Reducing Economic Crime through the use of Integrity Tests

The use of psychometrics assessments for the selection and development of talent is a billion dollar industry globally. In the war for talent organisations need to ensure they select the ‘best’, and that the ‘best’ will stay and add value to the organisation for many years to come. The most widely assessed psychological constructs are cognition, personality and emotional intelligence. Whilst these are vital constructs, there has been a substantial increase in the assessment of candidates’ ‘integrity’, as a part of a pre-selection screening process.

Most organisations have created a set of core values, which help drive their organisational culture. More and more we are seeing the value of ‘integrity’ on this list. Additionally, ‘integrity’ has made its way into many organisational and leadership competency models, according to which these companies systematically select and develop their talent.

Whilst it has been acknowledged that high levels of organisational integrity are critical to long-term organisational success, a lack of integrity, which can result in a number of counterproductive work behaviours (CWBs), such as theft, fraud, unproductiveness, absenteeism, vandalism, and even violence, is no less important. In fact, research has revealed that CWBs cause significant financial losses to organisations around the world (Murphy, 1993).

The situation in South African organisations is comparable to the global trends and in many cases is a lot worse. Specifically, the PWC Global Economic Crime Survey 2014 revealed that South African organisations experience high levels of economic crime including fraud, bribery, corruption, misappropriation of assets and financial statement fraud.

The bottom line is that economic crime poses a serious challenge to South African organisations. According to PWC South Africa director Louis Strydom, several respondents to their survey reported a loss of more than R1-billion each through fraud. The statistics are alarming and importantly not restricted to any specific industry though research does reveal that economic crime is most prevalent in the financial services, retail and consumer and communications sectors.

So how do organisations reduce the risk associated with CWBs? One solution is through the use of a holistic approach to integrity assessment. This means using integrity testing from 3 perspectives:

  1. Pre-employment assessments to ensure that one reduces the risk of employing the ‘wrong’ people.
  2. Post-hire assessments to assess reliability, personal values and organisational commitment among employees, pre promotion or job transfer.
  3. Organisational development assessments to identify counterproductive behaviours and weak links in the organisation by group level: positions, departments.

This approach is not only preventative but also corrective. It acknowledges that economic crime is perpetrated internally and that whilst screening out ‘bad apples’ is critical it is not sufficient, given that the Global Economic Crime Survey reports that 56% of fraudsters are already on the inside. Additionally, it sends a strong message to both internal and prospective employees that the organisation values ‘integrity’ and that CWBs will not be tolerated. Further, it helps build a culture of integrity, which goes a long way to reducing the perpetration of economic crime.