W EEKLY EDITION SEPT 13, 2017
Preventing Employee Theft
By Karleen Kos, PSAI Executive Director
No one likes to think about it – but it happens. Even though you strive to hire
trustworthy employee s, sometimes you get a bad apple. In fact, if 2017 statistics
from the Association of Fraud Examiners and others are to be believed:
• 75% of all employees steal from their employer at least once
• 38% steal at least twice
• 37% of all theft is committed by som eone in a managerial position
• Theft accounts for about 7% of a company's total revenue each year
• 33% of company bankruptcies can be traced to employee theft
These are sobering statistics – and they don't even take into account the many
ways employees can steal from you indirectly such as wasting time on jobs,
taking long breaks, or being careless with equipment. Maybe they seem too
extreme to you. Okay, even if reality is only half or one - fourth as bad,
somewhere between 1 in 3 and 1 in 5 employees are sta tistically likely to
commit some act that could harm your business.
These can include things like:
• Outright theft – taking your money or your stuff
• Skimming - diverting business funds
• Fraudulent disbursements - billing schemes, inflated expense reports, check tampering, misuse of company
credit cards or charge accounts
• Stealing business opportunities - misappropriation of customer lists or other trade secrets, running a "side
business" that underbids yours, using your equipment to conduct cash transactio ns you don't know about
Who steals? It may be natural to keep a closer eye on new people who haven't yet earned your trust, and that's
certainly a good idea. However, experts say it isn't safe to assume long time employees that you trust are "in the
clear ." Employees who steal typically have worked at a business for several years before they start to steal, and they
continue for an average of three years before they get caught. That's a lot of time to generate losses for the business.
Why do employees st eal? According to the International Foundation for Protection Officers, the most common
reasons for employee malfeasance and theft include:
• Low morale at the workplace. This is also a major reason why businesses suffer from low productivity.
• The employee feels that the business or company has wronged or mistreated them in some way.
• The employee feels that they are underpaid [and under - appreciated] for the work they do.
• The consequences for theft are minimal. Either no one ever gets caught or when they do t he company has no
punitive procedures or policies regarding employee theft. If there are no set consequences to employee
theft, then employees will continue to steal because there is no downside.
• Lack of control over inventory. It is easy to steal because the employer does not have preventive measures to
stop them. Preventive measures are crucial to reducing the risk of employee theft. If preventive measures are
not existent then the opportunity to steal is very high.
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