How To Guide
What Is A Rogue Employee?
- The ones that openly flout company rules and their actions will be detected quickly and will no doubt result in their quick exist from the business;
- The ones that on the surface appear to be compliant but under the surface they will be breaking the rules, these employees are more difficult to spot and often do remain in their jobs for some considerable time before their actions catch up with them.
A rogue employee is someone who has stopped complying with the company policies and is behaving in an unscrupulous manner not amenable to the company’s reputation. This often occurs when an employee is faced with professional or personal struggle making it easier to lose the sense of propriety. The employee might start abandoning their tasks and responsibilities, and in the worst-case scenario they work to undermine the business by committing fraudulent activities like stealing assets and/or sensitive company information for monetary gains or by sharing sensitive business data with a competitor.
The word rogue probably originates from the Old Middle English slang, for “a begging vagabond pretending to be a poor scholar from Oxford or Cambridge.” The first citations of the phrase “to go rogue” come from the 1920s, in reference to lone elephants that broke away from the herd and began to behave destructively.
Whilst working in business as a HR Manager since setting up Kea HR & Recruitment I have seen the early warning signs and my instincts have told me that ‘someone just isn’t right’. Usually when my radar gets awakened it’s rarely wrong. I’ve had a few situations recently when I’ve said to clients ‘there’s something not right there’ and they’ve reassured me that I’m over-reacting, then a few months down the line they’ve contacted me and said ‘you were right’.
Cherie Lowden was a trusted Accounts Manager for North Shields based shipping and logistics company, Aquatran, Lowden abused her position by systematically siphoning off large sums of cash, diverting it into her own account. Her actions only came to light when the mum-of-three was off work sick and the Director of the haulage firm got a query from a client about payments not being received. An investigation showed Lowden had made 30 deposits over a period of eight months to the value of £24,439.45 from the company account to her own using client references. Lowden pleaded guilty to fraud and was given 14 months suspended for two years with a three-month electronically monitored curfew and supervision.
Rogue employees undermine the business by failing to comply with its rules and policies
7 Red Flags That Might Indicate You Have A Rogue Employee
The truth is you can’t always tell who has the potential to go rogue. But there are a few red flags to watch out for. None of these should be taken in isolation, but if you find you have an employee that displays a few of these red flags then I would advise you delve a little deeper into their activities:
- Check Out Any Changes In Behaviour
The way staff go about their day can often betray their crimes, so it’s a good idea to keep an eye out for members of staff who are acting out of character, this can include things like a sudden change of lifestyle or unexplained wealth.
Kirsty Lane, a part-time accounts assistant for Pure Audio Visual, stole £200,000 from her employer to pay for a magician, fireworks and a free bar at her wedding in January 2011. Lane, began by stealing “modest” amounts before stealing larger sums to pay for her luxury lifestytle and lavish wedding. In this situation the Managing Director wasn’t aware anything was wrong until the day of the wedding when the lavishness of the event set alarm bells ringing. Back at the office investigations found she had created false invoices to channel the money from the company and had made 122 payments to her personal bank account between December 2008 and January 2011. Peter Sutton, Managing Director of the firm, was forced to make two members of staff redundant as a result of the financial damage inflicted by the fraud. He said: “She was a trusted member of the team and she had been in that position for a number of years, she defrauded the company in quite a complex way and there was no obvious digital trail”.
- Always Check References
One of the simplest things you can do to reduce the chances of internal fraud is to make sure you know who you are employing in the first place. Always ask for at least two independent references when taking on new staff and verify their personal information and background wherever possible. Be thorough and keep chasing these references – however long it takes.
Read my Top Tips to Requeting References For A Potential Employee and download my Template Reference Request Form.
- Check Expenses Claims.
Expenses fraud can include claims for journeys that were not made, false client entertainment claims, claims for amounts higher than that spent and forged signatures authorising the expense.
Your expense policy should detail the documentation required to support each claim. This should also specify which expenses are reimbursable and whether the employee needs approval before incurring the expenditure. If you suspect that a claim has been submitted incorrectly, investigate thoroughly and take immediate action, if expense claims go unchecked, it will be more difficult to obtain evidence from the employee or to take disciplinary action further down the line.
- Check Time Sheets
Entering and/or approving incorrect data is one of the most common abuses of attendance information. When done accidently it can expose employee carelessness, flawed processes and a lack of management control, however when done deliberately, in simple terms it is fraud. Employees are responsible for entering their correct attendance data and supervisors are responsible for certifying that this information is indeed correct. While we all hope that the majority of employees are both diligent and honest, unfortunately experience shows that this is not always the case.
With paper-based timesheets it’s very easy for employees to enter incorrect times of arriving and leaving work and overstate or round their hours up to the nearest hour. Overpayment then occurs as the employee is paid based on falsified hours or rates. If employee attendance data has to be retyped from timesheets or time cards into a payroll system, it is very easy for a dishonest employee to change the numbers. As well as being open to fraud, this type of process is susceptible to typos and mistakes. The less you have to rekey your time and attendance information, the more accurate your data and in turn the more accurate your payroll.
- Check Customer Receipts
Receipt fraud happens when incoming cash or cheques are stolen, or when the records of the amounts owed by customers are adjusted in return for cash rewards or other incentives.
One situation I was involved in resolving involved an employee in a shop, when they worked on their own the takings were always down so we began to investigate, it tranpired that when a customer was paying by cash the employee, instead of scanning the bar code on the item, was ringing an amount into the till. So they’d ring in £5 and take the full amount of £10 from the customer, then they’d pocket the £5 difference. If you notice odd transactions investigate what happened.
- Check Use (Or None Use) Of Holiday Entitlement
Be wary of employees who never take holidays. Rogue employees are constantly looking for ways to cover their tracks so they rarely take time off. This is why many companies force employees to take holiday. When an employee is REALLY adamant about not taking time off, it should be a gigantic red flag that something is wrong.
The intention of holiday entitlement is to allow employees to recharge, so they gain perspective and return a better worker. It’s simply not possible to do this when time away from work is limited to half days and long weekends. It’s a good rule to require all your full-time staff to take a minimum of one full week of holiday in each holiday year.
- Check Supplier Relationships
You want staff to have good close relationships with suppliers but you need to balance that wil reducing procurement fraud.
Procurement fraud is any fraud relating to a company purchasing goods, services or commissioning construction projects from third parties. Fraud can happen when the tender process has not been followed. It can also happen when there are payment claims for goods or services that were not delivered or were inferior to what was specified in the order.
7 Critical Steps to Take When an Employee Goes Rogue
When an employee goes rogue, the business owners are left to deal with the damage on a short-term and long-term basis, repairing what was broken and regaining what was lost. The damage can be in the form of putting the company’s security at risk, losing profit and clients, or to the extent of losing its credibility to operate a business.
It is important to take immediate, proactive actions when an employee goes rogue.
- Suspend The Rogue Employee
- Deactivate The Rogue Employee’s Access And Invalidate Their Credentials
This is an essential step. Immediately discontinue access to work platforms, emails, and other portals. If your rogue employee has access to your systems via a VPN (Virtual Private Network) i.e. they can access your systems from home and work as if they are in the office, ensure that access is blocked. Remove access and confiscate any personal identification card issued to the employee before they are sent home so they are unable to regain access to the business premises.
- Increase Your Security Levels And Protect Company Assets
Meet with your IT team/provider and make them aware of the situation and ask their advice on what protective measures could be implemented to ensure no further issues occur. Do a quick inventory of assets and sensitive information and try to assess if any are compromised. Identify the risks the company may be facing as a result of the violation committed and deploy protective measures necessary.
- Gather And Document Relevant Details That Led To The Employee Going Rogue
This is where you start cleaning up the mess created. Find out what influenced the employee to go rogue and commit offences against the company and gain a full understanding of what tools and measures they used to actualise the transgression. Identifying the motive of the employee will help you determine the measures that can be done to help find an amenable and legal way to resolve the real problem. This will also allow you the opportunity to identify employees who will possibly commit the same offence and implement preventive measures.
- Decide On The Continued Employment Status Of The Rogue Employee
Invite the employee to a disciplinary meeting where you will discuss the offence and come to a decision on the fate of the employee with regards to their continued employment. The sanction to be enforced on the employee will depend on the gravity of the violation.
There are situations when termination is the clear-cut decision. Termination applies to serious offences like theft or inappropriate use of company funds, rowdy behavior like sexual assault to a fellow employee, serious insubordination to an immediate supervisor, and losing a client while putting the company’s reputation in question by using the client’s confidential information (i.e. credit card details) for personal gains. There are also situations when a lighter sanction may be applied, such as a final written warning.
- Reinforce Company Policies And Implement Preventive Measures To Avoid Repeat Occurrences
Gather your team and have a focused discussion that reviews the existing policies and possible sanctions in the event a specific policy has been violated. Each employee is accountable. Ensure commitment to protecting the company’s best interest by reviewing the roles and responsibilities of every employee and their important functions in the company.
Utilise company tools like information boards, workstations, desktop wallpapers to document these policies in addition to your Employee Handbook.
Does your Employee Handbook need a re-write? If your Employee Handbook needs a re-write but you don’t the time or expertise to complete the task yourself, then please get in touch Employee Handbook Writing Service.
- Introduce Controls
Even long-serving employees could be tempted to commit fraud under certain circumstances, so it is equally important to watch out for any strange behaviour in those you think you know well as well as those who are recent additions to the team.
Build controls into your routine business processes such as managerial oversight of finance processes, ensuring that one person cannot transfer high value assets by themselves or without sign-off, regular checks and audits, and restricting access to key assets to only those who need to use them.
Sally Etchells, was a trusted employee at vehicle buidling firm, Ken Rosebury Limited based in Rochdale for over 25 years. Between April 2008 and November 2010 she abused her position of Office Manager by over paying herself from the payroll, she was also responsible for payment of bills and disguised payments that went to her bank account as payments to other companies, some of the payments were diverted to the account of the woman who stabled Etchells seven horses, in total she stoles £39,000. Etchells – who was director of the Arab Horse Society was also the respected boss of an equine charity was a friend of the MD and his wife. Etchells actions almost caused the closure of Ken Rosebury Limited. The fraud was found when Etchells had a day off and the MDs wife was looking at the payroll system, she first found an unusual payment of £25, then other small payments, then one payment of £5,000.
Implementing a period of suspension will allow for an uninterrupted investigation to take place. This ensures a quiet gathering of facts without the threat of having the person in question creating further obstructions. Make sure all access and credentials of the employee are deactivated and prevent further access to other company information and assets.
Read my Top Tips for Dealing with the Suspension of an Employee for Alleged Misconduct. and download a letter to send to the employee to confirm the period of suspension.
Read my Guide to Planning and Conducting a Disciplinary Meeting and download my Checklist.