Internal Theft

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 manger 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 deserve it.
• 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.

1. The management misconception that employee theft is conspicuous means they believe it will be:

1. Easy to prove
2. Easy to prosecute
3. Easy to see
4. Easy to prevent

2. What can be a major indicator that employee theft is occurring according to the author?

1. Shrinkage
2. Decreased foot traffic
3. Increased grievances
4. Changing floor plans

3. A deviation the author mentions can indicate employee theft is:

1. Products found near exits
2. Lack of vacation time taken
3. A & B
4. None of the above

4. When the author discusses employees using photocopied documents in lieu of originals, they mean:

1. Next to
2. Along with
3. Instead of
4. In addition to

5. Lax policies are:

a.        Very strict

b.        Not stringent

c.        Clearly stated

d.        Written and distributed

6. If a company lost $100 due to theft, how much would they have to sell to make up for it?

a.        $100

b.        $5000

c.        $50

d.        $2000

7. When employees rationalize their theft, they are __________ it.

a.        Admitting it

b.        Explaining it in their mind

c.        Predicting it

d.        Accepting it

8. According to the article, one reason employees steal is:

a.        They feel they are entitled

b.        They can’t help themselves

c.        They know they won’t be prosecuted

d.        They need the money