Alberta Quarcoopome’s thoughts: BEST PRACTICES FOR REDUCING INTERNAL FRAUD  (3) (MANAGING OUTSOURCING RISKS)

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Alberta Quarcoopome

Leaders must be close enough to relate to others, but far enough ahead to motivate them.” – John Maxwell

Hello dear Readers, how did you feel about the “Utterances from the grapevine”? Perhaps for some of you, it is no big deal, while to some others, it was insightful. Whatever the case, it is to let you know that a leader’s listening ear, when it is sometimes “placed on the ground”, can sense a storm or volcanic eruption coming along the path. I believe that revelations from the shop floor can facilitate  management to find solutions that can make outsourcing less risky and prone to fraud.

Questions to Ponder

Once again, please permit me to ask a few questions in respect of your bank’s outsourcing programs:

  • What are the objectives of the outsourcing policy?
  • Did the cost-benefit analysis of the scheme factor in other related costs like regular training, mentoring and coaching to bring the outsourced personnel up to, or even exceed the level of the existing staff?
  • Are the regular staff communicated to about the advantages of outsourcing, eliciting their support and cooperation with the outsourced staff?
  • Do supervisors and managers prepare training and coaching lessons for the outsourced staff?
  • What is the impact of your Human Resource or Training Departments on the outsourced staff?
  • Is the orientation program adequate enough for the outsourced staff to appreciate the bank’s mission, vision, values and corporate culture?
  • Does the outsourced company have a good working relationship with the bank, but treats the outsourced staff as “tools in trade”?
  • What are the internal controls that ensures that any red flags are marked and monitored to avoid them going overboard.

RECOMMENDATIONS

So far I have concentrated on outsourcing risks on the bank’s shop floor. Even though there are many schools of thought with regards to certain core activities now being outsourced in some banks, the balancing of the risk and return is still key.

It is never too late to make amends. Whatever happens, outsourcing is a global phenomenon. Management of the effects of outsourcing is very important. Bankers can best perform while doing their core business. Every other activity should also be critically monitored to ensure no losses are incurred, and if any, barely negligible.

  • Recruitment: A number of banks get involved in the recruitment stage for tellers, front office and sales personnel. After the short-listing of the applicants by the outsourced company, interviews are repeated by the bank to consider who fits the bank’s corporate expectations. Background checks performed by the outsourced company can also be doubly checked by the bank, to avoid persons who shuffle between various companies. These are the dangerous ones who easily perpetuate fraud wherever they go.
  • Orientation: I will recommend that resource persons include the existing staff, some young role models within the bank who might have also passed through the same process. I recommend that Managers and heads of departments take them through the normal banking activities. Finally, external resource personnel could also give them the usual global expectations and motivations.
  • Communication: Due to certain sensitive reasons, some banks do not include the outsourced branch staff in the official e-mail group. Considering the fact that in some banks, the percentage of outsourced can be more or slightly less than the regular staff, and may even have been in one place for some years, a special group mail can be created for such personnel for updates on bank communication, training material and any other relevant material they need to be have on current banking developments. Many of them are well educated and tech-savvy.
  • Regular Refresher: This is a requirement for both outsourced and regular staff. In some instances, one may find that the outsourced staff are the ones receiving constant training while regular staff are not updated. This creates a disjointed branch with knowledge gaps which affect customer service in the long run.
  • Reward Schemes: It is always an emotional period when bonuses are shared among regular staff. The excitement and glow from these staff sometimes dim the feelings of outsourced staff. Much as the bonus policy does not include contract staff, management of this within the branches should be done maturely. Can you imagine a lady exclaiming for joy on sighting the credit of her bonus into her account, while seated next to her is an outsourced staff who has performed the same function within the year, not receiving anything? Well well, branch managers usually try to collect something small from branch staff for such people but this is purely voluntary. I know that in some banks, provision is made for some small end of year tokens for the outsourced staff. Whatever it is, it has to be managed professionally by all staff to avoid creating enmity among them.
  • Monitoring: Can you imagine a Supervisor of Tellers say…” I am not worried about monitoring the tellers. After all they are outsourced staff, so any shortage they incur will be replaced by their company”!!! This is dangerous talk. Any supervisor with this attitude is not worth the seat he or she is occupying. This is an avenue for sloppy work by subordinates. Efforts should be made to trace causes of mistakes to avoid repetition and making customers lose trust. Some outsourced staff have recoiled into their shell because they feel they have no job security. Such people need career guidance, monitoring to find out their problems. Money is not everything. A lot of losses can be avoided just by some of these relationship building methods at no or little expense to the bank.
  • Total Commitment from Outsourced Company: I cannot stop without giving appreciation to all outsourcing companies for the good efforts they are making to partner financial institutions deliver their services at lower costs, at greater convenience to customers through cash collection, mobile money collections, account-opening, and so on. I therefore encourage them to take their staff as their own, train them regularly, organize more staff durbars for them to know current developments in the banks and offer them career guidance.

My Final Thoughts

– Lead by Example:  Leaders should focus on leading by example in all aspects of their work. Be a role model for your colleagues by exuding a positive presence.

– Communicate:  Your staff will feel much more engaged if you let them know what’s happening within the company.

– Get to Know your outsourced staff more. Ask them about their future plans and mentor them.

– Be watchful of any early danger signals: This can cause them to be compromised in their activities.

– Identify staff strengths and weaknesses. Harness from their strengths and de-energize on their weaknesses.

– Let staff appreciate the work they are doing by motivating them. Let them know that their position is temporary but their attitude will determine how far they can also move up the ladder.

– Avoid discriminatory practices: It can cause dissatisfaction among outsourced staff.

– Do not let customers know the status of staff (outsourced and regular). It is their service quality that makes the difference.

I hope these few words will go a long way for you to sit back and review your outsourcing scheme. It is never too late to reconsider some amendments. I pray banks and outsourcing companies cement their partnership in more fruitful ways. After all, all these will reduce risks and losses to both institutions. Let us practice outsourcing with all stakeholders enjoying a win-win situation.

TO BE CONTINUED

ABOUT THE AUTHOR

Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.

CONTACT

Website www.alkanbiz.com

Email:[email protected]alkanbiz.com  or [email protected]

CONTACT

Website www.alkanbiz.com

Email:[email protected]alkanbiz.com  or [email protected]

Tel: +233-0244333051/+233-0244611343

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