The fraud triangle is a model for explaining the factors that cause someone to commit occupational fraud. It consists of three components which, together, lead to fraudulent behavior:
1. Perceived unshareable financial need
2. Perceived opportunity
3. Rationalization
The fraud triangle originated from Donald Cressey’s hypothesis:
Trusted persons become trust violators when they conceive of themselves as having a financial problem which is non-shareable, are aware this problem can be secretly resolved by violation of the position of financial trust, and are able to apply to their own conduct in that situation verbalizations which enable them to adjust their conceptions of themselves as trusted persons with their conceptions of themselves as users of the entrusted funds or property.1
1Donald R. Cressey, Other People’s Money (Montclair: Patterson Smith, 1973) p. 30.
Executives often find themselves assigning blame. Many believe that ranking and sorting their colleagues is a key management skill–and I agree. A much rarer and more powerful skill is the ability to see our own contribution to the unwelcome behavior we see around us. Why is self-awareness more powerful than judging others? Because altering my own behavior is the best access I have to altering the future.
I know this. I teach this. I also forget to practice it.
In November of 2007, for example, I was in San Diego attending a weekend training for coaches. A breakout session was led by the author of one of the best-known books on coaching. It is a good book and I was very eager to attend. His ninety minute workshop was scheduled six times over two days–I was in a morning session on day two.
The author immediately struck me as irritated, aggressive, and arrogant. (Here I am, always ranking and sorting.) His opening seemed vague and rambling and his responses to questions were not pertinent. (Here I go, proceeding to collect evidence for my case.) People were shaking their heads and looking at each other. Coaches are a fairly supportive audience but in the first fifteen minutes, five of the thirty people walked out, one while the author was responding (elliptically) to his question! (Perfect. I have other people agreeing with me, a seductive substitute for truth.) I decided to (more…)
The Motley Fool: As you well know, Costco has taken some heat on Wall Street for being overly generous to its employees. According to a recent New York Times story, Costco store workers earn an average of around $17 an hour, which is 42% more than employees at Sam’s Club, which is owned by Wal-Mart. You have said Costco’s pay structure makes for good business. Explain.
Costco co-founder & CEO Jim Sinegal: Well, first of all, we have a very low turnover in our company. Our turnover is something in the 20% range, and that is including a lot of seasonal hires that we have both in the summer and at Christmas. After employees have been with us for more than a year, that turnover rate goes below 6%, so we take great pride in the fact that people join us and they stay with us. Our attitude has always been that if you hire good people and provide good wages and good jobs and more than that — if you provide careers — that good things will happen to your company. I think we can say that that has been proved by the quality of people that we have and how they have built our organization.
The power of being unsure, of remaining “in the inquiry” rather than settling for easy answers.
How to feel okay with yourself by helping others feel okay.
Presenting to Fortune 500 company executives.
The trap of over preparing your presentation.
Your brain’s skill for anticipating the future—and the dangerous illusions that creates.
Just click here and either listen through your computer or subscribe through iTunes to have this and all new episodes placed on your device as they become available.
In the first year or so it wasn’t just about proving how tough I was, I had to be tough. I was pretty sharp with people. But I’d learned in the classroom, the last thing you want to do is put somebody down because then they freeze, and not only do they freeze, but the whole class freezes. I had to relearn that lesson as a manager. … Early on I didn’t know how to delegate things. I was always trying to do other people’s jobs. I learned that first of all, you’ll drive yourself crazy doing that, and secondly you won’t have very good people working for you very long.
…
I found it useful to remember that most institutions don’t want to change. They’re institutions because they’ve developed a certain set of traditions and norms and expertise, and change is hard. A lot of the work I’d done as an academic affirmed that usually institutions change when they’re failing. It’s very hard to make them change when they’re succeeding. They take the cues too late from the environment.
I found three things helpful.
One is that you have to paint a picture of other times that that institution has responded to change and difficulty successfully.
Secondly, [it helps] if you can find in the institution a counter-narrative that supports the direction of change.
And finally, you have to look to see whether there are impediments to people doing the right thing. Mostly in good organizations, and the Department of State was certainly one, and I found this at Stanford too, people want to do the right thing — they don’t want to be obstructionist — but sometimes there are things that make it hard for them to do the right thing.
— Condoleezza Rice
On being Provost of Stanford University
& Secretary of State
in Harvard Business Review
Levy: Let’s talk about web services. Amazon Web Services is dominant in hosting—one observer says that you are the Coke of the field, and there’s no Pepsi. How did an ecommerce site wind up in the position where it’s hosting web powerhouses like Foursquare, NASA, Netflix, and The New York Times? … Young startups all tell me that even if Google offers them free hosting, they still want to use Amazon.
Why do you think that is?
Jeff Bezos: We were determined to build the best services but to price them at a level that customers couldn’t match, even if they were willing to use inferior products. Tech companies always have high margins, except for Amazon. We’re the only tech company with low margins.
Levy: How did you do it?
Jeff Bezos: We really obsess over small defects. That’s what drives up costs. Because the most expensive thing you can do is make a mistake. We can afford to focus on smaller and smaller defects and eliminate them at their root. That reduces cost, because things just work.
Years ago, while I was establishing myself in a new executive coaching practice, I supported my family by working as a part-time, outsourced CFO. Here is a reminiscence of a deep learning I earned during one of those accounting gigs.
I sought help from my own executive coach with the very difficult behavior of a bookkeeper employed by my client. She had called several urgent meetings with the partners and each time threatened to quit, more or less because of me. These meetings were very exasperating as she made charges that were either too vague to dispute or clearly contrary to plain facts. For example, although we repeatedly assured her that she had her job as long as she wanted it she insisted she could not continue to work under such uncertainty and would resign immediately because we were conspiring to take her job away. The partners felt obligated to placate and mollify her because she was the only bookkeeper out of several they had tried who was able to make any progress in getting their bills out to clients.
I said to my executive coach, “I am stressed and bothered because of her unpredictable behavior, of course, but I am mostly bothered by the fact that it bothers me. I am so ‘trained’ and ‘transformed’ I ought to be able to deal with her behavior without becoming stressed, hurt, or angry. I try to remain calm, not react to her outbursts, and keep on working because I need this income. I do what is necessary just to keep getting paid, so why do I lose sleep and spend my non-billable time talking about her with my coach, family, and friends?”
By the way, is this scenario reminding you of anything in your life, right now?
My coach reminded me of the dangers of attachment, of identifying with our property or positions. We confuse preferred outcomes with necessary results. We grasp so avidly to particular bits of property or actions by others that we forget we can still be ourselves without them. We attach money or prestige to ourselves so firmly that we forget that we are not our results or our reputations. What I want is not what I am.
I then remembered the old samurai expression (I suppose all samurai expressions are now old).
The most effective warrior dies before entering the battle.
The bookkeeper was not damaging my body or physically invading my free time. My attachments were the only things making my life difficult. I was attached to looking good in the eyes of my client, I was attached to (more…)
Knowledge at Wharton published a very well-done summary article on the problems with and alternatives to the traditional annual performance review. Here are my favorite excerpts.
“an overall performance management process — one that focuses on goal setting, feedback, coaching and clear statements of the company’s performance expectations — is absolutely critical” and indeed, is found in the highest-performing companies.
–Sibson Consulting/WorldatWork survey
Good managers provide feedback and direction that will help individuals achieve success. Bad managers don’t. They worry about (more…)
The New York Times recently ran a nice article about how Google–in its usual highly-analytic, data-driven way–measured the results of different management behaviors amongst its own workforce. The recommendations that emerged from this research will be familiar to readers of this blog.
I wish these were practiced as often as I preach them!
Google’s Project Oxygen
Eight Good Behaviors
Be a good coach
Provide specific, constructive feedback, balancing the negative and the positive.
Have regular (more…)
Revolution is in the air around the world. People everywhere are fed up with having arbitrary power exercised over them, with impractical limits placed on their everyday actions, with living in constant fear that someone in power will frown at them and destroy their livelihood without warning or objective justification. This global revolution differs from the Marxist model of the dispossessed and disaffected rising up from poverty to overthrow the business class. This time, educated professionals are actively engaged in the resistance. As a result, people long accustomed to wielding authority and position are rapidly changing the way they run things. Suddenly, leaders in many countries are peacefully giving up some of their power in hopes of participating in a new, more prosperous and humane community.
I am not talking about foreign countries. I am talking about where you work.
For as long as I have been in the business world employees have been mystified and upset by the performance review process. The managers conducting the reviews find them arbitrary, uncomfortable, and (more…)
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Bad presentation–or resistant audience?
I sought help from my own executive coach with the very difficult behavior of a bookkeeper employed by my client. She had called several urgent meetings with the partners and each time threatened to quit, more or less because of me. These meetings were very exasperating as she made charges that were either too vague to dispute or clearly contrary to plain facts. For example, although we repeatedly assured her that she had her job as long as she wanted it she insisted she could not continue to work under such uncertainty and would resign immediately because we were conspiring to take her job away. The partners felt obligated to placate and mollify her because she was the only bookkeeper out of several they had tried who was able to make any progress in getting their bills out to clients.
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