Benefits of Ethics Training for Employees:

Ethics training for employee programs are part of all companies as they provide insights for liability protection as well as improve employee morale, their retention is also positively affected by these programs. Ethics are very important for a business as it helps to determine how your company is percieved by others. If your company has a reputation of being ethical and reputable employees as well as customers and collegues will feel proud to be associated with your business, not the same scenario if your ethics and reputation is bad.

Ethics training for employees programs have to be carefully structured taking into consideration and setting standards for ethical behaviour in your company and what you want the training to accomplish. Companies have to make ethical training mandatory for all employees setting a good example that no one is above the law. The ethics training should help the employees become familiar with the company’s code of ethics, know more about decision making using ethical models. Good ethical training provides training covering five basic aspects of ethical training, responsibility, respect, fairness, honesty and compassion. Compliance laws and other topics such as using internet, computers only for company related work and not misusing these resources, about work place romance etc. are an itregral part of the training program.

The training has to provide information regarding reporting ethics violation to specific personnel and reassure them that offenders will be punished severely. This will inhibit the employees from giving into temptation to violate ethical code of the business. The most successful ethics training programs are in house training programs as it helps boost employee morale. These training needs to be an ongoing continuous program and employees must be aware of the ethical code always. Training should be provided in areas such as keeping confidential information safe, how to take the right decisions when there is a conflict of interest, personal versus business etc.

When the ethics training for employees is carefully planned and executed, the employees will have a clear idea of the company’s code of ethics as well as being intimidated with punishment techniques for those guilty of violations. Thus, ethics training for employees is an integral part of any training program provided to employees.

There are firms that offer their help and products to help new businesses function smoothly and efficiently.

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For example if the principal wants to make the test taking and the reporting of scores more ethical, he or she would not want to put it in his own goals for certain criteria for state or nationwide assessments. Without the pressure to meet certain goals for these assessments the teachers will automatically not look toward ethical means to make themselves or their class look good. Though this sounds dubious, there are many teachers who will adjust their teaching and their scores to meet the goal criteria that has been set by the state. By teaching the mid-level leaders a technique of not setting a bar or standard for those test scores, the principal can be assured that the ethical decisions of their teachers are not streamlined toward reaching a retrieved or pull through unethical means.

Don Rainwater has written many articles on business and educational ethics. To view more of his thoughts, books, products, or websites please visit this site

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Tags: programs, ethics, ethical, training, course

1. Finding the Gaps
It includes the skills and knowledge your company possesses and is a major determinant of your success. In this step you need to identify your strengths, areas needing further study and areas of concern that could seriously affect your ability to stay competitive. Once you are through with this step, you would have access to practicable online information and other references that will help you bridge any knowledge and skill gaps. Filling these gaps will help in making your organization better prepared and to ascertain benefit from valuable information relating to the various management functions.

2. Pre-Planning
Pre-Planning is the process by which the management of an organization foresee its future and develop the necessary measures and operations to achieve the goals of future. It includes development of the purpose, mission, vision, and value statements of the managing teams; communication of these documents and suggestions for improvement, culture survey to create a base against which change can be compared and last but not the least celebrating achievements and learning from mistakes. After Pre-Planning the team needs to formulate strategies and, clearly identify an action plan on which implementation is to be performed. As part of this phase, you will also need to repeat your mission and restate your company’s vision. Although there are many kinds of strategies but in this situation basic strategy should not change much in the short term, whereas sub-strategies can change rapidly in reaction to competitive situations.

3. Financing
Financing plan is developed to increase the business competitiveness through an improved knowledge of the techniques and methods of funding available. Equity and debt are two types of financing available to business. Equity is the money that you put into your business and Debt is what you borrow from others to invest in your business.

4. Involvement of Technology
The businesses are becoming more dependent on technology. By optimizing the use of technology, the business may maintain progress, improve its customer services, and gain a competitive edge over those businesses that are not utilizing their technology. In the modern world the change of information technology has become a vital part in competition with the real world. Now the Question is that why do we use technology in business? The answer is simple that it enhances customer service, can decrease cost, can improve communication, can facilitate research, can increase productivity, efficiency as well as effectiveness in the business.

5. Improvement in Human Resource
Using this resource to its best advantage is a means to maximize the effectiveness of the other entire systems and procedures already in place. The business or an organization having skilled and competitive employees is considered as the most competitive business. Proper human resource management is needed to increase effectiveness in work and to smoothly achieve the goals and accomplish tasks.

6. Marketing strategy
Marketing and related activities in a business, small or large, ensure that your business gets information from its customers, develops and markets the services to satisfy their needs and gets feedback on their satisfaction levels. Marketing acts as an interface between the enterprise and its markets. Marketing can be defined as the function that encompasses most activities between the producer of a good or the supplier of a service and the consumers. It is also a set of business development activities which starts with the consumer from whose needs, the business gets its service ideas and to whom it will sell its services.

7. Process of Quality Assurance
The Process of Quality Assurance in a business refers to planned, and step-by-step activities that determines that testing is being carried out correctly, results are accurate, and mistakes are found and corrected to avoid undesirable outcomes. Quality assurance is a constant set of activities that help the business to ensure that the test results provided are as accurate and reliable as possible. Maintaining quality assurance leads to customer retention, and an image as a competitive business in the minds of clients.

Conclusion
Competition in businesses is now found everywhere and in such a competitive world it is difficult for any new business or start-ups to survive and thrive. Implementation of the above steps can definitely help towards effectively competing in any market.

© 2006, Wholesale Pages UK. All rights reserved.

William King is the director of Canada Wholesale, UK Wholesalers and Dropshippers Directory. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.

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Tags: ethics, programs, business, corporate, training

Although as a retired Franchisor and now consultants I have in the past had new franchisor entrants want me to consult them and I ask them how long they have been in business and they have maybe 3-years total including the day they got their business license before opening? You think to yourself what? How can anybody and thickly with two sell franchises when they have not perfected their own business or prototype model?

But then comes the real kicker and one, which just makes me cringe as a franchisor consultant; then these would be Franchisors tell me when I ask how much capital they have they say that they have approximately $35,000 available.

This is a scary thought indeed; why you ask, well it takes a million really to franchise a concept and you burn thru it fairly quickly unless you do not mind eating Top Ramen, putting in lots of hours and treating the money like you earned it washing dishes at $5.15 per hour. If you are thinking about franchising your current business please consider all this in 2006.

“Lance Winslow” – Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; WorldThinkTank. Lance is an online writer in retirement.

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Tags:ethnics, training, class, good, programs

The corporate world today faces rising ethical dilemmas in every day operations. Ethical issues, often confused with corporate scandals, are not necessarily as dramatic as that. Every department of every organization face moral and ethical dilemmas in their day to day functioning, and often enough corporations get away with unethical or immoral behaviour. Of course, reasons vary. Arguably, organizations cannot afford the risk of not investing their time or resources in developing a comprehensive approach to corporate ethics. This report looks at two multinational organizations, Unilever and Nike Inc. and draws a comparison on their discriminatory practices in the various countries or culture they operate in. Both the firms are identified with unethical behaviour, and although the circumstances and the firm’s ways of handling these issues are different, little seems to have changed.

Unilever Issue: Fair is Lovely!!

An Anglo-Dutch company, Unilever owns many of the world’s consumer product brands in foods, beverages, cleaning agents and personal care products. Unilever employs more than 247,000 people and had a worldwide revenue of US$51.4 billion in 2004. (Unilever 2006). In India however the firm runs under its operations under the name of Hindustan lever. The company has a range of ‘home and personal care’ products in the Indian market. One of the most successful brands of the company is ‘Fair & Lovely’. The company websites claims to be using a patented technology for this fariness cream. The website claims ‘Fair & Lovely’ to be formulated with optimum levels of UV sunscreens and Niacinamide, which acts safely and gently with the natural renewal process of the skin, making complexion fairer over a period of six weeks.

A number of ethical concerns are however related to the product. Apart from the ill effects on the skin, as claimed by some doctors, the advertising and marketing of the product has been doing more harm than good for the society. Its frequently-aired ads typically show a depressed woman with few prospects, gaining a brighter future by having a boyfriend or attaining a job after becoming markedly fairer (emphasized by several silhouettes of her face lined up dark to light). On its Web site the company calls its product, “the miracle worker,” which is “proven to deliver one to three shades of change.” (Unilever 2006). To many it may seem or sound strange for all this to happen in a country where the majority of the people have a dark complexion of skin colour with variations in brownness. Ironically enough though, people from all walks of life, be it a would-be-mother in law, or a young or an old male, everyone seems to have a fascination for lighter skin. Women from all socio-economic backgrounds go to unbelievable lengths to become just a little whiter.

Although the advertising done by Unilever for ‘Fair & Lovely’ is not illegal but it certainly remains objectionable. In an era which is dawned by corporate scandals, such as Enron and the Australian Wheat Board (AWB), Unilever has been successfully running this product in over 38 countries. Ironically most of these countries are under-developed/ developing country, who can do away with such practices. In India, a country with a huge social and cultural divide, high unemployment and illiteracy levels, Unilever successfully deceives and manipulates people through its exaggerated claims. Even if the claims were to be true, and such a product was to make skin lighter, the company looks to gain market share and increase profitability by creating a mindset where lighter skin is superior to a darker complexion. In reality people are buying products that will cause more harm than good. The demand for such “skincare” products is part of an India-wide trend of women wanting to lighten their complexions in the belief that lighter is better. This desire has a long history, a hangover from India’s colonial past fuelled by contemporary global perceptions of beauty that give prominence to western marketing and fashion styles. The advertisements shown fail miserably at all levels of advertising ethics.

One of the concepts that can be used to explain the practices of Unilever advertising is Moral myophia, the failure of Unilever to see the moral dimension at all. The advertisements done by the firm have probably been successful. How else would you explain the never ending promotional campaigns all over the media; print, display or broadcast. Success in this case relates to the increasing profitability of the firm after a particular ad campaign. The social implications of this to the society are however conveniently ignored. Quite clearly, Unilever seems to be following the belief of the only bad advert is one that does not work.

The content of the product website makes things a little more complicated. The website claims to be helping women in India, often considered to be the weaker sex. The Fair and Lovely Foundation, an initiative of Hindustan Lever Limited seeks economic empowerment of Indian women through information and resources in the areas of education, career guidance and skills training. Comprising of an advisory body of leading individuals, this foundation aims to undertake various projects and initiatives in keeping with its vision of empowering women to a brighter future. Prominent women organizations and achievers partner initiative to promote economic empowerment of women. (Grace & Cohen 2005)

Noble thought?

It sure is, but at what expense. Isn’t it strange and ironic that this company, and others in the business, continue to sell fairness as a desirable quality, be it for success in marriage or career, and equate dark complexions with failure and undesirability? Where does a company draw the line between selling a product and being socially sensitive? What is even more disturbing is the fact that there is a constant attempt to disguise these socially unacceptable practices. As noble as the idea behind the Fair and Lovely Foundation might be, it still does not solve the root problem. Addressing one problem in the society can not come at the expense of exaggerating the other one. Women in India need to be empowered, and be told that they are no less than their male counterparts, however the people of India also need to be told that the mere colour of skin does not make one superior. The society needs to get over the colonial hangover, and the least that companies like Unilever can do is not spend millions of dollars on campaigns which do more social harm than good.

Nike Dilemma: Still waiting for them to “do it”!

Another corporate giant having its fare share of controversies over the years is Nike. Nike employs approximately 26,000 people worldwide. In addition, approximately 650,000 workers are employed in Nike contracted factories around the globe. More than 75% of these work in Asia, predominantly in China, Thailand, Indonesia, Vietnam, Korea and Malaysia (Nike 2006). In 1998 Nike came under fire for the sweatshop conditions of the workers in the Nike factories in China and other third world countries. The evidence showed that the workers were regularly subject to physical punishment and sexual abuse and exposed to dangerous chemicals. (Nike Accused of Lying About Asian Factories 1998). Sub standard working facilities, bare minimum wages and risks to health of labourers mark NIKE factories in Asia. The firm was also accused of practicing child labour in Pakistan.

So the question now is, why did it happen, and more importantly, has anything been done since to correct it.

So why did it happen?

Well that is quite clear. The reason why most firms outsource their activities to lesser developed countries is to exploit cheaper labour and production costs. Nike has a brand reputation worldwide, and in-fact is a market leader in the sales of athletic shoes. The constant focus is to formulate ways and strategies to reduce production costs, and one way of that is fewer wages to the workers. The high unemployment levels in the third world countries, as well as the desperation for people to be employed, in any kind of work, allows multinationals like Nike , the perfect platform to indulge in malpractices without getting into too much trouble. A look at some of the ethical issues concerned with Nike’s human (or inhuman!) right violations would give a better understanding of the concern.

Ethical Dilemma:

Any firm which expands its operations globally needs to follow the basic code of international ethics:

• Not to intentionally direct harm in the host country. By providing below standard and unsafe working conditions, and low wages, Nike was clearly intentionally doing harm.

• Benefit the host country. Although Nike was indeed expanding the number of jobs available in China, a desirable aspect, but the extremely low wages meant it was all beneficial for the corporation and not the people in China.

• Respect the human rights of employees. Reports of unsafe and hazardous working conditions proved that Nike did not care much about the human rights in China.

• Respect the values, culture and laws of the host country- as long as they are not morally wrong or against human rights. (Grace & Cohen 2005)

It would be a fair assumption to make, if a certain behaviour is unacceptable in the home country, it would most likely be morally wrong in a foreign environment as well. Managing stakeholder interests is also extremely important for any firm. However problems arise when businesses fail to prioritize the stakeholder interests. Nike prioritizes its stakeholders in terms of their importance to the firm, and quite clearly the workers in Asia, do not seem to be anywhere near top of this priority list. As a consequence, all the efforts of the firm are directed towards the consumers, who typically are in developed countries, with more money, and who can not care less about what might be happening in a Nike factory miles away from home.

So has Nike done anything about it?

Since the controversy first broke out in 1998, Nike has claimed to taken several steps to correct the mistakes. Or so is what the organisation claims. This section of the article focuses on Nike’s efforts, the truth, the lies and the myths about it.
After the controversy broke out in the international media, Nike’s founder and CEO Mr. Philip Knight made six commitments:

• All Nike shoe factories will meet the U.S. Occupational Safety and Health Administration’s (OSHA) standards in indoor air quality.

• The minimum age for Nike factory workers will be raised to 18 for footwear factories and 16 for apparel factories

• Nike will include non-government organizations in its factory monitoring, with summaries of that monitoring released to the public.

• Nike will expand its worker education program, making free high school equivalency courses available to all workers in Nike footwear factories.

• Nike will expand its micro-enterprise loan program to benefit four thousand families in Vietnam, Indonesia, Pakistan, and Thailand.

• Funding university research and open forums on responsible business practices, including programs at four universities in the 1998-99 academic year. (Connor 2001)

However there was still no mention of the human rights of workers, higher wages, more reasonable working hours, safer and healthier work places and respect for Workers’ Right to Freedom of Association. Later consumer activist Marc Kasky filed a lawsuit in California regarding newspaper advertisements and letters Nike distributed in response to criticisms of labour conditions in its factories. Kasky claimed that the company made representations that constituted false advertising. Nike responded the false advertising laws did not cover the company’s expression of its views on a public issue, and that these were entitled to First Amendment protection. The local court agreed with Nike’s lawyers, but the California Supreme Court overturned this ruling, claiming that the corporation’s communications were commercial speech and therefore subject to false advertising laws. (Kasky V. Nike 2002)

The parties subsequently settled out of court before any finding on the accuracy of Nike’s statements, for $1.5 million. Discovery in the Kasky case had the potential to open the Nike files to public scrutiny, to document the mistreatment of workers throughout the world, and the flow of money from Nike to public interest groups. However Kasky and his lawyers settled this potential historic case for a $1.5 million donation to a group controlled by the shoe and apparel industry. There hasn’t been a word about it since.

(Weissman & Mokhiber 2002)

In 2004 Nike announced that it would be developing a balanced scorecard to integrate corporate responsibility into its business. The sports goods manufacturer said it would introduce corporate responsibility as an integral part of its contract manufacturing business. Sourcing decisions were to be based not just on price, quality and delivery but also a contractor’s pledge towards labour management and environmental, health and safety programmes.

In 2005, seven years from the time when the controversy was first made public, an independent research conducted showed that although 60% of factories monitored achieved an A or B rating in terms of compliance with agreed standards, a quarter of factories were found to present more serious problems. These ranged from a lack of basic terms of employment and excessive hours of work to unauthorised sub-contracting, confirmed physical or sexual abuse and the existence of conditions which could lead to death or serious injury. The Guardian also reported some of the conditions that existed in the Chinese factories in 2005

• Between 25% and 50% of the factories in the region restrict access to toilets and drinking water during the workday.

• In more than half of Nike’s factories, the report said, employees worked more than 60 hours a week. In up to 25%, workers refusing to do overtime were punished.

• Wages were also below the legal minimum at up to 25% of factories
(What are factory conditions in China 2005)

Once again Nike said it would set up a taskforce to improve compliance with its code of conduct on working hours. It will also work with factories to help them address the most pressing problems as well as seeking to establish a set of common standards across the industry. (Nike opens up in Standards Drive 2005)

The question of course is, would anything still be done. There is a good chance it may never be. Nike sees business ethics as “no good at all”, and believes acting ethically would not be in the best of interests of the business. Not till the time, the sales of the business go down alarmingly, would there be any hope for any drastic improvements in these conditions. Nike has always had its share of controversies, and the firm seems to be thriving on it. The firm manages to use the controversies as a publicity tool. Thus far, Nike has treated allegations as an issue of public relations rather than human rights. Every allegation is followed by the release of public statements across various magazines and newspapers stating the efforts made by the firm to make the difference, but seven years down the road, the differences are yet to be seen. Meanwhile the efforts of Nike to manipulate and win even more customers go on. The corporate website of the firm talks heavily about their shifting approach to labour compliance.

(Evolution: Shifting Approach to labor compliance 2006)

Unlike Nike, Unilever has not quite been indulging itself in illegal activities, but does that make it any less harmful, or does that make Unilever any bit more ethical than Nike?

According to this writer, the answer to both the questions is NO. In fact what makes Unilever’s practices even scarier than those of Nike is the fact that they cause as much harm, but still there seems to be little concern over it. The firm has been in operation since 1978, and even 28 years after there seems to be little or no concern. There is little media coverage over the menace, possibly because of the advertising revenues being paid, or just the ignorant nature of the present day media, which seems to be more interested in scandals rather than some social concerns in a third world country.

The double standards practised by both Nike Inc, and Unilever are quite apparent as well. The majority of Nike clothing is produced in countries it hardly has any sales, but of course the factory conditions of a worker based in an American factory is strikingly different from that of a worker in a Chinese factory. Likewise Unilever manipulates the market by introducing fairness creams in cultures where beauty equates fairness. To boost the sales, the company goes a step further by trying to position the product by changing consumer perception of fairness as being successful, both socially and emotionally.

Social impacts? Did you ask?

Of course that’s hardly on the agenda. The interesting thing is, although Unilever operates in over 40 different counties, including Australia, the ‘Fair & Lovely’ product is only available in a handful of markets. The company does not have any ‘Dark & lovely’ brands in their western markets, possibly because they perceive this market to be more educated and therefore tougher to manipulate.

The firms of course have their reasons, and one of them is us, the consumers, who purchase these products. It is the age old formula of demand and supply. We demand the product, and the firm of course goes to any lengths to fulfil the gap. In Unilever’s case, there is an obvious need in the mind of the consumers in India to have fair skin. Similarly for Nike, the worldwide demand for their apparels compels the firm to go to unbelievable extent to produce lower cost products. The story unfortunately does not end here. We the consumers, then put the firm under even more pressure to maintain their profitability, only this time we take the role of investors. Investor’s of course are only concerned with the share return, and cannot care less about how the firm maintains its profitability.

Jennifer Abbott and Mark Achbar, in their documentary ‘The Corporation’, proved that corporations in the present time fit the definition of a ‘psychopath’. The concern is that this psychopath is being raised and bred by us, the consumers, and the investors. These are average times we are living in, with every day more issues, more scandals and more controversies breaking out. However reading the stories is nearly not enough. Something somehow somewhere needs to change and change sooner rather later, before it gets too late.

End of story?

Unfortunately, I don’t think so.

Pranay Rai is a young management student at Melbourne Business School, Australia. Through his simple yet unconventional style of writing, Pranay hopes to touch the souls of millions across the globe, reminding them of the social issues that have been long forgotten.

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Tags:ethics, programs, business, medical, corporate

We have clergy molesting children and folks telling us you can trust me because, well because; “I am a Christian!” Ouch, run when you hear that one, if someone has to tell you that you can trust them, then you know there is a problem indeed. Why are people so dishonest? Our own government is often dishonest and not just those purported stories about the leadership, that is politics, I mean everything else.

We have government workers using government credit cards to take their personal cars to the car wash and folks going to the local Tavern and writing it off as a “Strategy Session” and then they laugh and brag about it. That is not funny, I want my taxes reduced, drink on your own dime and get your car washed without committing a crime.

The lack of honesty amongst humans is so great it is as if you cannot believe a word you hear. You cannot believe a thing you read and what about TV we all know that is a mass media hysteria farce? Well is all this bombardment of BS, training humans to exhibit this lack of honesty?

Since corporations draw from our own populations to their various departments, including marketing it should be no surprise that often we see a little misrepresentation in Corporate Marketing Departments. But if you work hard you can curb these issues. Are you an honest person? Show me, don’t expect me to believe you next time. Consider this in 2006.

“Lance Winslow” – Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; WorldThinkTank. Lance is an online writer in retirement.

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Tags:ethics, programs, business, medical, corporate

1. The Poker School – “It’s a Game”

To poker players, business is a game and anything that can be done to gain advantage within the rules of the game (generally speaking, the laws of the land), is fair and just. If you love negotiating “gambits” (lowballing, goodcop/bad cop, red herrings, nibbling, etc.), and sales “tactics” (101 effective closing techniques, 30 tricks to getting past the gatekeeper,etc.) you may well belong to this school.

2. The Idealist School – “Do the right thing, even if it hurts.”

To the idealist, there is no seperation between business in life. If you would not lie to your loved ones, you do not lie to your clients. If it’s OK to tell a “white lie” to protect the feelings of a friend or prevent a tragedy, it’s OK to tell a “white lie” to protect a corporate ally or prevent a business tragedy. While two idealists may differ in the specific set of rules they live by, they share the rigidity of doing what they believe to be “right”, even when it seems contrary to their business goals.

3. The Pragmatist School – “What goes around, comes around.”

The behaviour of a pragmatist may be inseperable from that of an idealist,but the motivation is different. While the idealist tells the truth and treats people fairly because it’s “the right thing to do”, the pragmatist tells the truth and treats people fairly because they believe it is the most effective way of getting things done. However, they will not hesitate to use deception as a necessary tool in pursuing their aims. Because pragmatists value their reputation (being seen to be honest), they will tend towards “misleading” statements over outright lies.

There are also combinations of these schools. “Pragmatic idealists” dothe right thing because of their ideals but are not above pushing the envelope of truth when the pressure is on and the chips are high; “pragmatic poker players” tend not to bluff in order to evolve their reputation as trustworthy, but will take advantage of that reputation when it really counts. “Idealistic poker players” are those among us who recognise business as a game, fully expect everyone around them to do their best to lie and cheat, but will only involve themselves in games they believe they can win by doing the “right” thing.

Possibly the most important thing to realise is that not everyone plays by your rules. Your being honest does not ensure others will be honest with you; similarly, your willingness to lie, cheat, and bend the rules does not mean the people you are doing with will do the same.

Here are a few things you can do to put these theories of business ethics into practice:

1. If you haven’t already, identify what “school” you belong to. Remember,your motivation is as important an indication of your ethics as your actions.

2. Identify at least one person that you know or have read about that seems to embody each of the three primary and three secondary schools of ethics. Once again, be aware that knowing someone’s actions without understanding their motivation will not necessarily reveal their ethical bent.

3. Discuss this tip with friends, and see what else you can discover that will enable you to be who you are while dealing ever-more effectively with others.

Have fun, learn heaps, and remember – a good poker player will inevitably tell you they’re an idealist!

Michael Neill is a licensed Master Trainer of NLP and has written over 450 articles on in the areas of business success, money, relationships, health, happiness, well-being, and spirituality. His weekly coaching column is reprinted in newspapers and magazines throughout the world, and can be found online Here

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Tags: training, course, programs, trainer, seminars

Insurance fraud is one of the real threats facing the industry. The growth of the claims culture, together with research shows consumers believe insurers are ‘fair-game’, making for a dangerous combination. The costs to manage these claims come with a risk factor; bad faith suits, medical expense, investigation expense to name but a few. The utilization of third party providers to assist in managing these claims has opened the door to the added risk of provider fraud. The cost to the industry is enormous and affects the way the public view insurance companies and their service offerings.

MetLife director of special investigations, John Sargent stated in an article “that eliminating fraud is an unachievable goal”. But that hasn’t stopped his company or other industry leaders from trying. “”Our goal is to pay what we owe, and not a penny more or a penny less,”" Sargent says. “”The more efficient we are at identifying and preventing fraud, the better we can be at writing business at a more competitive rate.”"

Insurance fraud costs Canadian policyholders over $1 billion each year. To the average Canadian citizen, that means at least 10 percent of their total insurance premiums are used to cover the cost of fraud.
(see the site)

There is nothing new about fraudulent insurance claims or in the way they are adjudicated. The high cost of insurance fraud is passed on to the consumer and therefore, creates a situation where the industry might fail to seek a better solution to combating it. We’ve seen insurance claims directors reduce the numbers of claim handlers in order to ‘contain costs’, frustration amongst investigators when insurers exhort them to reduce fee’s, and then make a “”commercial decision”" to pay unnecessary claims. These cost cutting solutions are not and haven’t been effective, instead insurers need to re-focus on reducing claims before they become costly and problematic.

The History of Insurance Fraud

While insurance fraud schemes have evolved over time to fit within the circumstances of modern society, the foundation of them has been in place for centuries. For example, one of the earliest fraud schemes involved the purposeful sinking of ships, otherwise known as “ship scuttling”. One of the first incidents of ship scuttling was recorded in ancient Greece. The problem became increasingly worse, and by the early 1700′s ship scuttling became so prevalent that England passed one of the strictest insurance fraud statutes ever, providing for death by hanging as a penalty for conviction.

The sinking of the ship Adventure is typical. The Adventure was purposely sunk off the coast of Brighton, England in 1902. The ship owners, Easterby and MacFarlane, purchased the Adventure at a salvage auction (which like vehicle’s in modern day schemes, was where the most scuttled ships were purchased). The ship was then repaired so that it could earn the lowest passing grade of seaworthiness. The ship owners then, over-insured the Adventure and told it’s Captain (Captain William J. Cotling)to sink it, so that they could collect the insurance. As with many schemes, the characters committing the fraud were careless.

To maintain structure within a company you need a solid foundation. Insurium delivers practical solutions to bridging the GAP of escalating insurance claim costs

The Captain ordered an inexperienced mate to open the scuttle so that the ship would sink. The ship, however, was in shallow water and was sinking so slowly that the Captain had to refuse assistance from a nearby fishing vessel. In fact, the next morning the masts of the ship were still visible from the shoreline. In the end, the Captain was prosecuted for his actions and hanged. The shipowners however, were neither prosecuted nor fined.

The earliest recorded life insurance fraud a case of pretended death comes from England in the 1730′s. A father and daughter staged a succession of schemes in which the daughter appeared to convulse, with heart spasms then go limp in apparent death. While the father stood by in convincing grief. These schemes traveled from England to America and eventually with the advent of automobiles that we began to see related injury claims. Today the same schemes exist, though the mediums have changed. In a nutshell resourceful individuals have been quick to seize opportunities to steal money from insurers in just about every imaginable means.

Insurance fraud comes in many different flavors, ranging from isolated crimes of opportunity to sophisticated organized schemes. While it is unrealistic to expect insurers to eradicate fraud in its entirety, it is however, realistic for insurers to reduce their exposure to this multi billion dollar a year industry

Time for Change
Fraud Investigations are being scaled down, on the basis that it is reactive rather than proactive. Fraud has to be beaten by a more strategic approach, involving consumers, employers and claims handlers. The fraud problem in insurance relies heavily in the skills and effort of the insurer and their agents to uncover and manage fraud.

Lack-lustre investigations will not result in a dossier that is effective as evidence in a court. To discharge the burden of proof in a criminal trial, insurers need to provide evidence to convince a magistrate or jury beyond all reasonable doubt of any guilt. In civil cases, the usual standard of proof is on a balance of probabilities, in fraud cases there is a very high degree of probability. The costs associated with investigating fraud come with additional risks which could lead to reputational damage and loss of public confidence. This is an area of cost management that requires review and reconstruction.

To help reduce claims related costs and reserves, insurers need to become more proactive than reactive, to unjust claims and provider fraud. Being proactive requires a good understanding of the root cause. The root cause associated with fraudulent claims begins long before the claim is submitted and can be traced to human behavioral traits. The lack of understanding by employers or empathy by claims personnel coupled with a lack of good communication between, H.R, claims and investigators can a create a GAP in process and provide a green light for the claimant to fabricate, inflate or exaggerate their claims. With GAP’s, like these, there’s little wonder why insurers are seeing a rise in their claims portfolio. The answer is a lot simpler than it seems and corporate buy in is necessary. Proactive methodologies and practices will assist a company identify the motivations of individuals who are most likely to direct an act of fraud towards the insurer or their employer.

By being more proactive as apposed to reactive you have a better chance of reducing your claims exposure, reduce reserves and better manage your service providers while reducing the potential for litigation, bad publicity and poor public perception and at the same time ensuring compliance with your companies vision. In the war on insurance fraud, chasing the carrot will no longer yield the desired results. We need to stop looking at trying to remove the opportunity and focus more on the motive, thus understanding the root cause and effectively set about cost containment.

Insurium Inc., Enterprise Defense and Responsibility Consultants “Your Key To Corporate Preservation”

Visit Insurium Inc. website.

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Tags: ethics, programs, business, research, management

Some companies use inside PR teams with directors, managers, coordinators, and interns. Others engage outside PR firms in order to craft the perfect press release, the pitch letter that an editor will drool over, or to wine and dine a group of reporters at the hippest restaurant and bar in SoHo or Chelsea. Working the media takes time and effort. It involves building tailored media lists, distributing press materials, and yes, meeting with the media and even taking them to lunch (a dirty job, but someone’s gotta do it). It’s about nurturing one-on-one relationships that can sometimes take years – and money – to bear fruit.

I know, I know. You have no budget, time, or manpower for a massive PR campaign. I wouldn’t approach this topic if I didn’t have a solution here. The good news is that in today’s New Media world, the art of traditional public and media relations is changing. And it’s changing fast and for the better for small, but successful VARs like you. So I’m offering up a few tips on how to get your PR effort going without taking the traditional route.

Social media is quickly becoming a core element of communications and PR plans, which is great for you – simply because these new media tools are easy to use, don’t demand a lot of manpower, and are economical. How great is that? Blogging, social networks, and podcasts reach more customers and influencers of your product than traditional media might and require almost no out-of-pocket investment. Plus, once you take a little time to get familiar with these channels, it’s so easy to utilize them to your advantage!

According to a recent article in the Wall Street Journal, “When it comes to generating goodwill between a company, its customers, and prospects – the very essence of public relations – it’s a buyer’s market for small businesses.” For instance, one small business cut loose their PR firm which had been receiving a $6,500 monthly retainer, and replaced them with a $700-a-month line item in their budget for website maintenance. Using their up-to-date database, they began sending weekly email blasts to VIP customers and friends – again, at no cost. The results? The small company’s best PR efforts came from communicating directly with their existing customers and friends, who then forwarded those email blasts on to their friends. Special email newsletters included targeted information geared toward hitting those touchpoints that the company knew would grab the attention of its customers. They gave their customers what they wanted through links to the website and easy access to valuable information.

News “flashes” are also easy to incorporate into your PR program and search engines love them. When written thoughtfully, using keywords and phrases, and in paragraph format – one paragraph for content and one paragraph about your business -search engines will pick up on these flashes and reward you with a higher ranking in searches for your business or product. Create a “news” section on your website where these flashes can call home. Search engine crawlers visit sites that are constantly changed and that are dynamic. When crawlers see that you update your “news” section frequently, and you have carefully crafted your news to include your keywords, you quickly find that these pages will receive high rankings.

Of course, landing a feature story about your latest product in a Top 20 national newspaper (e.g., USA Today, Wall Street Journal, New York Times) or being included in a segment on Oprah or The Today Show is worth way more than its weight in gold, but so is going directly to the world – literally – and to the newswire yourself. The Web is allowing smart VARs like you to engage with the public without the mainstream press or the PR flak who court it. With new media resources, like YouTube and Flickr, you can now deliver unedited messages in your own voice and image instead of leaving it to the press to report the story they way they think it should be told. Or you can create short videos or podcasts for your own site for customers and potential leads to download and watch. Here, you can craft your own message and become “the expert” in your field. The same holds true for blogging. Start offering some of your insightful wisdom on new trends. Customers – and search engines – and sometimes even the traditional media will come to view you as the resource in your industry. The trick is to learn to use these tools without sounding too commercial in your pitches or offerings, and then enjoy the benefits of well-crafted viral marketing take hold.

A dedicated marketing professional, Michelle Kabele has been helping technology companies develop award-winning channel partner programs and marketing strategies for over 10 years. Michelle has worked extensively with small businesses throughout North America.

Michelle has an MBA from the J.L. Kellogg Graduate School of Management (Evanston, Ill.)

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Tags: media, pr, programs, marketing, company