Employees must trust each other — within reason

How much social capital does someone have to have built up to pressure a coworker to break policy? How much authority does someone have to wield to convince a coworker to ignore their "something feels funny" vibes and act on a request that shatters norms? I have been ruminating on these questions since the story behind the failure of Kansas' Heartland Tri-State Bank came to light. Shan Hanes, president and CEO of the $139 million bank, embezzled $47.1 million from the Elkhart institution. The impact to the trust within that team and their community will have a ripple effect for years to come..In my role as director of internal audit at a community bank in southwest Iowa, I introduced the popular phrase "trust but verify." The bank had approximately $90 million in assets at the time and a deep level of trust existed with leadership and the team. As the newbie in the group, this didn't comfort me; it worried me. While it may seem like this level of trust is the cornerstone of a healthy organization, blind trust is actually a hidden virus waiting for the right opportunity to infect. .If your first thought when reading about Hanes' embezzlement was, "That would never happen here," I encourage you to shift your mindset. Good people do terrible things when under extreme pressure or stress caused by gambling, pending foreclosure due to medical debits — or a "pig butchering" scam in the case of Hanes. The theft may start small, but it can quickly spiral out of control, especially when there is a lack of true oversight. .Healthy organizations understand the benefits of a robust internal audit program coupled with regular training amongst the team. While technical training is imperative, banks must create a culture of psychological safety where employees feel empowered to speak up when something feels "funny." They will speak up because they trust that someone will take their concerns seriously and investigate. .We need to experience a shift from old school, authoritarian leadership styles and toward a more collaborative style where everyone's voices are valued. If you say that employees are empowered yet dismiss their concerns out of hand, your actions will dissuade others from stepping forward when needed. .As an internal auditor, I wasn't out to prove anyone was stealing money from the bank. My job was to safeguard the assets and provide feedback to the board and leadership on how to shore up policies and procedures to mitigate losses. Those should be based on the bank's risk profile and reduce opportunities for employees to put themselves, and the bank, in untenable situations. But even if your bank has robust policies and procedures in place, you are not immune to fraud. .The banking community has an opportunity to learn from the Heartland Tri-State loss. This does not mean implementing five layers of approval prior to a wire transfer; it means rethinking your approach to training. Prioritize your organization's health by engaging a third party to provide training at all levels of the bank. This includes leadership development with executive and middle managers to provide the necessary tools to create a psychologically safe environment within which employees feel empowered to question their leaders' behavior without fear of losing their jobs. The training should reinforce the importance of communicating support for the bank's audit program, policies and procedures and, most importantly, thanking team members for their diligence and willingness to question authority when the opportunity arises. .My mind continues to come back to the employees who sent those wires out on behalf of their leader. This loss could have been stopped or mitigated if one person had felt empowered to question Hanes' authority in this situation. I wonder if they talked to someone about their concerns and were shut down. Each person involved in sending those wires will have to live with their choices. That is a heavy burden for anyone, but specifically for those who put their blind trust in a leader who wielded that trust as a weapon..Christy Baker is a facilitator and coach focusing on organizational health and strategies for Omaha-based Revela. She provides group training and individual coaching and is a former COO for an Iowa-based community banking group. She can be reached at christy@revelagroup.com. Visit RevelaGroup.com/podcast to learn more.