Personnel e.bulletin – February 2016

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Creating a Culture of Integrity
Prepared for the PHCC Educational Foundation by TPO, Inc.

Promoting integrity in your business is an easy choice. A company where the employees themselves work to prevent unethical behaviors – such as inventory theft, missing tools, timecard manipulation, leave abuse, or side work being done with company vehicles, tools, or materials – saves your business money and the time required to deal with such problems.  This article explores actions you can take to promote and reinforce a culture of integrity in your business.

Start Promoting Integrity via the Hiring Process
You can set the right tone for company culture by hiring the right people in the following ways:

Background checks.  Conduct extensive background checks and hire contractors that do their own. If you’re thorough, you’ll be more likely to ensure that a potential employee doesn’t come with bad history – like stealing from a previous employer.

Employ behavioral interview questions. Ask situational questions during the interview, as well as questions about education or skill sets.  The interviewee will more likely provide a spontaneous and clearer picture of his personality and ethics.

Reference checks. Ensure all credentials and references are valid.

Emphasize managerial hiring. Leadership sets the tone in a business, so if you apply these standards when hiring managers, you’ll more likely see overall ethical behavior

Set Clear Expectations for Ethical Behavior  
If employees don’t know what’s expected of them, they’ll be more likely to break rules. Even when a rule seems obvious, it’s important to communicate it. An employee who is newer to the workforce might not realize that they shouldn’t use equipment for personal reasons or standards might have been more lax at a previous place of employment.

Here are a couple of ways to set clear expectations:
Training. Once again, it’s best to set the tone from the beginning.  Whether through presentations, memos, or some combination, clarify ethical policies.

Establish a clear code of conduct. You can include this in your employee handbook. The code should specify prohibited behaviors and their consequences. Have employees sign a statement indicating they’ve read it; their signature will indicate that they’re aware of the rules and that they agree to comply with them.

Communicate and Act Fairly in Response to That Communication  
You’ve already set clear expectations. If you continue to be as open with employees as possible and give them opportunities to communicate in return, you’ll create an overall more transparent environment. Hopefully the following pointers will sounds familiar:

• Ask for feedback from employees.

• Have regular conversations with employees to give them the chance to speak up and to give you a chance to see if the culture of integrity is being communicated effectively.

• Share with employees as much information about the business’s direction as possible.

Employees with open communication channels with their manager and company will be less likely to engage in behaviors such as theft.

Establish Monitoring Systems  
Let’s take the example of timecard fraud. There are a few options to hold employees accountable for honesty in recording their time:

Install a device such as a time clock, card scanner or electronic timekeeping system on a computer. These can also record arrival and departure times, and some enter information into the payroll system. If needed, position a manager near the device at the beginning or end of shifts to monitor its use.

Compare timecard records. You can keep copies of cards for past pay periods to determine regular work patterns. Any discrepancies may indicate fraud.

Require your approval of timecards before they’re submitted. Once you’ve verified that the information is accurate, you can submit it.

Use GPS monitoring systems in company vehicles. If employees know that the truck’s location is always tracked, they are less likely to consider stretching driving time between appointments, making personal detours, doing weekend work or even speeding.

Another example would be equipment or material theft, which can be prevented in the following ways:

Establish physical security. Make sure there are locks where your equipment and materials are stored. Visible video cameras prevent thefts of opportunity.

Trust employees who’ve earned it. Designate employees who you trust to inventory materials and equipment. Knowing that someone is checking helps to prevent the mindset of “nobody will even know if I take this.”

Institute strict policies for access to inventory. If employees must sign in when accessing materials inventory or when using specific equipment, you’ll create a sense of accountability and discourage theft.

Establish an Employee Awareness Program
Involving employees in your accountability system further invest them in your business and encourage them to behave with integrity. One way to do this is by creating an employee awareness program:

Inform employees about the signs of unethical behavior. For example, if you’re worried about misuse of company equipment, you can share parts of your accountability system with employees. This reinforces the idea that someone is paying attention and enables them to spot misuse by fellow employees if it is happening.

Encourage them to report. Employees will be more motivated to share any concerns with you if you’ve created an environment of open communication.

Reward employees who take the risk of coming forward. Rewards can range from a simple “thank you” to a small bonus. In the end, a reward program will cost less over the long term than inventory theft or other fraud.

Respond Quickly and Fairly  
Needless to say, employees will be less likely to lie or steal if they know there will be actual consequences, so make sure you’re responding to unethical behavior in the following ways:

Respond quickly. If you take swift action, employees will know you’re serious about enforcing the code of ethics.

Do what you say you’ll do. You’ve set expectations for ethical behavior, so you must apply the consequences laid out in order to reinforce those expectations.

Keep to your daily procedures. If you’re consistently taking actions like locking up equipment, checking equipment logs, and verifying time sheets, you’ll demonstrate you’re committed to catching fraud.

If you work to create a culture of integrity from the start, establish trust, and take actions to cement that commitment to ethical behavior, you’ll both promote a healthier work environment and save your bottom line in the long term.


This content was developed for the PHCC Educational Foundation by TPO, Inc. ( Please consult your HR professional or attorney for further advice, as laws may differ in each state. Laws continue to evolve; the information presented is as of January, 2016. Any omission or inclusion of incorrect data is unintentional. Please note this article is not intended to provide legal advice or to substitute for supervisor employment law training.

The PHCC Educational Foundation, a partnership of contractors, manufacturers and wholesalers was founded in 1987 to serve the plumbing-heating-cooling industry by preparing contractors and their employees to meet the challenges of a constantly changing marketplace. If you found this article helpful, please consider supporting the Foundation by making a contribution at

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