Ethics expert, Dr. Chris Bauer, explains the difference and makes the case for having three documents: a code of conduct, code of ethics and a values statement.
There are many kinds of employee theft and it is important to understand the various types and how to detect them to protect your business. The U.S. Chamber of Commerce estimates losses suffered by companies due to employee theft and dishonesty to be as much as $50 billion. The report states that about 75 percent of all employees will commit theft at least once in their careers and 37.5 percent of employees will keep doing it.
In retail, most theft is actually committed by employees, not customers, and this can cost a business millions of dollars annually. But it’s not just retail; every business is at risk.
Why Employees Steal
Understanding why an employee may steal can help detect and prevent employee theft. Employees may steal for a variety of reasons including:
- feeling underappreciated
- feeling underpaid
- being overworked
- being generally unhappy about other issues, including some that are not work-related
On average it can take a year or more to actually discover employee theft. In that amount of time, a business can lose a great deal of money. So, understanding why employees steal is also very important to discovering and dealing with employee theft.
Generally, employees steal when there is opportunity, financial need and justification. The facts behind these motivations are often hidden and may not be clear to anyone else, but the employee feels justified in their actions. And it is important to note that many of the employees who steal are in managerial positions.
Types of Employee Theft
This brings up the issue of understanding types of theft and how to detect them. There are many kinds of employee theft ranging from simple little things like taking office supplies, all the way up to embezzlement of funds.
In a retail situation, you may find cash missing from the register or items missing or not rung up properly. In an office, you may find supplies missing or company postage used for personal mail. In a more extreme circumstance, duplicate or bogus checks may be written to an employee or another person. Devious bookkeeping issues may be taking place. And don’t forget data theft or theft of company secrets. These are all forms of employee theft that need to be investigated and dealt with in a professional and comprehensive manner.
6 Ways to Combat Theft
While a business can’t eliminate theft completely, there are steps that can be taken to help avert it:
- Perform your due diligence before hiring. That includes a background and credit check, drug tests and comprehensive interviews.
- Make sure you have a system whereby no one person has too much control. Utilize a system where it takes two signatures on every check.
- Have more than one person overseeing invoicing and accounts payable and receivable.
- Check all deliveries and everything you may be shipping out. Monitor everything in and out of your building, including trash!
- Utilize internal controls and comprehensive documentation on all inventory.
- Install surveillance equipment and security systems and make sure they are monitored and serviced. If you find the need to actually investigate someone, these tools will help you prove or disprove an employee’s guilt or innocence.
Maintaining an ethical company culture and environment, and leading by example, can go a long way to help employees feel appreciated which, in turn, can help deter employee theft.