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Management Side

Avoiding Corruption in the Workplace

If one accepts a traditional definition of corruption as "abusing power or taking actions illegally for personal gain," it could be argued that the paper industry is no different from any other business in this regard. However, in spite of many shared organizational features, each business environment has its own unique circumstances, which may make it more appealing for personnel to consider a corrupt practice. After all, the primary cause of corruption is greed, and unfortunately, everyone possesses this motivating characteristic to some degree. If the conditions in the workplace appear to make it easy for employees to take illegal actions without fear of being caught or punished, some will take the risks. These actions can include embezzlement, bribery, theft, extortion, and many others.

It was not long after I was employed in the paper industry that I learned of a corrupt practice that had been exposed in one of the industry's mills. Those who have experience in paper mill production will be familiar with the use of chemical defoamers as a wet end additive. At that time, a number of the defoamer suppliers were essentially small "garage type" operations. It was found that an agreement had been made between a superintendent and a supplier allowing the supplier to ship diluted defoamer while charging the mill for full strength chemical. Apparently the additional profit made by the supplier was then shared with the superintendent, who had ultimate control of the material selection. Since the effectiveness of defoamer was accepted as varying widely, it was a considerable time before this corruption was identified. Of course, the superintendent was fired and the supplier was held fully responsible for mill losses. Obviously, the incident exposed a major weakness in the mill's incoming materials testing as well as purchasing control procedures.

Some may think that corruption could be minimized simply by hiring "good" employees. To the extent this can be accomplished, it is certainly a worthy goal. Unfortunately, corruption finds its way even into the hiring practices at times. We are all familiar with cases of bias exhibited by human resources or personnel managers, including favoritism and nepotism. These hiring "mistakes" can lead to incompetent or unproductive workers. And even if a new employee has no known past record involving a corrupt act, it is not possible to know whether such behavior will occur in the future. Employees under intense pressure (internal or external) may resort to corruption.

This also does not mean that most corruption dwells in one level of the organization. In fact, it is estimated that over 50% of the fraud and theft in companies is committed by owners and managers! Corruption may arise due to political, administrative, or professional influences. In my opinion, we must accept that corruption may be present at any specific time or level, and is a continuing risk to the business climate of the organization. It can result in loss of profit, inefficient use of resources, decreased public trust, increased legal costs, penalties, and even eventually a reduced market share.

It is possible for corruption to become so ingrained in a company that it seems like part of "business as usual." In other words, it is overlooked as being just a part of "company politics". When this condition exists, many decisions are made for all the wrong reasons. The influence of management is very important in regard to conditions which can become sources of corruption. For example, employees may more easily rationalize participating in corrupt practices under the pressures of a management that is arrogant and inflexible. They may also react to a management that ruthlessly exploits workers by striking back through theft or fraud on the job. Management that lacks empathy and is perceived as constantly striving for more power is likely to breed a work force that reacts against it, using any means available, including corrupt acts intended to "punish" the company. The workers then begin to rationalize their own bad behavior.

Let's assume the company's management is not one of the ruthless and exploitive types. Can corruption be avoided in a more stable environment? In my opinion, the answer is no, but many things can be done to improve control. The following are some of the items which can be helpful in deterring corrupt behavior.

• Perform a corruption risk analysis to identify the key areas involved. Stress management oversight responsibility.
• Develop and put into practice anti-corruption programs and policies.
• Educate employees on the awareness of corruption and the resulting consequences.
• Emphasize a strong code of conduct within the company, reinforced by management.
• Increase transparency in all levels of the company, and have clearly defined paths of accountability and delegated authority.
• Consider rotating jobs when possible, and segregate duties that can result in too much power in one position.
• Review all critical documents within the company, and make sure they are protected.
• Safeguard all assets, processes, and important data. This is particularly important if proprietary information is involved.
• Consider installing cameras in work areas identified as having high corruption risk.
• Have a policy which allows employees to report corruption and other concerns to management without fear of reprisal.

Although the Protected Disclosure Act and other legislation protects "whistleblowers" who expose various forms of corruption within an organization, very few employees actually report it. This is due to fear of job loss, the possibility of becoming victimized, and a fear of being labeled as an accessory. But those companies which have strong internal corruption controls will benefit not only in profitability but also in industry reputation.

Robert Moore is a retired chemical engineer, and is an experienced technical and fictional writer. His past work experience spanned the chemical, paper and equipment manufacturing industries, including holding management positions at Voith Paper, Scapa plc, and The Mead Paper Corporation. He is also the author of humorous short stories about life in southwest Virginia, circa 1940-1960.



 


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