Eagle Eye Contents — Fall 2002

No matter what type of business you are in, there is probably some degree of employee dishonesty.

It is estimated that 95% of all businesses experience employee theft, fraud or embezzlement. Management is seldom aware of the actual extent of losses:

• It is estimated that approximately $600 million will be lost in 2002.
• Smaller organizations (less than 100 employees) suffer higher losses.
• Employee theft at retailers was estimated to be $32.3 billion in 2001
• It is estimated that 46%of losses are related to disgruntled workers.

Misconceptions

• Management doesn’t need to tell employees where it stands because they already know.
• Well paid or adequately paid employees are less likely to steal.
• Honest and loyal employees will report other employees who steal.
• Losses from shoplifting are higher than losses from employee dishonesty.
• Newer employees commit acts while senior employees can be trusted.
• Employee dishonesty is usually detected in its early stages.

Why employees steal

Employees often rationalize their actions and stated that lax policies, controls and management indifference presented opportunities and even encouraged dishonest behavior. Employees cited opportunities created by management rather than financial need as their primary motivation. One significant reason employees gave was their perceived belief that management was stealing, so it was OK for them to follow suit.

Prevention

• Identify existing dishonesty and potential opportunities and eliminate or reduce them.
• Separate duties. For example, the employee who receives funds should not be the one who does the reconciliation of the accounts.
• Educate supervisors and the general employee population on the impact of the problem.
• Develop a loss prevention program.
• Improve the perks and benefits of the job and pay decent wages.
• Create a stated policy on dishonesty.
• Safeguard all hardware and software.

Ignorance or neglect could seriously damage your organization’s reputation and financial security. The more you know about prevention, the better prepared you are to avoid potential threats to the success and security of your business.