Every business employing staff and selling either a product or service can be a victim of employee theft. For a business to be successful trust needs to be placed in the hands of employees. Unfortunately, from time to time, this trust is abused.
Across the various business sectors the items employee’s steal can be placed into six categories: merchandise, plant equipment, cash, business assets, intellectual property and time.
Obviously the type of theft will depend on the type of business. If you are in the finance industry the theft of money will be dominant yet in the retail industry theft of merchandise will be most prevalent.
In order for theft to occur four things need to exist: motivation, opportunity, rationalization and capability.
There is no set order in which these four points will occur however capability and opportunity will always go hand in hand.
Let’s take a closer look at the four areas:
Motivation
This is the factor businesses have the least control over as an employee’s motivation to steal will usually come from outside sources. Some examples of these factors are:
• Addictions such as drugs or gambling
• Excessive debt
• Sudden loss of income
• Pressure from other people
• Lifestyle
Lifestyle theft will often start out small and increase over time.
To give you an example of this: there was one employee who started out by taking $5 on the odd occasion just to buy lunch. As time went by both the frequency and dollar amount increased to the point where they were consistently taking up to $600 a week. Once caught the only reason given was ‘he liked to buy things’.
Rationalisation
This could also be described as justification. Businesses can have an impact on this factor as an employee will find rationalisation much easier when they are working for a business that treats them poorly.
Although having said that, even the best business in the world can have employee’s stealing if their rationalisation isn’t work related.
Some common rationalisations are:
• ‘They make a lot of money so they won’t miss a small amount’
• ‘I haven’t had a pay rise for a long time, how do they expect me to live’
• ‘Other staff take stuff all the time and nothing happens’
• ‘I’m always working extra hours without payment so this evens things out’
• ‘They don’t appreciate the work I do, so why shouldn’t I take it’
• ‘I should have been promoted a long time ago, they are costing me money’
As I mentioned before, if you are the world’s best employer and you still have an employee stealing chances are they have a very strong motivation and their rationalisation will be more about what will happen to them or their family if they don’t steal.
Opportunity
As a business owner this is where you have the most control to reduce or eliminate theft. In order for an opportunity to exist there must be either weak procedures in place or none at all.
A thorough assessment of potentially vulnerable areas within your business should be conducted and immediately followed up by implementing strong policies and procedures around the identified weaknesses.
Some areas you may look at developing procedures around are:
• Opening and closing the business
• Key controls
• Cash Handling
• The use of computers and the storing of data
• Receiving stock
• Invoicing
• Credit Card Transactions
As soon as you have developed and implemented the relevant procedures you will need to have all staff sign off stating they have read and understood them. Once all of this has been done the final step is to ensure they are being followed; the most effective way to do this is by conducting random audits.
Some other options available to assist in minimising opportunity is the implementation of closed circuit television (CCTV), access control systems, restricting high risk areas to key personnel and limiting functions on business computers.
Capability
The level of opportunity will be in direct proportion to the employee’s capability. What I mean by this is an opportunity can exist but if the employee doesn’t understand how to take advantage of it then theft is unlikely to occur.
An example of this would be where a business has poor procedures in place regarding how they record their invoices and it’s common knowledge among the staff.
The business has an employee who has the motive, has rationalised why it would be ok to steal and is aware there are poor procedures around the invoicing.
Fortunately for the business, he doesn’t understand how the invoicing works so he is incapable of taking advantage of the opportunity that exists.
Murry Taylor is currently the Chief Operating Officer for Group 1 Security; prior to this role he held various senior security/risk management positions (State/National) in RailCorp, Woolworths & Retail Adventures.
Every business employing staff and selling either a product or service can be a victim of employee theft. For a business to be successful trust needs to be placed in the hands of employees; unfortunately from time to time this trust is abused. So much so the cost of employee theft goes into the billions.
Across the various business sectors the items employee’s steal can be placed into six categories: merchandise, plant equipment, cash, business assets, intellectual property and time.
Obviously the type of theft will depend on the type of business. If you are in the finance industry the theft of money will be dominant yet in the retail industry theft of merchandise will be most prevalent.
In order for theft to occur four things need to exist: motivation, opportunity, rationalization and capability.
There is no set order in which these four points will occur however capability and opportunity will always go hand in hand.
Let’s take a closer look at the four areas:
Motivation
This is the factor businesses have the least control over as an employee’s motivation to steal will usually come from outside sources. Some examples of these factors are:
• Addictions such as drugs or gambling
• Excessive debt
• Sudden loss of income
• Pressure from other people
• Lifestyle
Lifestyle theft will often start out small and increase over time.
To give you an example of this: there was one employee who started out by taking $5 on the odd occasion just to buy lunch. As time went by both the frequency and dollar amount increased to the point where they were consistently taking up to $600 a week. Once caught the only reason given was ‘he liked to buy things’.
Rationalisation
This could also be described as justification. Businesses can have an impact on this factor as an employee will find rationalization much easier when they are working for a business that treats them poorly.
Although having said that, even the best business in the world can have employee’s stealing if their rationalization isn’t work related.
Some common rationalizations are:
• They make a lot of money so they won’t miss a small amount
• I haven’t had a pay rise for a long time, how do they expect me to live
• Other staff take stuff all the time and nothing happens
• I’m always working extra hours without payment so this evens things out
• They don’t appreciate the work I do, so why shouldn’t I take it
• I should have been promoted a long time ago, they are costing me money
As I mentioned before, if you are the world’s best employer and you still have an employee stealing chances are they have a very strong motivation and their rationalization will be more about what will happen to them or their family if they don’t steal.
Opportunity
As a business owner this is where you have the most control to reduce or eliminate theft. In order for an opportunity to exist there must be either weak procedures in place or none at all.
A thorough assessment of potentially vulnerable areas within your business should be conducted and immediately followed up by implementing strong policies and procedures around the identified weaknesses.
Some areas you may look at developing procedures around are:
• Opening and closing the business
• Key controls
• Cash Handling
• The use of computers and the storing of data
• Receiving stock
• Invoicing
• Credit Card Transactions
As soon as you have developed and implemented the relevant procedures you will need to have all staff sign off stating they have read and understood them. Once all of this has been done the final step is to ensure they are being followed; the most effective way to do this is by conducting random audits.
Some other options available to assist in minimising opportunity is the implementation of closed circuit television (CCTV), access control systems, restricting high risk areas to key personnel and limiting functions on business computers.
Capability
The level of opportunity will be in direct proportion to the employee’s capability. What I mean by this is an opportunity can exist but if the employee doesn’t understand how to take advantage of it then theft is unlikely to occur.
An example of this would be:
A business has poor procedures in place regarding how they record their invoices and it’s common knowledge amongst the staff. The business has an employee who has the motive, has rationalized why it would be ok to steal and is aware there are poor procedures around the invoicing.
Fortunately for the business, they don’t understand how the invoicing works so they are incapable of taking advantage of the opportunity that exists.
