28 July 2008
Employee theft is rising due to tough economy
Communicators have to contend with the "fastest growing crime in America!"
Companies have seen a steady increase in employee theft, and experts are pointing their fingers at the main cause: the flailing economy, USA Today newspaper reported last month.
According to Employee Theft Solutions, the FBI calls employee theft “the fastest growing crime in America!”
The FBI calls employee theft 'the fastest growing crime in America!'
Temptation and hardship
The results of the 2007 National Retail Security Survey, which questioned 139 US retailers about shoplifting, reveal that 74% reported a rise in shoplifting incidents since 2006. These companies say they feel the economy had been a contributing factor.
According to the survey, the majority of retail shrinkage last year was due to employee theft, at US$19.5 billion, which represented almost half of losses (47%).
Shoplifting accounted for $13.3 billion, or 32% of losses. Other losses included administrative error ($5.8 billion/14% of shrinkage) and vendor fraud ($1.7 billion/4% of shrinkage).
Reasons for employee and customer theft
In light of the current credit crunch, a small group of retailers were asked about the rise in theft rates so far in 2008.
Most said they thought that reduced sales and staff cutbacks had been a contributing factor, Joe LaRocca, vice president of loss prevention at the National Retail Federation, told USA Today.
A just cause for concern
During the current economic downturn, as salaries fail to keep up with inflation levels, people have less money available for everyday items such as food and fuel, and then resort to stealing.
"It's the single largest category of property crime in America, bar none," professor at the University of Florida and author of Theft By Employees, Dr. Richard Hollinger (pictured) told USA Today.
But many employees who are caught are fired from their jobs but aren't criminally prosecuted.
If fellow employees who abide by the law watch such events unfold, but see no prosecution, what sort of message does this send out? That a minor case of theft could go by unnoticed, or that the risk is "worth it"?
Communicating security measures
To combat theft, retailers have been introducing new technologies to deter, detect and convict criminals. Increased loss prevention security measures such as visible (and hidden) closed circuit televisions, although detering many would-be thieves from stealing, put the majority of innocent employees under an intense amount of undeserved scrutiny.
This creates another problem for employers: How to approach this sensitive issue in the workplace, being careful not to lay unfair suspicion on law-abiding employees?
Open-door policy a preventative tool
SCORE, a non-profit association dedicated to educating small businesses, has some tips about how to prevent employee theft. One point organizations need to remember is to have an open-door policy and a social organizational culture. If employees and others can speak freely, many managers will understand the pressures and might be able to eliminate them before they become acute, SCORE advises.
If employees and others can speak freely, many managers will understand the pressures and might be able to eliminate them.
For example, the controller of a small fruit-packing company in California stole US$112,000 from the company. When asked why, he said, "Nobody at the company ever talked to me, especially the owners. They were unfair. They talked down to me, and they were rude. They deserve everything they got."
Another SCORE suggestion that the communicatons function can help set up and publicize is to introduce a reporting system for employees to report criminal conduct. "Confidential hotlines are one of the best ways for an organization to monitor compliance," it advises.
Businesswide problem, not an isolated issue
"When employee theft is discovered, the employer/owner feels violated and often reacts out of emotion. Remembering that this is a business problem and addressing it as such will aid in quick resolution and prevention," advises Mary Paulsel, of Missouri Small Business Development Centers.
If you're the victim of employee theft, Paulsel says, the first thing you should do is take a thorough look at your company processes. "Theft usually occurs as a result of a breakdown in procedure. Do you lack a system for checks and balances? Are employees not following clearly defined procedures? Use the situation as a wake-up call to re-examine the way you do business," she advises.
Paulsel's tips for decreasing employee theft* include:
- Do background checks on your employees. Don't go on a "gut" reaction or assume that because someone is a friend or relative of a current trusted employee, the same must be true of the new prospect.
- Don't assume that well-paid employees will resist the temptation to steal, or that trusted employees will report others who steal.
- Remove the opportunity to steal. Establish a system of routine checks and balances and oversight for key processes.
- Work with your employees to create a plan to discourage theft. Provide a confidential forum in which they can speak about their suspicions without fear of repercussion. Ensure that employees know that management and ownership are subject to the same rules and processes as anyone else in the company.
When employee theft is discovered, the employer/owner feels violated and often reacts out of emotion.
- Realize that theft often occurs when employees are under personal financial stress. Incentives such as bonuses for high productivity or sales can help deter theft.
- Create policies that are clear, consistent and comprehensive in dealing with employee theft. Distribute the policies in written form. Avoid double standards. Be mindful of morale among other employees.
- Finally, be a positive role model. Set an example of ethical behavior and equitable management.
(* extracted from Missouri Business Net article.)
Have your say
Have you found, as Paulsel suggests, that incentives such as bonuses for high productivity or sales can help deter employee theft?
Have you had to tackle employee theft in your workplace? How do you communicate the need for increased security measures to employees? What effect does it have on remaining employees' morale? How do you engage employees to follow such heightened security procedures?
Discuss these issues with other comms practitioners by joining the Internal Comms Hub members' group on the Communicators' Network.
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