Trustbreakers

Trustbreakers

Employee theft costs businesses billions of dollars every year. Do you know how to prevent loss caused by those you trust? asks Michelle Garetson

By Michelle Garetson

June/July 2002

Employee theft does more than rob a business of physical assets — it breaks an employer's trust. The emotional hit taken on the discovery that the damage was done internally reaches farther than the adjusted amounts to the bottom line.

Findings by the U.S Chamber of Commerce in 1999 estimated that employee theft costs American companies $20 billion to $40 billion a year. Unfortunately, 75 percent of employee-related crimes go unnoticed.

Losses can take the form of the manufactured product or its components, to office supplies, to inflated expense reports, to time theft, i.e. unauthorized leaves or time card fraud.

Does this mean employers must become 'Big Brother'? To some extent, yes. Nearly every business experiences some degree of employee theft and less than 10 percent of the employee population is responsible for more than 95 percent of the total losses from employee theft. Ironically, thieves often do not commit the crime for the money - they merely saw an opportunity to steal. This is the nail on which the key to prevention is hung — eliminate the opportunity. This can be done a number of ways but it needs to be done.

Background and reference checks for employees, securing your inventory and property through regular physical inventory and document audits, and knowing who has keys to the building are all strong behavioral boundaries that will help employers and employees keep on track.

Most important, employers need to set a good example so as not to create a corporate culture that invites theft. Employees look to their managers for direction. If you have business practices that are suspect, your employees may follow suit and inevitably break the trust you thought you had.