Management Blog

Are you turning a blind eye to fraud?

Workplace fraud is emerging as a serious problem for Australian businesses with one in five companies affected by crime without even realising about it, according to a recent news.com.au posting.

The article refers to research that estimates the cost to the community of corporate fraud is well over $14 million a year; another study on the same topic has found fraud incidents have increased from 27,657 in 2004 to 65,000 in 2006.

Common fraud incidents include: employees lying about their experience or qualifications to get a job; timesheet embellishment; misusing computers and company files; abuse of sick leave entitlements; inflating expense claims; and stock shrinkage.

Workplace law experts quoted in the article recommend companies of all sizes implement fraud-reducing strategies, call in forensic accountants if they suspect dishonesty and always check the details of a prospective employee's CV before taking them on board.   

Want to go from mid to big?

Teaming up can be a smart move for mid-sized companies wishing to enter global markets or complete with larger firms. It can also be a disaster if the right alliance isn't formed.

In a recent article on innovative partnering, Business 2.0 magazine offers four key factors that can determine the successful union of growth focused mid-sized companies.

1) Anticipate the payoff – Only form an alliance with a company that has the skills and connections to make your firm bigger and better

2) Do your homework and your groundwork – Thoroughly research your prospective partner and ensure the alliance has the backing of senior executives at both companies

3) Create a team-based culture – Understand the connection between productivity and employee satisfaction

4) Consider corporate citizenship – evaluate the financial and social goals of the alliance, a process that can contribute to profitability

Coping mechanisms worth avoiding

Increased stress levels come with the territory as you rise up the corporate ladder; how you choose to deal with this stress can define your career success… or lack of it. Fast Company has put together a list of 10 coping mechanisms that can trip managers up.

In summary, these include:

1) Avoiding confrontation to circumvent an angry outburst

2) Not listening to advisors because of fear of change

3) Refusing to own up to being wrong

4) Thinking that dealing with problems with unearth more problems

5) Not being able to let go of a losing venture

6) Being fixated with strategy while ignoring its execution

7) Taking the logical path and ignoring gut instincts

8) Trusting gust instincts alone and ignoring analysis

9) Encouraging a culture of favouritism

10) Choosing to overlook issues they don't understand

Online identity theft on the agenda

The sheer volume of passwords computer users are required to have means many people simply use the same password for different sites. A harmless cyberspace habit?

The International Telecommunications Union (ITU) doesn't think so. The Geneva-based UN agency believes the practice is contributing to the rapidly growing and costly problem of online identity theft.

The ITU has urged businesses and regulators to focus on identifying new methods of protecting personal information, one of which is the use of more streamlined user identification methods.

It also has a warning for online marketers. The ITU says businesses that do not respect the privacy of consumers with regard to the use of data capturing tools, such as cookies, are jeopardising the future expansion of e-commerce.

Be a better blogger

With blogging starting to make an impact on corporate life it pays to get it right, suggests The Times in a recent article that offers tips and tricks on how to successfully tackle online self-publishing.

In the short history of blogging, the first response of many companies was to watch blogs closely for whistleblowers, protestors or threats. However, a growing number of companies are realising the potential of blogs to engage consumers either through their own blog or via advertising on other blogs.

The article suggests the key to developing a successful corporate blog is to avoid PR speak. Online audiences are savvy; they won't return to a blog laden with corporate dross, poorly written postings or information that doesn't relate to their needs.

Organisations wishing to make the most of blogging should act in a straightforward manner at all times and "advertise on good blogs and allow their own blogging employees to be honest, open and entertaining."

Refocusing focus groups

The days of traditional focus group market research methods are numbered with advances in technology and behavioural studies providing more dynamic and insightful data on consumer needs.

Inc. magazine reports companies including Yahoo and Pepsi are breaking with past methods by using a range of new techniques to help them introduce new products to the market place. In summary, these include:

1) Internet research panels – where groups of consumers participate via instant-message services from the comfort of their own home or office

2) Conversation groups – groups of friends get together at a host's home to discuss life issues; this information is matched to product solutions

3) Immersion groups and ethnography – when companies go to the consumer to study their behaviours at home live or via cameras

Time to reassess ageist views

Businesses need to start rethinking how they treat older workers and implement programmes to diminish generational prejudices in the workplace, according a Financial Times opinion piece of the issue.

Commonly held beliefs that older workers can't cope with IT tools and dislike change or that younger workers are unreliable, flighty and take more sick days are examples of intergenerational prejudices that managers need to address.

"By failing to make better connections between the generations, whether at work or in the wider community, we risk polarising young and old, almost setting them up in opposition to each other, just at a time when we need to think harder about the financial implications of our aging society."

To avoid the prospect of losing talented staff the article says leaders should consider the benefits of introducing diversity enhancing strategies that foster greater acceptance and collaboration between different age groups.

Predictions for the year ahead

2007 may become known as the year of the social enterprise with a new breed of entrepreneurs rising to the top by 'doing good', according to several US corporate trailblazers who gave Business 2.0 their predictions for the year ahead.

In summary, here's what they said:

Howard Schultz, Starbucks chairman, believes fostering trust with both staff and customers is the key to successfully fostering social responsibility. "Where companies at one time could spread their message through traditional marketing, consumers now seek an enduring emotional connection with the companies they patronise."

Vinod Khosla, Khosla Ventures founder, predicts that opportunities abound for investors that consider 'green' alternatives to oil consuming technologies. "If investors can generate returns by putting money in companies focused on alterative energies, that will mean funding for newer and newer technologies."

Laura Scher, Working Assets CEO, says if a company is going to take a stance on a particular issue, from gay rights to the environment, consistency is critical. "You won't be successful if you start something that you call a social enterprise just because you think it's a good way to make money. That might work in the short term, but I don't think it's going to have staying power."

Whitespace: Are you ready for Second Life?

You're standing next to a floating neon Christmas tree talking to a colleague as she proudly displays her gossamer wings. Another nearby co-worker has ankle length green hair and is wearing a red tutu. A fat little elf with robotic hands joins the conversation. It might sound like you're at a fancy dress Christmas party. You're not. You're not even in the same room as these people. You're at your desk conversing with colleagues in Helsinki, Sydney and Johannesburg via the 3D online experience known as Second Life. Some claim it's the future of the web. Others believe it's an over-hyped geek enclave that shouldn't be taken too seriously. Differing viewpoints aside, one thing cannot be disputed: innovation-focused companies large and small across the real world are watching Second Life very closely. Should you?

Imagine it, create it

Second Life is the offspring of San Francisco-based new media developer Linden Labs. Since going live three years ago over 1.8 million people have joined this startlingly beautiful animated world where members, referred to as residents, are free to participate in a virtual economy, buy virtual land and create virtual homes, offices and objects. Second Life is not a game; there is no overriding objective. According to its website: "Second Life is a 3D online digital world imagined, created and owned by its residents". Each resident is represented by a 3D personalised avatar, a human-like form that can be personalised to look like you or somebody completely different. Navigating the Second Life universe is as easy as walking, flying or teleporting to whatever location takes your fancy.

Creation and reinvention define Second Life. You'll discover everything from ancient Egyptian ruins to interactive jukeboxes, S&M parlours to ice skates that glide perfectly across any surface, all of which have been created and are owned by residents. To achieve this, residents are given access to online software that enables them to build any object imaginable. These 3D modelling applications are as simple as to use as desktop publishing software (although a degree of design savvy will help). Soon after joining Second Life you'll be able to create simple objects like a floating sphere; it might take a little longer to design and build a modernist townhouse. And if you don't want to create an object yourself, you can buy it from somebody else using Second Life's currency Linden dollars or L$ which can be earned or exchanged for real world currency.

The business end of Second Life

There is real world money to be made in Second Life. It's estimated several thousand residents earn over US$20,000 a year (1) by creating and selling residences, objects and experiences; a virtual form of cottage industry. The next – and currently evolving – stage in the commercial evolution of Second Life is the sale of products online that are subsequently delivered to a resident's real world address. Dell is blazing a trail in this area by allowing residents to build customised computers in the company's Second Life store; once the purchase is complete a manufactured version is delivered to the buyer's first life home. A host of other companies, including adidas and Toyota, are encouraging residents to develop (but not purchase) personalised products as part of an engaging brand experience that has considerable product development and market testing value. (2)

Other value adding services that suit Second Life include online technical support featuring 3D product demonstrations or retail stores in which avatars with a resident's real body measurements try on clothes for size. Or how about an optometrist's shop that enables you to see how glasses look on your face from all angles. With relatively low overheads and the promise of immersive experiences, Second Life could be a dream come true for retailers. And don't assume this virtual world is limited to a market of spotty teenage males; the average age of Second Life residents is 32 years old and the gender balance is roughly 50/50. (3)

Collaboration is king

While Second Life's potential as a marketing conduit is substantial, its impact as a tool for workplace collaboration is likely to emerge as this virtual world's most valuable commercial benefit in the short term. Numerous advertising and media companies are setting up offices that allow staff from across the world or across the hall to meet in creatively engaging private meeting spaces. Could there be any better incubator for innovation that an environment built on the tenets collaborative creation? Multinational advertising agency Leo Burnett thinks so. The company is in the process of establishing a Second Life presence that will allow its 2,400 creative workers from around the world to collaborate in an 'ideas hub'. (4)

Second Life offers an inclusive communication channel for interaction with home-based or Third Place staff members that, unlike video conferencing, does not chew up large amounts of bandwidth. It may also lessen the occurrence of mundane or convoluted meetings; Second Life is said to force people to get to the point quickly as communication is predominantly text-based, although expect this to change as voice over Internet protocol (VoIP) starts to make its presence felt. (5)

The jury is still out on whether it's a good idea to meet with clients in Second Life. More suited to brainstorming than formal presentations, there is, as yet, no easy way to display work or deliver reports in virtual form. It can be more difficult to organise Second Life meetings with external parties than staff and the acceptance of this form of interaction depends on the type of company you're dealing with; some clients might see Second Life interaction as cutting edge and in tune with online developments, others may see it as an irreverent gimmick.

Climbing the learning curve

Universities are taking note of the collaborative aspects of Second Life with as many as 60 US institutions establishing virtual presences where academics and students can meet in informal surroundings. (6) Many believe Second Life interaction will give distance education students a greater sense of community and introduce valuable cross-cultural perspectives into course work. Expect to see more academic research being carried out in Second Life. Researcher Professor Peter Yellowlees from the University of California, Davis has recently unveiled a 'schizophrenic' experience in Second Life to give psych students greater insight into mentally illness. (7)

Staff training and professional development are other growth areas. Multinationals American Express and Intel as well as the US retail giant Wal-Mart have plans underway to train staff in Second Life. (8) You can imagine cost efficiencies of conducting a training session with staff across the country in a virtual environment. The innate creativity, informality and role-playing opportunities of Second Life are also a good foundation for coaching and mentoring.

The trouble with virtual

Rushing into Second Life is not without its risks for businesses. Where there's commerce there's crime with con artists and hackers setting up shop in Second Life just like everyone else. Applications known as copybots are currently roaming through Second Life replicating virtual possessions without permission. While relatively harmless, this application may be a precursor of things to come.

It's a mistake to think any organisation is safe from real world issues in Second Life. Some companies have been boycotted or experienced protests in their virtual store or office over their actions in the real world. (9) Security is another concern. While you can restrict who enters parcels of land you own, security measures should always be top of mind when discussing confidential topics.

Nefarious activities aside, size is an issue for this online community. Despite the hype over its popularity, not that many signed up residents visit Second Life on a regular basis. At any one time there are only between 10,000 and 15,000 people (10) – a community the size of Dalby – logged onto Second Life. Of those residents who are logged on, many are more interested in social than commercial pursuits, including virtual sex (although you will need to buy genitalia first) and gambling.

Where to from here?

Prepare yourself for a deluge of predictions that Second Life is the next big thing. You'll soon start hearing how it will replace the Internet as we know it with avatars wandering through visually rich 3D worlds to fulfil the majority of our shopping and information gathering activities. At this point in time there is very little evidence one way or another to suggest Second Life will transform into a commercial powerhouse. However, it must be remembered that this online world is a work in progress. While there are many unknowns, it's safe to say that being part of an environment built on sustained creativity will foster creativity within innovation-focused enterprises. For that reason alone it's worth putting your toe in the virtual water and experiencing Second Life. Who knows what ideas will come to mind while you're talking to your gossamer-winged CIO.

Notes

1. Newitz, Annalee, "Your Second Life is ready", popsci.com, September 2006
2. Jana, Reena & McConnon, Aili, "Second Life lessons", Business Week, 27 November 2006
3. Newitz, Annalee
4. Steel, Emily, "Avatars at work", Career Journal, 16 November 2006
5. Wilson, David, "Weekday warriors", The Age, 24 November 2006
6. Wong, Grace, "Educators explore 'Second Life' online", cnn.com, 14 November 2006
7. Hutcheon, Stephen, "Visual hallucination is all in the mind", The Age, 5 December 2006
8. Newitz, Annalee
9. Jana, Reena & McConnon, Aili
10. "Brands show a lust for Second Life", Brandweek, 20 November 2006

Childcare tax breaks could boost business

At a time when we are being warned of an impending skills shortage many Australian women simply can't enter the workforce due to a nation-wide shortage of adequate childcare facilities, news.com.au reports.

New research indicates our level of female participation in the workforce is nothing to be proud of with Australia recording one of the lowest rates of working women in the developed world.

A Federal Government inquiry into work life balance believes a solution to this 'flashpoint' problem could be the introduction of tax breaks for childcare expenses – including the cost of hiring a nanny – to encourage mothers back into the workforce.

Bringing more women into the workforce could have significant economic benefits. The inquiry suggests childcare tax breaks could result in a national income increase of between 2.8% and 4.4%.