The statistics are staggering. The latest National Retail Security Survey states that 45 percent of losses to retailers are attributed to theft by employees. The Association of Certified Fraud Examiners (ACFE) reports that 5 percent of revenues of a typical organization are stolen by company workers. The average internal fraud scheme goes undetected for 18 months. Small businesses are particularly vulnerable since they don't have the resources or the processes in place to avoid and/or detect fraud activity.
With no formal loss prevention programs in place, many owners and managers rely on their experience and expertise to react to incidences of employees stealing. Others rely on their beliefs, perceptions and ideals that their employees would not steal from them for a number of reasons. The following are myths associated with those ideological thoughts:
My employees would not steal from me because ...
1. They Like Me – While it is true that good relationships with the boss may deter a small percentage of employees from stealing, research has shown that dishonest employees are driven by a number of factors. Loss Prevention professionals cite the presence of the Theft Triangle as the breeding ground for employee theft. When these elements are present in the workplace, employees may be tempted to steal or become involved in other counterproductive behaviors.
Motive - Potential gain and use for the cash or product
Opportunity – Ability to quickly and safely steal the cash or product
Low Risk of Detection – Perception of low probability of getting caught
The employees may genuinely like the manager or owner, but if the three factors are present in the work environment, the temptation to steal may override friendship.
2. They're My Best Employees – Many managers and employers perceive that because certain employees are self-motivated, hard workers, they do not have any integrity issues. They are above reproach simply because they exceed expectations in their performance. And because of that belief, those employees are not scrutinized for compliance to the rules, nor suspected of counterproductive behavior or theft. Without accountability to the rules, even the best of employees may take advantage and steal.
3. I Show That I Trust Them – It is essential that trust be developed throughout any organization. It is the foundation of every great relationship. In the world of business, the trust must be validated with accountability. Unfortunately managers and owners may interpret showing trust as not checking up on employees. Without a check and balance process or audit system, employees may perceive that there is low risk of getting caught. All incidences of employee theft violate trust. Show your employees that you trust them, but follow up on the performance expectations you have established.
4. They Have a Clean Background – Pre-employment background checks are significant in establishing a comprehensive loss prevention program. Hiring employees without criminal convictions may be a good start in creating an environment of honesty and trust. High integrity must permeate the organization. With a culture devoid of strong policies and procedures supported by compliance processes and effective supervision, employees may steal with a compelling motive, opportunity and the perception that they won't get caught. The ACFE reports that of the 1,388 internal frauds investigated by Certified Fraud Examiners in the past year, 87 percent of them were perpetuated by first time offenders. They cited the lack of internal controls as the key factor in the crimes that triggered the criminal behavior.
5. I Pay Them a Higher Wage – Assumptions are made that paying employees a higher wage than their counterparts with other companies will make them happy. If employees are happy with their wages they won't steal. It's another myth. Sociological studies have shown that employees are influenced by the culture established by the work environment. Approximately 10 percent of the employees are morally incorruptible. They don't bend or break the rules. They don't steal given any opportunity to do so. Additionally, approximately 10 percent of employees bend and break policies and procedures with regularity and are prone to steal. They are the challenge of Human Resource personnel in medium and larger size businesses and a big problem for the smaller companies. The remaining 80 percent of the employee's behavior in the workplace is influenced by the culture and attitudes. If the rules are clear and compliance is expected, employee behavior gravitates to following those rules. If the counterproductive behavior of the small percentage of the problem employees is not addressed and allowed to flourish, other employees will be influenced by that behavior. Ninety percent of the workforce can be positively influenced to compliant behavior with well written rules, clear expectations and effective follow-up.
We want to believe that employees won't steal from us. We really do. We use these reasons to support our views. But, on their merits, these views are indeed myths. Sociological studies on workplace behavior, criminal investigations on employee fraud, and anecdotal stories have proven that the workplace environment must be controlled to avoid counterproductive behavior and theft. Policies and procedures must be well written. Compliance to the rules and behavior expectations must be clear. Internal controls must be established and audited. Counterproductive behavior must be addressed effectively, and the elements of the Theft Triangle must be eliminated. It must be known in the work environment that opportunities to steal are low and the probability of getting caught is high. You then might be right when you say; my employees won't steal from me.
For more information on security, safety, loss and crime prevention for restaurants, visit www.LossBusters.com. For daily tips on restaurant loss prevention, follow on Twitter @LossBusters
D.B. “Libby” Libhart has more than 30 years of experience in the loss prevention industry. He has provided security and safety leadership in retail settings such as department stores, drug stores and quick-service restaurants. Before launching his own company, LossBusters, Libby served as the Senior Director of U.S. Security and Safety for McDonald’s Corp. He entered the QSR industry with Taco Bell and subsequently YUM Brands.