Preventing payroll fraud, or any inappropriate behavior, starts with establishing a company culture that clearly rejects it. Employees should know that the company they work for values integrity. Managers should communicate those values and expectations during the hiring process, then regularly train staff on acceptable behavior.

“One of the things we’ve started to do is speak to interviewees about our values,” says Hewick. “We question them in ways that uncover their values and that will tell us how they’ll react in certain situations. We try to weed out people who would likely try to cheat the system.”

Implementing a nepotism policy can help combat potential problems, as can offering a confidential human resources complaint hotline so employees can feel safe to report abuses. 

It’s also important to have an employee onboarding and monitoring system that includes verifying the existence of new hires and checking on their work over time. It should also include a system for verifying time cards before people are paid, approving overtime in advance, and monitoring payroll. 

It’s fine to put one person in charge of this process, but a second person should review audits to ensure proper checks and balances.

Policies and policing aren’t the only options for fighting payroll fraud. Technology can also be a useful tool. 

There are now app-based time clocks that use biometric markers, like fingerprints or facial recognition, to log an employee in and out of work. Many of these apps also incorporate geofencing, a virtual location marker created by GPS, to ensure the person logging in is on the job site.

USSI switched to one of these systems in response to its run-in with ghost employees. The program easily integrated with the company’s existing timekeeping and payroll system.

“At first a few people were a little leery, but over time they became comfortable with it,” says Hewick.

Rozalado Services in Chicago has never experienced payroll fraud, but three years ago the company switched from having employees clock in using a landline phone and a 4-digit pin to using a geofencing app.

“It’s a job requirement that they have a smartphone,” says Dominic Amoroso, Rozalado’s director of operations. “Each phone has a unique IP address so you can’t use someone else’s username and password on your phone.”

Using the same technology, Rozalado’s janitors must also upload photos to document anything out of the ordinary. For example, if they claim a job took longer than usual because of excessive trash, they must show photos of the trash. It’s yet another way to ensure staff are doing the work for which they’re being paid.

“All of our managers know how long it takes to clean an account,” says Amoroso. “If it’s a two hour account and someone has been there two and a half hours, the manager will message them asking why it’s taking longer.”

Additionally, Rozalado performs frequent inspections of its job sites. 

“We have three people who all they do is inspect, all day every day,” he says. “A lot of companies don’t even do inspections unless there’s a complaint because they think they can’t afford it. Our mentality is that we can’t afford not to do these things.”

USSI has also made changes to its managers’ workloads to allow them to spend more time checking on job sites. 

“The technology is just a tool,” says Hewick. “The more important thing is the human touch of the people in the field. Getting to know your people and really being there for them is just as important.”

When managers are on site often, they can improve the bond with the customer.

“Customers hear things,” says Hewick. “If you have a good relationship with them, then they will tell you if they hear or see something that sounds strange.”

If a business is worried that it could have ghost employees or a buddy problem, it should quickly take action. If it doesn’t have an HR manager to audit its processes and records, or if a third-party opinion is needed, a consultant should be considered.

“People oftentimes don’t know what they don’t know,” says Cheddie. “This is where HR leaders can help. We close the knowledge gap and help them grow their business.” 

Becky Mollenkamp is a freelance writer based in St. Louis.

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