Business lessons from the recent IRS scandal

IRS scandal reminds businesses to prepare

It is easy to dislike the IRS; they take our money. Even if we like what a good chunk of that money goes toward, it’s still easy to grumble about the entity that takes our money and occasionally makes us prove our accounting. And that is when they are doing their jobs correctly – this week’s news has made it even easier to mistrust the agency. But let’s make a couple of assumptions and perform a little exercise examining our own businesses as compared to the revelations about the IRS this week.

Initial indications make it appear most likely that individual agents in one office took it upon themselves to place extra scrutiny upon organizations with whom they disagree ideologically. How they thought they would not get discovered raises a logical concern that they had made an educated calculation that they could get away with such criminal activity. That is another problem (and a big one), but let’s set that aside for a moment and assume the guilty were acting on their own and within a bubble of arrogant and ignorant power.

Some problems you just cannot plan for

This type of problem is one of the most difficult for us to plan for as we operate our own businesses. What if one of your employees steals and sells credit card numbers of your customers? Do you read all of your employees’ emails to make certain they are not starting a competing business using your trade secrets while working for you? What do you do when it is discovered that one of your employees has been covertly capturing video of people using your establishment’s restroom?

Some problems you just cannot plan for, but you can build some checks and balances into your business to prevent many such problems or at least minimize their duration and impact. First, set clear policies for the behavior of your employees. Second, split responsibilities in such a way that critical elements of activity are overseen by more than one person.

For example, split the responsibilities of receiving and issuing checks from your business account, or as came up in a RISE panel this week, don’t put your IT guy in charge of security of your online and digital data.

And finally, create and maintain a crisis management plan. By simply thinking ahead about the problems you are most likely to face and having even an outline of a plan in place regarding the actions you will take if a crisis occurs, you will increase your likelihood of detecting the crisis early and minimize its impact by reacting quickly.

It is improbable that your company will ever be hated as much and by as many people as the IRS. But guard your reputation by taking some simple steps to detect and recover from problems that occur within your company with or without your knowledge and participation.