Consider also these sometimes hazy matters: giving friends or even customers a “special deal” or loaning out your property after hours and moonlighting — offering professional services off the clock, in direct competition with you.
Less hazy: tampering with records, invoices, computer files, schedules, documents or products in such a way as to receive personal gain, discredit a fellow employee, hide one’s own misdeeds or place the company in a bad light.
Whatever the size of your business, its viability depends on your ability to prevent employee theft, fraud and abuse in all forms.
What do you watch for? What do you do about it? And how do you avoid getting paranoid about your employees’ actions and motives? Remember always that thieves and cheaters in your workplace are the rare exception, albeit an expensive one.
Prevention is where to center your energies. After-the-fact recovery of stolen funds or property and punishment for the guilty usually involves a net loss to the company due to executive time, legal expenses, employee turnover, rehiring/training expenses and perhaps fees to professional investigators. Punishment is infinitely more expensive and legally hazardous than prevention.
The vast majority of employees are honest to the point of not taking home even pens and paper clips from the company. But then there are those who do steal and can come up with a variety of rationalizations for their misdeeds. Understanding their motives will help you prepare and protect against employee theft and fraud.
Here are some of those rationalizations:
“Everyone does it.” You know, of course, that “everyone” in your workforce does not steal. But thieving employees may have a quite different perspective. They commonly organize themselves in cliques or clusters — the inner circle with whom they share their escapades and tales of “what they got away with” — and judge what “everyone” does by the low standards of this small group. Watch for theft rings. Only rarely does a repeat offender not involve an accomplice or at least a confidant.
“It was small potatoes.” Most thieves and cheaters downplay the seriousness of their infractions by an appeal to relative scale: what’s a $50 stolen calculator to a company that makes millions each year or to a boss who drives a Mercedes? Relative scale should never be accepted to rationalize a permissive attitude toward dishonesty. Establish a zero-tolerance policy.
“They had it coming.” A significant portion of employee theft or sabotage arises from a perceived injustice of some kind. The boss criticizes my work in front of others, so I respond by sticking a copy of Windows 2000 in my pocket to take home. A co-worker says something offensive to me, so I strike back at the world in general by anonymously throwing some bugs into the company computer system. Be alert to “anger theft” and abuse in the aftermath of interpersonal conflict, reprimands or other personnel problems in the workplace.
“I had it coming.” Employees who feel undercompensated or unrecognized for their work sometimes respond by a self-devised “bonus” plan. They take home just enough company equipment or money to raise their total compensation to what they perceive as a equitable amount.
Studies have shown characteristic patterns for such thefts. They commonly occur in the days immediately before or after payday, then cease almost entirely until the next payday. Guard against this kind of equity theft or abuse, particularly after an employee has been turned down for a raise or promotion, after a company-wide wage freeze has been established and during periods of company turmoil (restructuring, takeover, new management, etc.).
Many de facto thefts are explained away by employees as “borrowing”: “One of the company’s printers may have been found at my home, but I had to use it for my work and just forgot about it. I was going to return it. What do you think I am, a thief?”
Frankly, yes. Don’t accept after-the-fact rationalizations as excuses for stealing. Employees with a legitimate off-site need for company equipment request it in advance, usually in writing. In advance of any such problem, your policies for removal of equipment from company premises should be clear, specific and well-known to all employees.
Certainly any employer would prefer to ferret out dishonest workers before they sign on to the company payroll. But how do you spot a thief?
In the last two decades, one of the great success stories of predicting workplace behavior is the science of integrity testing.
A leader in this game is Reid Psychological Systems, Chicago. Reid provides a paper-and-pencil Integrity Attitude Scale with 83 questions. Most test-takers complete this instrument in about 15 minutes. Once processed by Reid’s computing system, the test reveals with 85-percent classification accuracy which of your job applicants are prone to dishonest statements and acts.
This testing instrument has been widely validated, including approval by the American Psychological Association. It stands up in court as a valid reason to prefer one candidate over another.
Other tests in Reid’s arsenal aimed at potential problem employees are the Safety and Substance Abuse Scale (46 questions that take about 10 minutes) and a composite instrument, the Abbreviated Reid Report, made up of questions testing integrity, social behavior, substance abuse and attitudes toward personal achievement (a 15-minute test).
There are several firms that provide such services — just search the Internet for “integrity testing” and “honesty testing.”
Integrity tests can also be administered to employees at any time after hiring. Employers can use test results to plan training or counseling programs, or simply to alert supervisors and others to employees with dishonest tendencies.
In addition to integrity testing, measures to eliminate employee theft and fraud involve both overt and covert actions on the part of management. Three overt actions are crucial:
1. Establish specific policies that define fraud and theft at your business and spell out discipline procedures clearly — “including termination and criminal prosecution” is a common phrase in such policies.
2. Educate every employee through your training programs about these policies. These policies should not be just one more page hidden in your employee manual.
Spend time going over policies and procedures involving employee integrity in pre-employment information interviews and sessions for job applicants, orientation sessions for new employees and training programs for all employees.
Update policies and procedures regularly to keep them specific and timely for your business circumstances. When policies or procedures change, re-educate the workforce — don’t just send a memo!
The seriousness you show toward these policies will directly influence how seriously employees take them.
3. Let employees know about their successes in preventing losses through theft or fraud, on a monthly or quarterly basis. Thank them for partnering with you in maintaining a zero-tolerance policy. Employees respond positively to a good track record and work to keep it going.
On the flip side, make a big noise when theft or fraud is discovered. If a laser printer disappears from the office, the thief obviously prefers that you shrug it off and sweep the matter under the carpet. Don’t oblige the thief! You must show passionate outrage — but not to the point of making innocent parties feel accused.
Finally, here are three covert policies that will help eliminate employee theft and abuse:
1. Video surveillance equipment in warehouse and shop areas. A wall-mounted camera and remote monitor can be put in for less than $500, according to our phone research with several nationwide merchandise outlets including Circuit City, Costco, Office Depot and others. It’s an investment.
You don’t have to stay glued to the screen. Just having the camera there can be pretty effective as a deterrent to stealing, equipment sabotage and other problems. The presence of the camera in the room usually intimidates would-be thieves. The unit can easily be connected to a VCR for a continuous or sporadic visual record of site
activity.
2. Contract with a professional security agency to review your internal security measures periodically. This need not be expensive. You can involve a security expert as an occasional speaker in your employee training program. His or her visible presence will be eloquent and powerful testimony to how seriously you take the problems of theft and fraud.
Contact a reputable security service in your area and ask for an inventory of your security needs. Make clear that your central purpose is prevention of theft and abuse, and only secondarily apprehension after the crime. Choose the security firm with the overall plan that best suits your budget and specific security needs.
3. Investigate “lock-out” options for computers, phones and e-mail to prevent unauthorized long-distance charges, personal business on company time and legally if not morally hazardous materials finding their way onto company hard drives.
When faced with sexual harassment charges or other work environment issues, many companies have found it hard to explain why sexually explicit files had been downloaded from the Internet onto company computers; why e-mail archives contained racist or sexist humor; and why telephone records showed calls from business telephones to adult-only numbers. Permanently erasing such records from a computer hard-drive is no easy matter; investigators have sophisticated electronic means of detecting and reconstructing supposedly deleted files.
By devoting attention and energy to eliminating theft and fraud in your company, you can protect and improve your bottom line significantly. And you do have a right to expect your people to be honest.
