Preventing Fraud by Thinking Like a Thief: Motivation

The key to understanding employees who commit fraud is found in the fraud triangle, an old concept in criminology that still has wide acceptance in the fraud examination field. In order for fraud to occur, three things must be present, and each represents one side of the triangle. The three pieces of every fraud puzzle are opportunity, motivation, and rationalization.

Motivation
The second piece of the fraud triangle is the motive. What has caused the employee to steal? This could be a financial need like a potential mortgage foreclosure on the employee’s home or a spending spree that went out of control. Gambling habits and drug addictions are common motives for theft.

Sometimes employees are motivated by a feeling of inequity or a perception that they are underpaid. Revenge against an employee or against the company as a whole can motivate an otherwise honest employee. Many times greed can be involved in the motive to commit fraud.

Motivation is difficult to deal with because it is often completely internalized. Management may not be aware that an employee has a risk factor such as high debts, or that the employee feels unfairly treated. On the other hand, when management does see warning signs, such as the employee, who often complains about disparities on the job, these should be taken seriously.

Companies can help reduce the motivation for fraud by ensuring that they are paying employees market rates for the jobs they do. Management must also strive to treat employees equally and fairly, to the extent that is possible. They should also be on the lookout for warning signs that might indicate a personal motivation, such as financial problems, legal problems, or addiction problems.