Author: Arthur Ph.D.

The vast majority of employees are honest to the point of not taking home even pens and paperclips from the company — well, at least not boxes of pens and paperclips.

But their opposites — those who in one way or another may steal half their salary or more from you each year — have a variety of rationalizations for their misdeeds. To understand these misguided motives is to prepare and protect yourself against employee theft and fraud:

• “Everyone does it.” You know, of course, that “everyone” in your workforce does not steal. But thieving employees may have a quite different perspective. They commonly organize themselves in cliques or clusters — the inner circle with whom they share their escapades and tales of “what they got away with”– then judge what “everyone” does by the low standards of this small group. Watch, therefore, for theft rings among your workforce. Only rarely does a repeat offender not involve an accomplice or at least a confidant.

• “It was small potatoes.” Most thieves and cheaters downplay the seriousness of their infractions by an appeal to relative scale: What’s a $50 stolen calculator to a company that makes millions each year or to a boss who drives a Mercedes? Relative scale should never be accepted to rationalize a permissive attitude toward theft and fraud. Establish a zero tolerance policy for theft and fraud in any form or for any amount.

• “They had it coming.” A significant portion of employee theft or sabotage arises from a felt injustice of some kind. The boss criticizes my work in front of others, so I respond by sticking a $300 copy of Windows 2000 in my briefcase or lunchbox to take home. A co-worker says something offensive to me, so I strike back at the world in general by anonymously throwing some bugs into the company computer system. Be alert to anger theft and abuse in the aftermath of interpersonal conflict, reprimands, or other personnel problems in the workplace.

• “I had it coming.” Employees who feel under-compensated or unrecognized for their work sometimes respond by a self-devised “bonus” plan. They take home just enough company equipment or money to raise their total compensation to what they perceive as a equitable amount. Studies have shown characteristic patterns for such thefts. They commonly occur in the days immediately before or after payday, then cease almost entirely until the next payday. Guard against this kind of equity theft or abuse particularly after an employee has been turned down for a raise or promotion; after a company-wide wage freeze has been established; and during periods of company turmoil (restructuring, takeover, new management, etc.).

• In an era of telecommuting, many de facto thefts are explained away by employees as “borrowing” — one of the company’s printers may have been found at my home, but I had to keep up with my work, didn’t I? I was going to return it. What do you think I am, a thief? Frankly, yes. Don’t accept after-the-fact rationalizations as excuses for stealing. Employees with a legitimate off-site need for company equipment request it in advance, usually in writing. In advance of any such problem, your policies for removal of equipment from company premises should be clear, specific, and well-known to all employees.

Cartoon by Marc Tyler Nobleman.

 

Across industries, up to 85 percent of all theft and fraud stems from employees, not outsiders, according to Department of Commerce estimates. The categories of “theft” and “fraud” include the following, all unfortunately alive and well in the wide range of workforces:

• embezzlement large and small, ranging from felonious robbery to snitching from petty cash and postage

• unauthorized expenses for telephone, fax, computers, company vehicles, and other equipment

• removal of equipment, parts, software, and office supplies from company premises

• fraudulent filing of expense reports and reimbursement requests

• exaggerated or wholly fictitious accident and injury claims

• misuse of days off for sickness or family emergencies

• use of company facilities and personnel for personal business or entertainment, including Internet play and excessive non-business e-mail, voice-mail, and fedex (TM)

• company-paid travel, ostensibly for business but in fact for personal purposes

Consider also these hazy (but no less harmful) aspects of employee theft and fraud:

• selling company products or services to clients or others “at a special discount” made possible because the employee is trafficking in stolen goods or offering professional services on a “moonlight” basis in direct competition with you.

• taking advantage of company clients and other contacts for personal gain. This can involve inappropriate off-the-clock business dealings with patients or clients, sharing of information from confidential client files, and quid pro quo arrangements for favors and considerations.

• tampering with records, computer files, schedules, documents, or products in such a way as to discredit a fellow employee, hide one’s own misdeeds, or place the company in a bad light.

Whether your business involves a handful or hundreds of employees, your viability as a business enterprise or professional practice depends upon your ability to prevent employee theft, fraud, and abuse in all forms. At the same time, avoid paranoia about your employees’ actions and motives. Thieves and cheaters in your workplace probably remain the rare exception, albeit an expensive one.

Prevention of theft and fraud is where your focus and energies should be placed. Although obviously necessary, after-the-fact recovery of stolen funds or property and punishment for the guilty usually involves a net loss to the company due to executive time, legal expenses, employee turnover and rehiring/training expenses, and perhaps fees to professional investigators. In short, punishment is infinitely more expensive and legally hazardous than is prevention.