Employee Theft: The Big and Little of It
By Allen F. Weitzel
Anyone can steal. The secretary that makes personal copies on the copy machine. The manager who mails his household bills using company stamps. The VP who damages the video camera on his vacation. Personnel managers authorizing and taking salaries for fictitious workers. The parking employee borrowing five bucks for lunch. It's all about the degree of theft and the intention. What is the value of what was used, damaged or taken? Was the theft premeditated?
The FBI reports that employee theft losses exceed an estimated $4.9 billion annually, averaging $700 per offense. Experts estimate that 30 percent of employees steal, and 60 percent will steal if given sufficient motive. Just as there are different degrees of theft, there are also different kinds.
Employees steal for various reasons. They believe they are working hard and are not rewarded adequately. Employees see others stealing and believe that it is OK. When employees become angry over misunderstandings, revenge can lead to theft. Economic hard times may trigger dishonesty. Employees may take merchandise from storerooms. Workers may steal from other employees, taking purses from back rooms or stealing from another employee's cash drawer, so it appears the coworker is dishonest.
There are two types of maintenance theft. One is the employee who steals for profit. Be wary of the worker that enters other department areas to make repairs and then steals products during that process. The other scenario is employees who want supplies for their home projects. This is theft for convenience rather than profit. Purveyors and contractors also can steal, so be alert when they are on the property.
Unmotivated employees create significant company losses. Employees who fail to do their own work are performing an ambiguous form of theft by forcing other employees to carry their load or the company to pay overtime to get jobs completed. The simplest form of productivity theft is the employee who comes in late, leaves early and takes long breaks. There are also employees who make numerous personal phone calls, chat excessively with coworkers or spend all day Web surfing. Employees add to productivity theft by allowing friends to congregate at their station, which not only slows them down but also creates safety concerns when the employee's attention to duty wanes. There are employees who practice time-card theft by having their friends clock them in when they are not working. Just as employees who steal money or products must be monitored, time thieves also must be disciplined.
There is no magic wand that managers can wave to prevent employee theft. Managers must talk about theft, so employees know that management is not blind to it. To begin the implementation of prevention strategies, be open about company discipline procedures regarding dishonesty. Use all the security procedures that the company can afford to implement. Establish strict and equal rules for use of all company equipment and products. Hire mystery shoppers to observe the operation. Pull cash drawers in mid-shift and check for shortages. Remove cash drawers to look for hidden or forgotten currency. Inspect workstations after an employee's shift. Encourage employees to protect themselves by checking and documenting their work, so they can be sheltered from false accusations. Price every item in stores. This prevents the employees from inventing or discounting prices and discourages price-tag switching.
To prevent product theft, establish a policy outlining when and how employees may go to and from their vehicles. Only allow visitors to meet with employees at a designated site and not at their workstations. Create a strict storage and inventory system. Do not permit employees to take trash, damaged items or leftover food home, free of charge, at the end of the day. If employees are allowed such freedoms, they may damage an item or overcook food, so they can take it home. Require that all waste or damaged goods be paid for, at cost. To prevent management from looking greedy, donate the money to a charity. Security should inspect all packages leaving the property. Stolen items could be hidden inside a package that has been authorized for removal. Prosecute dishonest employees.
The larger the facility, the more technology is needed to protect the resources. For serious theft, video surveillance is the primary defense. Surveillance cameras are helpful, but assign adequate staff to monitor the cameras. Employees are smart, and some may watch for an opportunity to steal. On the other hand, understand that security measures could negatively affect morale, making employees feel that they are not trusted. Consider this issue when establishing a security program.
Use paper trails to help employees become responsible. Require employees to sign for money or goods when it changes hands. Limit access to supply stock and cash rooms. Require employees to work in two-person teams when the opportunity for theft is obvious. Alternate which employees work as a team, so the same two workers are not constantly together.
Unexpectedly drop in on employees. Managers should not establish a routine for when they check on their staff. Use non-peak hour visits or night surveillance. Employees rarely expect managers to leave their home at night to check on the crew. When employees see the manager at odd hours, the word gets out that the boss does check on the staff.
Document times and dates when incidents occur. Theft trends may develop, and then through referencing the work schedule, suspects can be identified. Maintain up-to-date inventory-control systems tied to register sales.
In accounting, do not permit the accounts-payable person to reconcile the bill of lading paperwork. Do not allow the purchasing department to be the same employees who receive deliveries. Records must be current and accurate. Do not permit the accounting department to annually change report formats. Always compare "apples to apples" when studying financial reports. If record-keeping documentation is sloppy, theft will be harder to detect.
Conduct as much pre-employment screening of candidates that the law will allow to hire the most trustworthy staff possible. When employees are hired, policies on theft and the misuse of time should be made clear. Employees must understand that every department will aggressively combat dishonesty.
Search for signs of internal theft. Managers should trust their eyes and be suspicious of anything amiss. If something does not seem right, it may not be right. Watch for a sudden rise in a worker's living standards. Pay attention to employees who insist on handling routine clerical tasks or resist inspections. Listen to clients who complain about being overcharged. Pursuing customer grievances can uncover internal dishonesty.
Address employees who have substance-abuse symptoms or problems. The company should have a substance-abuse program in place.
Be fair with employees. If they feel the company is unfair, they will invent ways to steal. Be certain about a worker's misconduct before making accusations.
A proactive relationship should be established with the police. Have meetings during the off-season and establish action plans that both sides can administer when a theft occurs. Ask law enforcement to survey the facility and then implement their suggestions to deter theft. Always let a professional investigate embezzlement. When the company decides to prosecute an employee, the District Attorney will determine if the case is worth pursuing.
Create an atmosphere in which employees know that if they steal, they will get caught.
If a worker is caught stealing, do not hide that fact from coworkers. Employees must understand that when others steal from the company, they are stealing from honest employees, causing reductions in profit-sharing contributions or future pay raises.
Offer a source for counseling to workers with financial difficulties. Set an honest example. Remind employees that no one, including management, is above suspicion. If management is seen dipping into petty cash, fudging expense accounts or taking home equipment, dishonest employees will feel justified in doing the same.
Reward employees who report dishonest or suspicious activities. All reports must be taken seriously. Protect these employee sources without exception. Such positive actions will spread throughout the facility. Establish countermeasures and procedures addressing every type of corruption. Quite simply, reward integrity and establish procedures that make it easy for employees to remain honest.
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