Corruption: Why It Happens and How to Stop It

The thought of using guilt to control the cost of theft and fraud prevention seems a little odd, but the way Duke University's Dan Ariely presents it makes a lot of sense. He says that "nourishing guilt" among employees can influence them to act more ethically, and he gives examples to back it up. Ariely, in an interview with PwC's Forensic Services Partner Matt Shelhorse, discusses his theories on the psychology of corruption, and provides some thought-provoking answers to the following questions:

 
• What influences a person to undertake corruption?
 
• What should you be looking for?
 
• How can you limit the threat by encouraging ethical behavior in your organization?  

 The answer to the first question: motivation, fuzzy rules and rationalization, reminiscent of the fraud triangle.

Reinforcement is Key

Ariely recommends that employers keep reminding employees of where the lines between ethical and unethical behavior lie. He says that giving frequent examples of good and bad behavior can help to reinforce the lesson and that a professional code of conduct is imperative.

Economic Indicators

He draws a distinction between big cheaters and small cheaters, arguing that the huge number of people who cheat just a little bit has a far greater impact than the small number big cheaters. Again, he provides the numbers to back up his theory. Watch the interview below to get some great insight into how employers can get their employees to act ethically in world full of temptation.

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