The Face of Theft

The Face of Theft
By Kerry Sapet
SDC CPA
 
“The thief was a special type of thief. This thief was an artist of theft. Other thieves merely stole everything that was not nailed down, but this thief stole the nails as well.”
–Terry Pratchett, author
 
Money. Computers. Post It notes. The list of items employees steal is long, varied, and sometimes surprising. One employee stole 5-gallon jugs of water from the water cooler to change the water in his tropical fish tank. Another regularly pilfered rolls of toilet paper. No matter what is being stolen, theft is theft. And it often starts small, with a box of paperclips, a stapler, a pen. . . and snowballs from there. Being aware of potential theft and putting controls in place to mitigate or prevent theft is key. But understanding the reasons behind employee theft can help pinpoint who is most likely to steal. 
The Problem
Employee theft is a big problem. According to a 2018 study by the U.S. Chamber of Commerce, 75% of employees have stolen from their employer at least once. The Chamber also found that up to 30% of business failures may be the result of employee theft. The theft of noncash property increased from 10.6% of company fraud cases in 2002 to 21% in 2018, according to Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners (ACFE). More than 80% of thefts occur at companies that have fewer than 150 employees, half occur at companies with 25 or fewer employees.
So why do employees steal?
The “Logic” of Employees Who Steal

 

“Most people who steal from work – whether time theft, fraud, embezzlement or theft of goods or products – are not doing so because they are professional thieves or dishonest people,” says Terry Shulman, author of Biting The Hand That Feeds: The Employee Theft Epidemic. “They slip into it a little at a time, mostly out of a combination of disgruntlement and compulsion.”
Generally, people like to think of themselves as basically good, so they justify the crime, says Art Markman, a professor of psychology at the University of Texas at Austin. An employee could have any number of motives for stealing from an organization, but some reasons are more common, such as:
 
  • They feel poorly treated.
  • They have a particular hardship or change in income.
  • They have an expensive addiction, such as drug use or gambling.
  • They want to get revenge on their employers or to “settle the score” after receiving a pay cut or feeling overworked and underpaid.  Office supplies and equipment tend to go missing more often during times of corporate cutback and salary reductions.
  • It’s tempting. Employees who know their employer doesn’t monitor inventory won’t likely feel at risk for being caught stealing. Some individuals steal for the thrill alone. There’s widespread stealing of workplace supplies, such as pens, pencils, and tape dispensers. People justify the theft because the expense to the company is small.
What Are the Warning Signs?
 

Typically, a bad experience at work-such as a poor performance evaluation, a demotion, or having pay or benefits reduced plays a role in the decision to commit fraud. These events are human resources-related red flags. A recent study showed that nearly 85% of fraudsters displayed behavioral red flags prior to the detection of the theft. The “red flags” include, but aren’t limited to:
  • Living beyond their means
  • Exhibiting control issues and/or suspiciousness.
  • Having unusually close relationships with vendors/customers.
  • Having difficult relationships with co-workers.
  • Undergoing financial difficulties.
Tips to Prevent Theft
Workplace experts suggest that policies regarding theft need to be written and discussed. Talk with employees about theft and the employer’s position on it. Lay out the ramifications of theft. Employers should give specific examples of how stealing is wrong, even when taking a box of paperclips. Employers may also want to clarify what constitutes theft; some employees may not be aware that using office supplies at home isn’t the purpose of the equipment. This is a tricky, gray area for some employees because of the blurring of work/home environments. Most employees realize that stealing is wrong, but specifically indicating (in a policy manual) that theft won’t be tolerated, creates the impression that employers are aware of the potential risk.
Failing to address theft can indicate to employees that the company hasn’t taken measures to prevent it or catch employees who steal. Companies may wish to install surveillance systems, after consulting with legal counsel. Mentioning the company’s security cameras or monitoring systems, for example, should help to deter employees. Employers should also tell employees to report any stealing they witness to a supervisor or through an anonymous channel – either by writing or a tip hotline.
People say that knowledge is power. The same adage applies to employee theft. Being aware of situations that may contribute to employee theft is important. Knowing why and how employees justify theft can lead to greater understanding on the part of employers. Ultimately, this knowledge can help employers stay a step ahead of employees who feel justified in taking that calculator or that laptop and making it theirs.

 

If you would like more information about this topic or to contact the author, please contact Kerry Sapet at 630.820.5770 or write directly to her at ksapet@sdccpa.com.