Employee Theft (Research Paper)
MGT 212: Section 02570
November 27, 2012
Employee theft is a problem of considerable size for many companies. Many corporate security experts estimate that 25 to 40 percent of all employees steal from their employers, and the U.S. Department of Commerce (DOC) estimates that employee theft of cash, property, and merchandise may cost American businesses as much as $50 billion on an annual basis. It is also not uncommon in today's workplaces. And it is often the employee you least suspect that is the culprit Small business owners are not immune to this scourge; indeed, many analysts believe that internal theft of money or goods from employees is a primary cause of a significant percentage of small business failures. In the early 1990s, the DOC estimated that employee theft and embezzlement activities accounted for one out of five business failures, many of which were smaller firms that were unable to weather the erosion that those activities brought to their bottom lines (Walsh, 2000). These devastating losses are often passed on to consumers who are forced to pay higher prices for goods and services to help defer the cost of employee theft. Government research has found that each family pays an estimated three hundred dollars each year to subsidize business losses due to employee theft and shoplifting (Walsh, 2000). Security experts also contend that small business enterprises may be particularly vulnerable to internal theft. Smaller firms often include employees with multiple responsibilities that provide greater opportunity to commit theft and greater means to conceal such actions. In addition, many small business owners fall victim to erroneous assumptions about: (1) the nature of their relationship with employees, and (2) their ability to effectively combat employee theft. Business consultants point out that owners of small firms that have 50 or fewer employees may well view the work force as a "family" of sorts that operates in a more personable, friendly atmosphere than those that proliferate in the office corridors of multinational companies. Owners of such businesses may place too much faith on this "first-name-basis" atmosphere as an effective deterrent against internal theft (Schaefer, 2011). Employee theft can encompass many activities including: faking on-the-job injuries for compensation, taking merchandise, stealing small sums of cash, forging or destroying receipts, shipping and billing scams, putting fictitious employees on payroll, and falsifying expense records. Employee theft may be a simple isolated event carried out by one individual, a highly organized scheme to acquire substantial financial or material gain, or anything in between. It can range from petty theft acquisitions valued below a specified dollar amount or may be grand theft, whereby the losses exceed the value established through state and federal legal statutes (Walsh, 2000). Rarely, do most employees steal from their employer because of need. Thefts are usually because an opportunity to do so has presented itself. It stands to reason that an employee will only steal from their employer if the chances of getting caught are low.
Small business owners should be aware of several common warning signs of employee theft, and of the types of employees that are most likely to steal from their employers. According to (Schaefer, 2011), common tangible signs that an employee may be stealing include missing records (such as shipping and receiving bills), company checks that bounce, customer complaints about missing or late deliveries, hefty payments made for "miscellaneous" purposes in employee expense claims, and managers who insist on performing clerical duties. These are just a few prime examples of warnings that something’s not right. There are many other basic reasons why employees steal:
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