Archive for the Human Resources Category
In times of economic turmoil the incidence of fraud and embezzlement increases. You can protect yourself by implementing and enforcing a few simple procedures. These procedures are ones all business should follow regularly but may have been lax in enforcing. Now is the time to tighten up the ship.
- Manually sign all checks. Do not use a signature stamp.
- Only sign a check if it is supported by an invoice, a purchase order or check request explaining the purpose of the disbursement.
- Rotate who opens the bank statement each month and make sure the person who prepares the checks or prepares the billing is not involved. Open the statement as soon as it arrives and look for any odd or suspicious. Call the bank if you are even mildly concerned.
- Have someone not involved with paying vendors or collecting from clients prepare the monthly bank reconciliation. Someone from senior management, if there isn’t a CFO, needs to review the monthly bank reconciliation.
- Review the list of invoices prepared each month to identify any customers you do not recognize. If anything looks odd, call the customer and verify the order.
- Manually approve all electronic transactions. A form similar to a check request can be developed to support the individual transactions.
- Verify all unused checks are accounted for. This is done by periodically flipping through the unissued checks to make sure there is no break in the numeric sequence.
- Keep checks locked-up with as few people as possible having a key or knowing where the key is kept.
- If you experience an unusual and unexplained cash shortage bring in a consultant to investigate.
- If you do find evidence of fraud or embezzlement make sure you prosecute the individual so they don’t become a repeat offender.
A former client suspected one of its senior people was ripping them off by charging things to the corporate credit card. Things that could possibly pertain to the project the person was working on. It went on for years and no one investigated. When they finally acted they determined they were out in excess of the $250,000 they were able to recover.
Several months ago a client made the hard decision to fire a family member. The business had grown beyond this person’s capabilities, interest and understanding and it caused undue hardship on the relationship. There was one problem though, there was no one waiting in the wings to replace him. So for months he teetered trying to help in his old job while at the same time trying to find a new position. Ultimately the client hired a replacement that was well worth the wait.
All this pointed out the need for succession plans at many levels of a company. In a small business there needs to be a succession plan for anyone serving in a key role. People can just as easily contract a long-term illness as leave. The impact on the company is just as bad particularly if the person is in a client facing position.
The following are thoughts on how to plan for a key employee leaving including the CEO:
- Understand what the employee’s day-to-day role is. What are the key deliverables.
- If the employee is manager, get some sense before the person leaves as to the skills of any direct reports.
- Have the person write or update the position description for their position (this should be done annually as a rule). They are the best person to do it. Then evaluate whether the components of the position description are still relevant to the company as is or does the position need to be changed.
- Make it a company policy to cross-train as many positions as possible. In a period of downsizing or long recruiting time this could save the company from falling significantly behind in one area.
- Understand each employee’s level of efficiency. What one employee can do in a day may take another more time necessitating a change in the staffing plan and potentially more cost. Years ago I had a controller that did the work of two people. I lived in fear she would leave and the organization would be forced to hire two people. Fortunately it never happened.
- Avoid a knee jerk reaction where someone is promoted just because they are next in line in the department. An employee’s departure presents an opportunity to reevaluate, reorganize and re-energize.
Do you have thoughts to add on planning for when a key employee leaves?
