How to fight fraud, corruption through culture transformation

Achieving an ethical culture, increasing the ability to detect and respond to cases of economic crime and by strengthening internal controls are key in fighting economic crime. [iStockphoto]

Various studies and commentaries point to an ongoing erosion of our value systems that manifests in increased economic crime in our region. Surveys such as the PwC Global Economic Crime Survey and the recently released Transparency International Corruption Perception Index point to a worrying state of the East African region.

Economic crime at an institutional level is generally fought through three broad means: Achieving an ethical culture, increasing the ability to detect and respond to cases of economic crime and by strengthening internal controls.

Many organisations have predominantly invested in internal controls and increasing their ability to detect and respond to cases of economic crime. However, the most effective means, is achieving an ethical culture. An ethical culture means 'doing the right thing even when no one is watching'. It is a culture that is founded on ethics and integrity. An ethical culture can be achieved through varied means including leadership coaching, values immersion and culture transformation.

Culture transformation is the process of evolving the 'way things are done in an organisation' to achieve a desired future state which is aligned with the organisational values and strategic priorities. The journey towards pursuing and embedding an ethical culture involves undertaking critical steps which include leadership alignment, assessing existing culture traits, defining a roadmap for behaviour change and delving into spreading mechanisms that make the change stick.

Leadership is crucial in culture evolution and in seeing through the success of a culture transformation journey. Its alignment entails creating and nurturing a united front in developing and encouraging an environment where difficult conversations on economic crime and the zero-tolerance position of the organisation are held.

The right tone from the top is achieved by demonstrating commitment to the ethical culture transformation journey and creating buy-in for the vision for change. Leadership buy-in thus plays a pivotal role in initiating personal ownership and accountability towards a culture centered on ethics and integrity.

The next step, culture assessment, involves obtaining insights on the true picture of the current state and specifically on the dominant cultural traits.

Within the context of economic crime, culture assessment would enable organisations understand which organisation's characteristics may support the ethical culture journey and which ones may be a hindrance. An appropriate cultural measurement framework should provide insights on overall employee experience and be repeatable i.e., provide backward and forward-looking indicators. The findings of the culture assessment form the basis of the culture transformation roadmap.

Formulating a culture transformation roadmap involves developing a plan of the activities needed to bridge the gap between the culture assessment findings and the desired ethical culture. In retrospect, it requires selection of behaviours centred on ethics and integrity which when adopted will be key to delivering the desired culture traits that are characteristic of an ethical organisation.

Successfully combating economic crime would also require employees to commit to the identified enabling set of behaviours. Achieving this commitment could involve deploying initiatives that are hinged on transparency, honesty, trust and upholding ethics in day-to-day interactions.

Additionally, there is need to identify behaviour-spreading mechanisms that support the achievement of ethical culture transformation initiatives. This can be achieved through integration of ethical culture change with day-to-day activities including institutionalising them into recognition frameworks. A key spreading mechanism involves use of culture change agents whose key role is to advocate for the ethical culture transformation journey and support leadership in driving the initiatives.

The journey to an ethical culture periodically requires organisations to take stock of the lessons learnt, and opportunities that can potentially be leveraged to reinforce behaviour change and drive individual accountability in prevention of economic crime within organisations. This can be achieved through periodic measurement of ethical culture transformation initiatives and continuous remediation of emerging challenges in order to attain the goals of embedding an ethical culture.

Integrating ethical behaviour metrics into the performance management framework may also reinforce efforts towards culture change. To further reinforce efforts towards an ethical culture, there is need to continually create internal and external awareness on the organisational stance on fraud and corruption. This includes clear articulation on the repercussions associated with participation in economic crime.

With the reported high prevalence of economic crime and its apparent stubbornness, it may be easy for one to give up hope and conclude that we are caught in a self-feeding corruption trap. There is however hope and change has been achieved elsewhere. By identifying the moments that matter and seeking to change our reactions to them, we could achieve the desired culture change within relatively short timelines. However, we first need to believe that we can.

Ms Wainaina is a culture transformation consultant at PwC Kenya. Mr Kamau is a forensics advisory consultant at PwC Kenya.