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Conquering Fraud: Using HOGA to Combat Pressure in the Fraud Triangle

Writer: Bill Carlson Bill Carlson
Jul 25, 20243 min read

Introduction


In the complex world of occupational fraud, the Fraud Triangle provides a clear framework to understand why individuals commit fraudulent acts. Developed by criminologist Donald Cressey, the Fraud Triangle consists of three elements: Pressure, Opportunity, and Rationalization. Each element plays a crucial role in the decision to engage in fraudulent behavior. In this blog post, we will delve into the 'Pressure' aspect of the Fraud Triangle and explore how HOGA (Honesty, Openness, Gratitude, Awareness) can serve as a powerful method to identify and combat the pressures we all face.


Understanding Pressure in the Fraud Triangle


Definition: Pressure refers to the motivation or incentive to commit fraud. It is the driving force that compels an individual to consider unethical behavior as a viable solution to their problems.

Types of Pressure:

  • Financial Pressures: These include personal debt, financial losses, or the need for additional income.

  • Work-Related Pressures: Unrealistic performance targets, fear of job loss, or a high-stress work environment can create significant pressure.

  • External Pressures: Lifestyle demands, addiction issues, or societal expectations can also contribute to the pressure individuals feel.

Examples:

  • A manager struggling to meet financial targets to secure a bonus may feel pressured to falsify reports.

  • An employee facing mounting personal debt may see embezzlement as the only way out.

  • A salesperson with unrealistic sales targets might resort to unethical practices to meet quotas.


The Role of HOGA in Combating Pressure


HOGA, which stands for Honesty, Openness, Gratitude, and Awareness, is a holistic approach that can help individuals and organizations address the pressures that lead to fraudulent behavior.


1. Honesty

Being honest with oneself and others is the foundation of ethical behavior. Honesty involves recognizing and admitting to the pressures one is facing, whether they are financial, work-related, or external. By fostering a culture of honesty, organizations can encourage employees to seek help and support rather than resorting to unethical practices.

Application:

  • Self-Reflection: Encourage employees to reflect on their personal and professional lives, identifying any pressures they may be experiencing.

  • Open Communication: Create an environment where employees feel comfortable discussing their concerns and pressures without fear of judgment or retribution.


2. Openness

Openness involves being transparent and communicative about challenges and pressures. When individuals are open about their struggles, it can lead to collective problem-solving and support within the organization.

Application:

  • Support Systems: Implement support systems such as counseling services, mentorship programs, and peer support groups.

  • Regular Check-Ins: Conduct regular check-ins with employees to understand their well-being and address any pressures they may be facing.


3. Gratitude

Gratitude shifts focus from what is lacking to what is already present and valuable in one's life. By practicing gratitude, individuals can mitigate feelings of inadequacy or desperation that often lead to unethical behavior.

Application:

  • Gratitude Practices: Encourage daily gratitude practices, such as keeping a gratitude journal or sharing gratitude moments during team meetings.

  • Recognition Programs: Implement recognition programs to acknowledge and reward employees' hard work and dedication, fostering a positive and appreciative work environment.


4. Awareness

Awareness involves being mindful of one's thoughts, feelings, and behaviors. It helps individuals recognize the pressures they are facing and the potential consequences of their actions.

Application:

  • Mindfulness Training: Offer mindfulness training programs to help employees develop greater self-awareness and stress management skills.

  • Ethics Training: Provide regular ethics training to remind employees of the organization's values and the importance of ethical behavior.


Real-World Examples


Case Study 1: Enron Enron's collapse is a classic example of how financial pressures and opportunities created by weak oversight can lead to catastrophic fraud. Executives at Enron rationalized their actions through a perceived entitlement to financial success, highlighting the need for honest self-reflection and gratitude for their positions.

Case Study 2: Wells Fargo The Wells Fargo scandal, where unrealistic sales targets pressured employees into fraudulent activities, underscores the importance of fostering an open and supportive work environment. By addressing the pressures employees faced and promoting ethical standards, such scandals can be prevented.


Conclusion


Understanding the 'Pressure' element of the Fraud Triangle is crucial in identifying and mitigating the risks of occupational fraud. By incorporating the principles of HOGA—Honesty, Openness, Gratitude, and Awareness—individuals and organizations can create a robust framework to combat internal and external pressures. This approach not only helps prevent fraudulent behavior but also fosters a positive and ethical workplace culture.


 
 
 

Comments

What the Professionals Are Saying 

"I teach a course on negotiations, during which I spend a good deal of time talking about honesty and ethics in negotiations. As an ethics researcher, I think it is important that students not only understand strategies for successfully claiming value in negotiations, but also learn about the temptations they will face to engage in unethical bargaining, and unethical behavior more broadly in their professional careers. Bill brought this message to life. Bill explained to my students – with openness, authenticity, and scientific insight – the ethical missteps he took in his career. I am incredibly grateful to have had Bill in my class – I learned from him just as much as my students did. I think he would be a welcome, and much needed, addition to any course related to ethics, well-being, power and influence, or negotiations (and likely many more!)."   

                                                                        Professor Emma Levine/ University of Chicago Booth School of Business 

“Bill Carlson has a reservoir of experience that will resonate with college students and professionals from all walks of life. Seldom do you encounter an individual willing to openly share his foibles and mistakes in an attempt to deviate the life paths of those mutually-inclined to make the same errors. Bill lays his life bare in his presentation and shares the detrimental impact his decision-making had on his personal and professional life; yet he lays the foundation for an inroad to a better future built upon his gratitude for life, learning from his mistakes, and pursuit of his new definition of “life wholeness”.  

                                                                         Dr. William C. McCoy, Director/Rutland Institute for Ethics

                                                                         Visiting Professor, College of Education/Clemson University 

"For over 30 years, I have been teaching full- and part-time. For the past eleven years I have been a member of the accounting faculty at Fordham University. This semester, Fall 2021, Mr. Carlson agreed to speak with my students about his story, and I can say that I have had few guest speakers who delivered such a powerful message about the importance of professional obligations. It was the story of a seemingly nice guy who exhibited a lack of judgment and would pay a heavy price for it. Most importantly, it is a story of a man who reflected upon his moral lapse and has made a solid commitment to helping others."              

                                                                                       Timothy P. Hedley, Ph.D., CPA, CFF, CFE

                                                                            Retired Global Leader of Fraud Risk Management Services, KPMG LLP

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