If you would like a copy of the full version of Employee Theft–The Profit Killer, visit www.employeetheft.com. Reproduced in good faith
Whether your business is manufacturing, retail, wholesale, service, hospitality or high tech, it is probably experiencing some degree of employee theft. The list of items employee steal from their employers is endless and includes such items as inventory, money, parts, components, supplies, information and customers. In fact, it is estimated that 95 percent of all businesses experience employee theft and management is seldom aware of the actual extent of losses or even the existence of theft.
Studies by the Department of Commerce, American Management Association and other organization estimate that employees steal over a billion dollars a week from their unknowing employers. Other studies estimate that nearly one-third of all bankruptcies are caused by employee theft and it takes approximately $20 in sales to offset every $1 lost to theft. Often management has indications of the problem through declining profits, unexplained inventory shortages, rumors and many other signs.
Management Misconceptions
More often than not, it is very difficult for a manager to accept the possibility that employees he/she hired, trusts and works beside are capable of engaging in such disloyal and dishonest activity. Consequently, it is easy to understand how management embraces misconceptions about the problem. Some of these misconceptions about employee theft include:
Most theft is caused by non-employees.
Well-paid and/or senior employees are trustworthy/loyal and don’t steal.
Honest employees can be counted on to report employee theft.
Employee theft is conspicuous and can be detected in its early stages.
You don’t need to formally inform employees that theft will not be tolerated.
Signs of Theft
Since there are as many signs of theft as there are ways to steal the list of warning signs is endless. The key is for management to realize that certain conditions or incidents may not be the result of carelessness or incompetence, but indications that theft is in progress. All irregularities or deviations must be evaluated with an open mind and creative mind. Inventory or product found near employee exits or dumpsters, sensitive documents discovered in copy machines, employees in key positions who refuse to take time off, photo-copied documents used in lieu of originals have been signs of past theft and may be indications of existing dishonesty.
Why Employees Steal
Amazingly, employees questioned as to why they stole often rationalize their action and state the opportunity of theft presented itself through lax policies, controls and management indifference. Moreover, many employees cite opportunities created by management, not their financial need, as their primary motivation to steal. Another significant reason employees give for stealing is their perceived belief management was stealing so it was okay for them to also do so. This condition proves the point that, if management wants a theft free work environment, it must set the example of honesty and adherence to policies.
Some other common examples of employee rationale for theft include:
I am underpaid and I only taking what I deserve.
Everybody does it, besides, they can write it off.
The company makes a large profit and I deserve some of it.
The company angered me and I got back at it.
How to Interview an Employee Suspect
There are a number of crucial issues to consider in dealing with an employee suspected of theft. On one hand, the employer wants to know the truth regarding possible guilt of an employee suspected of theft even though the employee is reluctant to cooperate. On the other hand, there are serious legal and employee relation problems that can arise from not handling the situation in an appropriate manner. Although the issues are many and complex, the following are just a few of the basic steps to be followed in determining the facts of a theft incident leading to the interview of suspects:
Carefully evaluate the source and validity of any information that alerts management to a potential theft problem.
Gather as much information or evidence regarding the alleged theft as possible prior to taking any action.
If necessary, review facts and findings with an attorney, auditor in areas of legal and accounting concerns.
Know all of the legal and labour concerns regarding the interview of a suspect
Stick to and discuss issues at hand. Don't deviate or allow deviation from obtaining the truth and facts surrounding the situation.
Dealing with employees suspected of theft tests the emotions, restraint, legal knowledge and objectivity of every manger and supervisor. Since the consequences of mishandling the investigation of employee theft is so great, the key is to learn the procedure now and not learn during the course of an incident.
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How to Prevent Losses
Until management gains an accurate understanding about employee theft and initiates sound loss prevention measures, it will remain a major drain of profits productivity and employee morale. Minimally, the following steps should be taken:
Conduct a survey or audit of your business. Identify possible existing theft and potential opportunities or risks to potential theft. Immediately develop a plan to eliminate or reduce your exposure to these risks.
Educate supervision and the general employee population as to the impact employee theft has on them and how they, not just management, are the key to solving the problem.
Develop a Loss Prevention Program that ensures an ongoing effort to prevent and detect dishonest activity.
