
Travel Tips
Most companies have policies, as I said, about business travel. These are the most common rules. Your boss or company may be more liberal in certain respects, but err on the side of caution, and you will be valued.
• Flights must be coach for all but the highest-ranking employees, at the cheapest available nonstop fare. Many large companies have an arrangement with a travel agency with whom flights must be booked in order to assure policies are observed. You don’t use the company travel agent, you don’t get reimbursed.
• Travel is only reimbursed for the time you’re there for business. If you decide to take a couple extra days as vacation (with your boss’s prior approval) and do a little sightseeing after the business obligations are met, you do that at your own expense. In the old days, flights were much cheaper if you stayed over a Saturday, so some companies would spring for an extra night or two in a hotel if it was less than what they saved by the employee staying the weekend; these days, Saturday-stay restrictions are all but nonexistent and so are those kinds of negotiations.
• The IRS has a per-diem—daily amount—that one can deduct for meals while traveling for business, which differs based on city. Your company probably has similar limits. Unless you are entertaining business associates (and even then, there are probably guidelines), be modest in your meal expenses. Breakfast, lunch, and dinner are usually fair, but don’t be ordering the lobster every night, and don’t think the nightcap at a club will be covered.
• It is not your employer’s job to buy you clothes, toiletries, and so on. We assume you will pack your own. If you forgot to pack pajamas or underwear and have to run out to buy them, that’s at your personal expense. Even if the airline loses your luggage and you have to buy something to get through your meeting, expect to work that out with the airline.
• Incidental office supplies or services (using the hotel printer or fax, for example) that are essential to the business you’re there to conduct are generally acceptable expenses. Don’t go crazy, though; buy only what you can show was essential to the business you’re there to conduct.
• Same goes if you have to pay for internet. Some hotels include wireless internet in the room price; others charge for it, and some charge by the hour or the amount of data. In those cases, you can expect to be reimbursed for internet access that is essential to your work, but if you rack up the hours/megabytes on Facebook updates or watching baby sloths on YouTube. . . . I know the baby sloths are adorable and a great stress reducer, but they’re not a legitimate business expense.
• Any other expenses: Ask yourself if they are essential to the business at hand and are things the company would normally pay for if the business were conducted in the office. If the answer is yes in both cases, but the amount is high, you should probably still clear it with management. Your boss is only a phone call or email away, and if you have documented approval, you won’t run into trouble later when you submit your expense report for reimbursement.
• Bottom line: Your business travel expenses should cost less money than the business you’re doing makes the company. Otherwise, the company isn’t going to be afloat for very long.
MEMO TO MANAGEMENT
A clear, consistent policy regarding business travel expenses—any business expenses, for that matter—is essential. Small companies often feel they don’t need to be so formal, but if you decide what is reimbursable case by case, you run the risk of abuse or of employees feeling uncertain and uncomfortable about what is appropriate to spend and what is not. Furthermore, if different managers make different decisions, it’s hard to maintain a policy that is evenhanded and fiscally responsible. As noted above, a company that doesn’t manage its expenses relative to income generated is going to be in trouble.
CASE FILE
All Work, All the Time
Bella was devoted to her job, no question. She worked long hours and never missed a day and seldom took vacation. We value employees like Bella, but even for someone like her, there are limits to what is an appropriate business expense.
Whenever Bella worked late, she called a car service to take her home. That would be fine if it was a once-in-a-while thing related to a particular deadline or project, but Bella did it so often she was basically commuting via car service. The vice president she reported to asked her to put a stop to that, and she did.
Instead, every time the weather looked even a little dicey (“it’s going to snow,” “there’s a forecast of thund
erstorms”), Bella booked a room in the hotel closest to the office and charged it to the company. “I was afraid I wouldn’t be able to get into the office in the morning,” she explained to her boss.
She also ordered lunch on the company account every day and dinners frequently. “I didn’t want to lose any work time, so I ordered in,” she said in her defense. That’s great, the VP told her, but we pay employees a salary so they can pay for their own meals. No one was ordering her to eat in the office, so if she chose to do that, it would be at her own expense.
“Don’t you value my devotion?” Bella asked.
We do, her boss told her, but we show that with salary. Expensing the things that are ordinary living expenses—eating, commuting, having a place to sleep—amounts to supplementing salary without approval. And a good employee would never do that.
Good employee that she was, Bella saw it his way. And she sometimes went home at a decent hour, which was probably healthy for her, too.
CASE FILE
Wiped Out
Lots of employees seem to think that office supplies are free for their personal use. Pens, paperclips, Post-Its, note pads all go home with people all the time, sometimes inadvertently and frequently intentionally. Wonder why your company buys cheap pens and off-brand supplies? Partly to save money and partly to make them less enticing to thieves. Nicer pens get “used up” at a surprisingly rapid rate compared to cheap stick pens.
Employees have taken home hanging folders and tabs in order to file their tax materials, colored markers to label things around the house, paper for their home printer, spiral notebooks and pencils for their children to use for school, and whiteboard erasers to use with a whiteboard in their kitchen. I heard of an employee who was strapped for cash and stole the milk employees were using for their coffee. But the one I’ll never forget is the toilet paper thief.
Employees Gone Wild Page 8