Employee Theft Essay, Research Paper
INTRODUCTION The reduction of employee theft can be achieved by understanding the causes and implementing theft deterrent programs. Employee theft and pilfering have existed since the beginning of business. The exact amount it costs businesses is unknown, but estimates suggest it costs billions. Whether the theft amounts to small items such as paper clips and pencils or large items like a television or fur coat, it all comes out of the bottom line. Lost profits can lead a business to bankruptcy and its employees to the unemployment line. Employers are fighting back with loss-prevention plans, pre-employment assessments, and high-tech solutions to reduce their losses. WHAT IT COSTS Employee theft and pilfering cost businesses from 10 billion to 100 billion dollars a year and is on the rise. Internal theft accounts for 67 to 80 percent of business losses (Henry 49). To illustrate the magnitude of the problem consider the following: A business sells $100 worth of merchandise. The net profit for the sale is $4. To make up a loss of $100 requires the business to make twenty-five $100 transactions at a $4 net profit. This means $2,500 of merchandise must be sold to cover a $100 loss or theft.Taking time out from business to appear at several court hearings and trials can cost owners even more money. With more and more companies struggling to stay in business, employee theft can cost them their existence, forcing them into bankruptcy. HOW WIDE SPREAD IS THE PROBLEM Employee theft impacts almost every industry. It appears that the problem has expanded to the point where nearly all employees have committed theft or have pilfered something from their employer. The frequency with which politicians, business, and religious leaders are involved in high-level corruption is breeding an immunity to crime in general. The idea of taking what you can is beginning to acquire an aura of acceptability. For example, Macey s Incorporated of Salt Lake City, Utah decided to add another store to its chain. They needed to hire 280 full-time and part-time employees. Well in advance of the opening more than 2,000 applicants were called in for interviews and pre-employment testing. But just two weeks before the store was due to open, not even 200 of the positions had been filled. This was due to that fact that of the 2,000 applicants, 1,800 openly admitted to have stolen from their employers over the past six months. In addition, many admitted to being drug and alcohol abusers. President Ken Macey recalls, The really scary thing was how many of these people didn t see anything wrong with what they were doing (qtd. In Ingram 33). WHAT CAUSES EMPLOYEE THEFT Many studies have been conducted to determine why employees steal from their employers. Many factors contribute to the problem. It appears that no one factor is more significant than the other and a combination of factors is usually present. Stealing is sometimes considered to be unofficial compensation and a justifiable pay back for what is viewed as employer greed (Ingram 33). Almost any employee can be a thief, regardless of status, length of employment, age or gender. Management s attitude toward stealing, and participation in it, can influence what a worker thinks is acceptable behavior. For example, a trainer of managers was caught stealing and six of the seven managers trained by that person were also found to be stealing (Campbell 33). Business owners unwillingness to admit that employee theft exists in the work place, causes complacency toward loss-prevention. In the same way, management s lack of knowledge about theft leads to more losses. Companies without a well-defined ethics policy or that informally bend the rules are sending a message to their employees they cannot afford. Employees steal because they are dissatisfied with or have a lack of commitment to their job. They must also have the opportunity, attitude, and need to steal. Research indicates that the desire to steal may be connected to how employees view pay inequities and how they are treated by management. Likewise, the perception of unfairness, disrespect or lack of compassion contributes to the employees attitude toward stealing. Employer loyalty is down due to the reduction of full-time positions and the hiring of either part-time or temporary help. This trend is leading to an increase in employee theft. High levels of stress coupled with job dissatisfaction lead to higher levels of employee theft. Layoffs and bad news about the economy as a whole can intensify feelings that employees must look out for themselves because the company does not have their best interest in mind. If bad news is delivered without rationale or in an unfeeling way employees tend to seek retribution by turning to or increasing theft. For instance, a study was conducted using three plants owed by the same company. The first plant had no pay cuts and the theft rate remained the same. The second plant received a temporary pay cut that was thoroughly and thoughtfully explained. The theft rate went from 3 percent to 4.5 percent. The third plant also receives a temporary pay cut, but with a vague and insensitive explanation. The theft rate more than doubled. Once the pay rates were reinstated, the theft rates returned to 3 percent (Campbell 33). Higher rates of theft have been associated with those employees intending to quit their jobs. Those intending to quit steal as much as seven times more than those intending to stay (Ingram 36). If co-workers view stealing as acceptable or their fear of being caught is non-existent or low, employees are more likely to steal. Some employees who appear to be honest are often deceiving their employers through theft. In order for an employee to steal over a long period of time they must be viewed as an honest, hard working person. Financial and personal hardships that result from drugs, alcohol, gambling, or living above personal incomes can lead an employee to steal. Declining morals and ethical standards of the younger generation, as well as, a reduced commitment to conformity and a reduced fear of social consequences for their behavior have also influenced employee theft (Holt 16). SAMPLE CASES Case 1 A bank teller pilfers $22 from her cash drawer. When confronted, she claims missing money represents shortages,” but later confesses. Case 2 A federal employee uses a government credit card for personal purchases in an emergency. When no one detects the action, the employee charges another $4,500 in personal items. Case 3 A manager suggests that a consultant, in addition to his regular billings, submit occasional fictitious bills to the company. The manager then approves them for payment. The pair split $300,000 of the company s money (Campbell 33).
BUSINESS ATTITUDE Surpr
Adler, Steven. Selling employees in loss prevention. Security Management Dec 1993: 30-34.Campbell, Kim. Workers Sticky Fingers Are Costly. Christian Science Monitor Nov 1996: 33.Cook, Stephanie. Customer Service Manager. Personal Interview. 8 Nov 1996.Henry, Jack. What you don t know about employee theft will hurt you. National Petroleum News Apr 1994: 49.Holt, Andrew. Controlling employee theft. CMA – the Management and Accounting Magazine Sep 1993: 16-20.Ingram, Bob. Honesty: just a policy?. Supermarket Business Apr 1994: 33-37.Juneja, Ravi. Employee Relationships: fraud, trust, can control. CMA – the Management and Accounting Magazine May 1993: 31. APPENDIX Employee Theft ProfileLow Risk* Works the day shift* Female* 31 years of age or older* Less than 1 or more than 5 years experience* Believes companies treat self and others fairly * Thinks he/she will be caught if trying to steal * Believes co-workers condemn employee theft * No plans to quit job High Risk * Works the evening and/ or night shift * Male * 16 – 30 years of age * 2 – 5 years experience * Believes companies are unfair to self and others * Thinks it s easy to steal from the company * Believes co-workers accept employee theft * Intends to quit job