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A few pens here, a notepad or two there, a stapler, a ruler, a stamp – who would ever miss these little items should they disappear from the workplace? Pencils, paperclips, paper – they seem abundant and ready for the taking, right? Well, they may seem that way to the nonchalant employee who rationalizes his or her choices for workplace theft, but the truth is, these little items have been purchased for work-related use, and work-related use alone. Taking an envelope from the supply closet in order to mail a quick personal note is just not work-related. No matter how a person rationalizes it, stealing is stealing. And stealing is costly.
On the other hand, some employers have an open use policy—a “take a pen, leave a pen,” kind of philosophy. In that case, an employee may be able to take an envelope for personal use, but he or she shouldn’t do it without asking. The employee should walk over to the person in charge and ask, “Is it ok if I take this envelope to mail my Uncle Fred a quick note?” If the boss says yes, then great. Employees who can’t bring themselves to ask the question in the first place probably know the answer would be “No.”
So what makes people pilfer from the company purse or supply closet anyway? Experts offer varied theories, but most agree that the decision to steal and commit fraud is based on complex sociological factors.
In the 1950s, criminologist Donald R. Cressey introduced the theory of the “fraud triangle.” The fraud triangle suggests that there are three factors that contribute to an employee committing fraud.
The first factor is financial pressure on the employee, such as gambling or credit card debts.
The second factor is opportunity, or the employee’s perception that an opportunity to commit fraud exists. This opportunity may arise from the company’s poor internal controls, loose discipline policy, or some other factor.
The third factor is the employee’s ability to rationalize the fraud, suggesting to him or herself that it is somehow justified and/or non-criminal.
A slightly different theory came out in the 1980s with a study conducted by Richard Hollinger and John Clark. The study found that employees were motivated to commit fraud because of dissatisfaction at work. When employees perceived that their jobs or working conditions were unfair, perhaps due to inadequate compensation or unequal treatment, they were more likely to justify and commit fraud.
These two theories, while different, both suggest that employees may be motivated to steal and commit fraud when they are able to rationalize/justify the behavior.
How can your company prevent and detect employee theft? Consider implementing these practices:
- Set a high moral and ethical standard at the top, and make sure that standard is communicated down through every level of the organization. Management must reinforce and model that standard.
- Screen all job candidates carefully, and conduct criminal and credit checks on those entering positions of trust.
- Enforce a zero tolerance policy for employee theft/fraud of any sort, and include in the policy an outline of exactly what constitutes stealing.
- Implement an Anonymous Tip hotline for employees to report illegal or unethical activity at work (a 2004 report found that the “anonymous tip” was the most prevalent method for detecting fraud).
- Implement and monitor internal controls, strengthening them as needed or as new technologies and tools become available.
- Conduct regularly-scheduled and surprise internal audits, as well as external audits.
- Train senior management on fraud awareness and investigation procedures, and provide ethics training to all employees.
- Make certain that a single person does not control company finances. Instead, engage two or more people in the process of recording and processing financial transactions.
- Never use a signature stamp for signing checks, and never authorize blank checks.
- Address disgruntled employees and be aware of employees who may be experiencing financial difficulties.
- Maintain a positive work environment and be as consistent and fair as possible, supporting open communication and employee recognition.
It is also important for the company to carry adequate limits of insurance for crime, employee theft, and computer fraud. And, make sure to read the policy’s exclusions.
The bottom line is that most employees will not steal, not even the “little things,” if they understand the behavior is wrong and know they will likely get caught. Spending a little to prevent theft is a lot cheaper than paying for it later.