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If you keep up with the Oversight Blog, you know there are two things we cite regularly: The Hawthorne Effect, or the phenomenon that employees improve behavior when they know they’re being watched, and Chris Rossie’s favorite saying, “inspect what you expect.” The two go hand-in-hand as “inspecting what you expect” directly leads to the Hawthorne effect.
Here at Oversight, we tout that our clients can save as much as 5% of their T&E/P-card program costs after implementing our product. A very small sample of this is fraud, as the lion’s share of our cost savings to clients comes in the form of decreased audit expenses, and the fact that employees adhere more closely to policy when they know they’re being watched. Hundreds of employees decreasing their card spend over time really adds up. This is the Hawthorne Effect in its full glory. These employees were never bad actors, they were just weren’t being very conscientious.
To keep from having to buy a technology solution, many organizations implement a new policy or a new rule to try and circumvent the non-compliant spending. Their thinking is that if 99% of the employees follow policy, then the 1% won’t matter so much. This is not true. In our research we have found that the 1-4% of employees engaged in non-compliant spending contribute 80% of the exceptions (or “rule breaking”) triggered in our software. A very small group, or even one person, can do a large amount of damage if allowed to go on unchecked.
Other companies may instate a new rule, particularly one that imposes a burden, and find that inconveniencing the majority may not be worth the hassle, especially when they can use analysis to find the rare 1% of the employees and influence their behavior, and still keep tabs on the merely sloppy employees as well. Influencing behavior of even the smallest one percent is better than letting thousands of dollars go to waste each year. Or better still, what if analysis combined with an informed spending policy took the 1% of bad actors down to .01%?
This would make a difference.
In business, you already have “99 problems.” T&E shouldn’t be one of them. Especially when there are third-party analytical services ready to analyze spending for a fraction of the cost of doing data analysis on your own. Read more about how Insights On Demand works.