We know our employees steal, but who cares?

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Author John Towler, Ph.D.
Original Publication Exchange Magazine

How just one dishonest employees can seriously damage a company or its reputation.

The following is a true story. Only the names have been changed to protect the guilty and the fools who allowed it to happen. Some time ago in a major Canadian city, a retailer hired a person as a sales clerk. This company knew that employee theft was a problem everywhere. They had attended a very expensive anti-theft conference in New York and had spent thousands on sophisticated surveillance equipment for their stores. But they continued to hire anyone who was willing to work for them. They did not screen applicants and were not interested in doing so.

They discovered that one of their recent hires had managed to steal some 8000 items over a 3 month period for a total loss of just under $200,000.00. This smart crook was able to circumvent the theft protection systems and, well, rob them blind. But there is more to this story. Three years before, the firm had learned about the value of pre-screening employees and the kinds of proven tools that could be used to weed out dishonest applicants. They knew about the kinds of instruments that were being used to identify dishonest employees already on the payroll. They didn’t use them and weren’t interested.

Several different executives at the vice presidential level were approached over the next three years. They all said the same thing, “We have spent thousands on sophisticated electronic systems. That’s all we need.” They were wrong and it cost them $200,000.00 to find out with the one thief they happened to catch. There are probably more, but they aren’t looking for them. This company has a problem but they have their heads in the sand.

Employee theft has reached staggering proportions everywhere. The Retail Council of Canada reports that employee theft losses have grown to more than $2 million a day. This means that retailers can expect to lose about 1.9% of their total sales from internal theft alone. There are many cases of firms that went bankrupt because they didn’t control this problem.

Canadians seem to be a bit more honest that our American friends. Internal employee theft in Canada represents 31% of all losses, while in the US it is at the 46% level. But no matter which side of the border you are on, the costs are staggering and they are increasing every year. Theft protection systems, alarms, drop safes, silent alarms and mystery shoppers all help, but no method is 100% effective and there will always be somebody who can outsmart the smartest system.

There are things that you can do to alleviate the problem. It doesn’t cost a fortune to reduce employee theft. The answer is so simple, it’s hard to make it sound difficult. Don’t hire dishonest people in the first place! Far too many firms are still hiring people without first finding out as much as they can about them. Security firms selling electronic anti-theft devices are unlikely to tell you how to identify dishonest employees, but it can be done - easily and inexpensively.

Why do people steal? It’s not because they are poor and need the money. It’s because they are predisposed to steal and see little or nothing wrong with it. Thieves who are caught explain their behaviour by saying such things as:

  • I’m underpaid and take only what I deserve.
  • Everyone does it. I’m no different from the others.
  • The company expects it and just writes it off.
  • The company makes huge profits, so they can afford it.
  • The company makes me mad and this is my way of getting even.

Strange as it may seem, people with this kind of mind set will actually tell you that they will steal because they see nothing wrong with it. This makes it easy to use simple, inexpensive assessment instruments that will weed them out. There are several excellent ones available. These instruments are proven, reliable, valid and legal.

Any of the tests we offer will enable you to pre-screen applicants and weed out the ones who are most likely to steal. Not hiring these people will significantly reduce the risk of theft. Of course this does not deal with the issue of any theft prone employees you may already have on the payroll. The best way to handle this is by using a carefully designed, anonymous, confidential survey. Given to all employees, the survey will collect information about gaps and weaknesses in your security system. It will also identify the amount and kinds of theft currently taking place.

Assessing applicants before you hire them is not just common sense; it is essential. No firm should ignore employee theft. It would be mean to say that the ones that do deserve what they get, but those who refuse to use the tools available will certainly suffer the consequences.

John Towler is a Psychologist and the founder of Creative Organizational Design. You may send comments about this article to jtowler@creativeorgdesign.com. For more information, please contact us.

Re-printable with permission.