No more free coffee

Never underestimate the power (and stupidity) of people in large groups. It will take months, possibly years to figure out all the reasons behind the riots in England, but themes are emerging. Community leaders as well as many of the rioters themselves appear frustrated with cuts in social services and the widening of the gap between the haves and the have nots. English society has always functioned on a class system; it’s not as pronounced as it was even 100 years ago, but it is still very much apparent in certain professions and areas of the country. The cuts in services as well as the overall collapse of the economy have helped ensure that those in the “lower” classes feel even more disenfranchised.

When you take what people believe to be theirs and further reaffirm what they perceive to be their lower class status, they can react in a number of ways. When “wronged,” they often band together in a shared sense of anger and frustration at what transpired. A few will act out and take steps to let the group know how angry they are. Others will react purely for the attention and thrill of “doing something.” Some will sit in the corner and internalize what has happened and figure out how to react.The English riots are obviously at the far extreme of those reactions. That said, companies can learn from what happened.

Since the recession began, companies have cut back expenses, using a broad range of tactics. From reducing headcount to cutting benefits, executives have gone back time and time again to capture savings. In most companies, free coffee in break rooms was a casualty long ago. It was either removed entirely or replaced by a cheaper brand that is supposedly coffee yet looks and tastes like dishwater. It’s a seemingly inconsequential action, but the strangest triggers can push people over the edge. At the same time, the pay gap between a company’s CEO and its employees continues to grow.

The more companies “take” from their employees, be it through revoking coffee and benefits or giving pay cuts, the more likely the employees are to rebel in some shape or form. In very isolated incidents, they will react with physical violence, but most will soldier on until they can’t take it anymore. With over 76% of former employees declaring that they are disgruntled, clearly companies are not winning many fans.

Let me be very clear: most of the steps that companies are taking to reduce costs are largely unavoidable. Without cuts in benefits, reductions in headcount, changes in 401K plans, etc., many companies would have closed their doors long ago. However, companies should acknowledge that cuts come with risks.

Each time a company “takes,” the risk that employees will react badly to the decision increases. Production can go down, employee departures can increase, and customer service can plummet. Not surprisingly, employee fraud can also skyrocket. My earlier post shows that employees need some form of rationalization to commit fraud. By continuing to make cuts, your company is providing the perfect excuse for an employee to “get even.”

Sooner or later, cuts will go to the bone and trigger a reaction. Please bear that in mind as you decide whether to remove coffee from the break room entirely.

Need a writer that understands fraud? When you hire me to write an article, blog post, newsletter, or white paper, you get an accomplished writer that is also an expert in fraud.

paul@mccormackwrites.com

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About Paul McCormack
I have over 20 years of experience in corporate fraud and intellectual theft prevention, detection and investigation. Unlike many fraud experts, I have both industry and professional services experience. To date, I have conducted over 800 interrogations of fraud suspects including numerous senior corporate executives. As a freelance writer, I have written over 1,000 articles on a broad range of topics. My areas of expertise include: • Asset Misappropriation • Big Data • Bribery, Corruption, and Collusion • Check, Wire, ACH, and Credit Card Fraud • Consumer Fraud • Corporate Security • Cybersecurity • Data privacy (Europe, Brazil, Russia, India, and China) • Drug Trafficking • Embezzlement • Employee Fraud • Executive Protection • Fintech • Financial Statement Fraud • FCPA • Healthcare fraud • Identity Theft • Intellectual Property Theft • Internal Audit • Interrogation Tactics • Loss Prevention • Mobile Fraud • Money Laundering • Operational Excellence • Organized Crime • Payments Fraud • PCI Compliance • Retail Fraud • Risk Management • Terrorism and Counterterrorism • UK Bribery Act • Workplace Violence

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