15 Employee Theft Statistics and Prevention Tips


Owning Up To Employee Theft

Any business or organization will tell you that security is an important consideration. Just ask the citizens of Troy. The stone walls withstood Greek armies for 10 years until the Greeks finally gave up and sailed away, leaving behind their wooden horse. Claiming the horse as a trophy the Trojans wheeled it into the city and called for a celebration. Their new acquisition had a hidden agenda and Greek spies hiding in the hollow horse slipped out and opened the gate. Troy fell and a valuable history lesson was learned about the importance of security screening.

When the enemy is inside the walls, or standing behind the cash register, good security becomes a much more difficult problem. In the U.S., the retail industry loses more than $50 billion annually from employee theft, and on a case by case basis, employees steal six times more than shoplifters. The Wall Street Journal reports that 75% of employees have stolen from their employer at least once. Employee theft is rampant and in many cases the perpetrators are the most unlikely suspects.

One case involves Evelyn Hynes, a social services administrator in Canada. She was sentenced to four years for defrauding her employer of almost one million dollars. Surprisingly, her employer never checked her criminal record when she was hired. If they had, they would have discovered that she had served time for a previous fraud conviction while working at a bank. In an ironic twist, while Ms. Hynes was committing the crime over the span of more than a decade she was also establishing a reputation as a highly regarded university lecturer and writer on the subject of ethics in social work.

Background checks and structured interviews may turn up felony convictions and compulsive liars but even honest people will cheat. Johnathan Haidt, author of The Righteous Mind, reports that given the opportunity, almost 80% of people will cheat. The incentive, or how much is at stake, does not affect the incidence of cheating. Two factors: the possibility of being caught, and plausible deny-ability, are the two largest contributors.

A strategy designed to make it more likely a theft will be discovered and one that makes responsibility for the theft difficult to deny can help curb the problem. Random inspections and audits as well as internal checks are excellent tools. While management is important in implementing security procedures, studies show 37% of employee thefts are actually committed by managers.

Providing employees with an anonymous way to report theft gives them responsibility to help solve the problem, and soliciting ideas and suggestions to prevent theft shows your people that you respect their input. The fact is that 44% of employees say their employers could do more to reduce employee theft but employers choose not to do so. Acknowledging that employee theft is a problem is often the most crucial and important step in preventing it.