Everyone likes to think that they are living their life with honesty. But the truth is that everyone has their own breaking edge. Fraud happens more often than we realize, and it’s not just about some mysterious character in the shadows. It can happen in offices, businesses, or even at home. This is where the Fraud Triangle comes into play. Developed by criminologist Donald Cressey, it explains the three key reasons people commit fraud: Pressure, Opportunity, and Rationalization. We’re diving deep into Rationalization, the mental excuse that makes fraud look “okay.”
What Is Rationalization?
Suppose the employee is going through stress related to work or experiencing money troubles. Opportunity arrives at the door, aligning with dishonesty, and the inner voice keeps telling them not to do the dishonest acts. But the employee found a way to validate their choices by telling themselves that it will only happen for one time or that they deserve to take advantage of this opportunity. It is the mental manipulation to assure themselves that their immoral behaviors are justified. Fraud is perceived as fair by them.
Examples of Rationalization
Let’s break it down with some real-world examples:
The Underpaid Employee: Picture someone working at a small company. They’re constantly putting in long hours but feel underpaid. One day, they take a few bucks from the cash register. They might think, “I’m underpaid anyway. I deserve this.” That’s rationalization at work. They convince themselves that what they did isn’t wrong because they think it’s owed to them.
The Pressure of Meeting Targets: A sales manager is under extreme pressure to hit unrealistic targets. They’re not hitting the numbers, and the boss is breathing down their neck. So, they start inflating numbers on reports. They might tell themselves, “Since many others are doing the same, it cannot be considered as taking money unlawfully”. It’s about convincing themselves that bending the rules is acceptable because it’s for the greater good (or so they think).
The Struggling Business Owner: Suppose the business owner is facing financial downfall. Accumulated bills are getting harder to pay back. The owner takes the funds from the business to tackle the financial troubles. They can think that they have worked with more intensity for the business, and a small amount of funds will not create problems for the company. That’s how the rationalization justifies the immoral behavior. The requirement of existence defends the illegal acts.
Why Rationalization Is Dangerous?
Here’s the problem with rationalization: it doesn’t just make fraud easier; it makes it harder for the person to admit what they’re doing is wrong. The more someone justifies their actions, the more they distance themselves from their guilt. Over time, their moral compass starts to shift. They become numb to the wrongness of their actions, which leads to more fraud and bigger consequences down the road.
Combating Rationalization and Preventing Fraud
How can we stop rationalization from taking root? It’s all about creating an environment where rationalizing fraud is hard to do. To decrease the occurrence of frauds, several steps can be taken by the businesses as well as individuals:
Clear Code of Ethics: If everyone knows what’s right and wrong from the start, it’s harder to rationalize bad behavior. Having a clear code of ethics sets the boundaries.
Open Dialogue: Employees and businesses should encourage open conversations about challenges, stress, and issues. If people feel comfortable sharing their problems, they’re less likely to feel isolated and pressured into making bad decisions.
Strong Internal Controls: Regular audits and good internal checks make it difficult for people to act on their temptations. If fraud is harder to pull off, the rationalization factor shrinks.
Whistleblower Programs: Setting up a safe, anonymous way for employees to report fraud can prevent small problems from snowballing. Knowing there’s a way to report dishonest behavior discourages rationalization.
Questions to Understand your ability
Q1.) What’s the deal with rationalization when it comes to fraud?
a) Making excuses to make yourself feel okay about doing something wrong
b) Making fraud harder to pull off
c) Owning up to your mistakes
d) Ignoring ethical guidelines for personal benefit
Q2.) The underpaid employee takes a little cash. What excuse are they using?
a) “Everyone does it, so why not?”
b) “I’m underpaid, I deserve this.”
c) “I’ll just pay it back, no big deal.”
d) “It’s such a small amount, no one will notice.”
Q3.) Why is rationalization so dangerous when it comes to fraud?
a) It helps people realize their mistakes right away.
b) It distances you from the guilt and makes it easier to repeat.
c) It makes it harder to act unethically.
d) It encourages people to follow the rules.
Q4.) What can businesses do to stop fraud from happening in the first place?
a) Let employees justify their actions however they want
b) Have a clear code of ethics that everyone sticks to
c) Reduce the frequency of audits to make employees feel more comfortable
d) Ignore ethical challenges and just focus on results
Q5.) How does a whistleblower program help stop fraud from snowballing?
a) It delivers the path for employees for the justification of their immoral acts
b) It builds a safe environment for the people to flag unethical behavior with confidence
c) It helps in covering up the fraud smoothly.
d) It supports employees to neglect unethical actions.
Conclusion
Rationalization is one of the riskiest angles of fraud. It’s the reason why honest individuals sometimes turn to dishonesty. It lets them persuade themselves that betraying or heisting is permissible even though inwardly it’s untrue. By knowing how the rationalization operates, organizations can implement actions to decrease the risk of fraud. A strong moral foundation, a solid governance structure, and free-flowing conversation can prevent people from justifying wrongful behavior or unethical actions. Ultimately, it’s about ensuring that excuses don’t shape our actions, but rather the values that distinguish right from wrong.
FAQ's
Rationalization is the mental trickery people use to make themselves believe that bad actions aren’t actually that bad. They find a way to convince themselves that stealing or lying is justified. It’s the mind’s way of covering up guilt.
Imagine an employee who feels underpaid. One day, they take some cash from the register. They tell themselves, “I deserve this.” That’s rationalization: they twist their mind to believe it’s okay.
Rationalization makes it way too easy to ignore the wrong in a decision. It dulls the moral compass and lets people believe their bad actions are acceptable, even when they know deep down they’re not.
It’s dangerous because it makes people numb to their own wrongdoings. The more they justify their actions, the harder it becomes to feel guilty, which only makes them go deeper into unethical behavior.
When targets are impossible to hit, employees start bending the rules. They think, “Everyone’s doing it, so it must be fine.” They convince themselves that inflating numbers or cutting corners isn’t a big deal because it’s all for the greater good.
When a business owner is drowning in bills, they might think, “I’ve worked hard for this company. A small amount of money does not bring any troubles. That is how they defend this unlawful act.
Set clear rules. Create an environment where unethical behavior is harder to justify. Encourage employees to speak up and give them tools to report fraud without fear. Strong internal checks make fraud less tempting.
A code of ethics is like a rulebook. If everyone knows the boundaries upfront, it’s harder to justify crossing them. It keeps things clear—this is right, that’s wrong—and stops people from finding excuses.
