One of the main reasons as to why trading companies fail is employee fraud. Therefore, if you want your trading company to do well in the long run, you need to put in place measures to minimize employee fraud. Your goal should actually be that of eliminating employee fraud altogether. But if that sounds like too lofty a goal, you can opt to — at the very least — try to minimize employee fraud. And in that regard, if you want to minimize employee fraud in your trading company, you need to:
- Hire honest people: so this is a question of undertaking proper background checks, before hiring people. You need to ensure that you don’t hire folks who have a track record of being fraudsters. You can weed out such individuals through proper background checks.
- Educate your employees on the need for them to avoid fraud: so this is a question of getting them to see the bigger picture. Getting them, for instance, to appreciate that if they defraud the company, it will fail – and they will end up being jobless.
- Put in place deterrence measures: these would include proper accounting and audit systems, through which you can detect employee fraud. You can also have CCTV and other monitoring systems (including human ‘observers’), to further minimize the possibility of fraud in your trading company.
- Pay your people well: the objective here is to get reduce the incentives for fraud. For all other factors being held constant, well-paid employees are less prone to fraud than ill-paid employees. To ensure transparency in the way you pay your employees, you can set up a web-based portal (akin to Lowe’s portal, at www.myloweslife.com) through which your employees would be able to view the calculations that lead to their paychecks. You also need to consider paying bonuses to your employees so as to inculcate a sense of ownership in the trading company. This will further lower the possibility of them engaging in fraud.