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Employee Theft Essay, Research Paper

OUTLINE

I. Overview

II. Myths & Misconceptions

III. Facts & Reality

IV. Why Employees Steal

V. Signs of Theft

VI. Preventing Losses

VII. Loss Prevention Programs

VIII. Summary

Overview

Employee theft is clearly one of the most costly, misunderstood and underestimated business problems facing today’s management. Studies conducted by the Department of Commerce, American Management Association, Joint Economic Committee of Congress, Universities and trade associations all decided that losses from employee theft have a dramatic effect on the financial stability, profit level and survival of most businesses. Several studies estimate employee theft and dishonesty costs US businesses between $60 and $120 billion per year, not including the billions spent on protecting against theft. Most studies and security experts agree that nearly every type and size of business is likely to experience some form(s) of employee theft and not realize the existence or extent of it. In fact, small and medium businesses are often more vulnerable to employee theft due to less supervision; lack of controls, procedures, audits; and blind loyalty.

What do employees steal? Whether a business is retail, distribution, manufacturing, health care, hospitality, communications, energy, scrap metal, printing, bakery products or cardboard boxes, it has assets someone feels is worth stealing. Employee theft may include stealing product, inventory, supplies or cash. The fact is employee theft is present in every type of business.

Myths and Misconceptions

A primary reason employee theft continues to thrive is because management has yet to achieve an understanding of the importance and nature of employee theft. Most managers have a tendency to disregard many of the indicators of theft and convince themselves that inventory shortages, loss of business, declining profits, rumors of dishonesty and other potential warning signs are not theft related and unworthy of inquiry. After all, employee theft often consists of extremely unpleasant situations involving executives, trusted employees, customers, vendors, even family members and friends.

While some theories and explanations of employee theft have been accepted by experts but many remain unproven and create more confusion than not of the problem. Some of the more obvious misconceptions regarding employee theft include:

? Management doesn’t need to tell employees where it stands on employee theft because they already know.

? Well-paid or adequately paid employees are less likely to steal.

? Honest and loyal employees will report other employees who steal.

? Losses from shoplifting are higher than losses from employee theft.

? Newer employees commit employee theft while more senior employees can be trusted.

? Employee theft is detected in its early stages.

As long as management believe incorrect information about employee theft and fail to become educated to the facts, employee theft will remain a major drain of profits and employee morale.

Facts and Reality

Getting rid of myths and misconceptions about employee theft is only half the answer to dealing with the problem of management’s inability to understand and effectively deal with employee theft. Once management becomes more educated to the misconceptions, it must become aware of the valid facts and accepted theories regarding employee theft. Only then will it be able to develop loss prevention programs and strategies that will reduce risks to theft and prevent losses. Some accepted theories regarding employee theft are:

? Opportunity, not need, to steal is the primary cause of employee theft.

? A majority of employee theft goes undetected by management.

? Less than 10% of the employee population causes over 95% of the total losses from employee theft.

? Nearly every business experiences some degree of employee theft.

? Employee theft is often committed in reaction to favoritism, unreasonable discipline, inconsistency and other acts of poor or abusive supervision.

? A majority of honest employees look the other way regarding employee theft and fail to report it.

? A majority of the time, employees know or suspect employee theft is present, but will not report.

? There is a direct correlation between drug abuse and employee theft.

Why Employees Steal

The primary reason employees steal is more as a result of opportunity than need. At the same time, an employee in need of money generally weighs the risk/consequence of stealing prior to the act. Since the employee suspects or knows he/she may or will be fired or prosecuted if caught, he/she then assesses the chances of getting away with it. If the opportunity to steal is clearly present and risk of being caught is low, the employee may steal. If the opportunity is minimal and the risk of caught is high, the employee is more likely to keep from theft. Only when this environment is created can management claim it has achieved a true theft prevention program.

Below is a widely recognized set of reasoning employees often offer in response to being questioned why they stole from their employer:

? I was passed over for a raise or a promotion and the company owed it to me.

? Management doesn’t care – they never said anything about it.

? Management steals

? I am worth a lot more than the company is paying me

? The company doesn’t share the profits with us.

? They made it easy to steal.

? I got even.

Signs of Theft

Since there are as many signs of theft as there are ways to steal. The problem is that management often assumes certain incidents or conditions

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