The mother of the problem

If you were required to read Beowulf in school you may recall how he was contracted by the king of a neighboring village to come and kill a monster who had been praying on the community. Beowulf does this, but quickly realizes that if he is to solve the problem completely he has to kill the mother of the monster. Killing the mother proves to be much harder, but necessary for the safety of the village.

A recent Linkedin question had me thinking about this. The question had to do with how to get an organization to adopt an internal control program. It would be easy to simply impose the program on the organization , but clearly its effectiveness would be questionable. In this instance the "mother of the beast" is the organization's cultural state. If the larger and more fundamental issues of common purpose, and morale are not dealt with effectively (and which might be driving the organization's resistance) the internal control program might reduce some of the risk, but it risks creating an environment more susceptible to fraud, and creating an even bigger more difficult problem to solve.

Internal controls are effective in managing risk in a business no matter how bad the environment, but they are much more effective if they are executed inside of a healthy organization.

Corporate Social Responsibility

In the January 17th issue of the Economist they tackle the issue of Corporate Social Responsibility (link below). For some this sounds like the same old cynical public relations campaign dressed in environmentally friendly and low carbon footprint clothing. It is true that there is a PR aspect to the idea of jumping on the "green" band wagon. However, there are a growing number of companies taking it seriously.

The emerging work force has a more sensative social conscience and is making career choices based on a company's social responsibility track record. Companies are also discovering that making volunteer opportunities available to employees adds to their job satisfaction.

Practically speaking, happy employees are more productive and less likely to steal from their employers. Companies that behave ethically do enjoy a reputation that aids their growth.


http://www.economist.com/opinion/displaystory.cfm?story_id=10491077

Identity Fraud 45.3B in America

Identity fraud is declining, (claims are down 11% from last year) in America but it is still staggering.

Most Common Victims:
Age: 24-34
Race: African American
Income: $100,000.00 plus

Tips:

1. Put a fraud alert on your credit report. This prevents anyone from opening a credit account without first contacting you.
2. Keep your information private: especially on-line and over the phone.

Average cost to repair Credit: $691.00

See the article by Jonathan Stempel below for the complete story.
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1161861220080211

Its that time again

Every year at this time I have to find a time to get a physical exam. It is not my favorite activity on earth but as I age it is just prudent and proactive to do so. If everything ends up being OK then it is worth the time. If something comes up, it is even more worth it since I know that my regular exams reduce the likelyhood of an issue being too big to solve.

It is a good idea to do the same thing in your business. It is not as unpleasant as a physical and can end up improving your bottom line. If it turns out your business is operating as efficiently as possible then you have the satisfaction of knowing that. If not, it gives you the opportunity to make the changes early so you have the remainder of the year to reap the benefits.