| With the economy on a low, instances of employees turning to theft are surfacing... Reading Time: 7 minutes (1009 Words) Key learnings: - Experts believe that employees who resort to petty thefts at office do so owing to money crunch, layoffs and other socio-economic pressures
- Dealing with internal employee fraud needs tact and vigilance
When Susan Mathew, HR manager at an apparel firm, noticed a sizeable raise in the 'travel allowance' claims of one of her sales assistants, she didn't wait. The assistant's explanations were ambiguous and it didn't take Susan long to understand the 'theft'. Internal theft or pilfering is on the rise at firms and experts lay the blame on the ongoing global financial crisis. Sadly, many organisations are unaware of such thefts or misappropriation. The reasons are two-fold. One, the thefts are too petty to come to the notice of managements immediately. Two, the managements are concerned more about bottom-line profits than to worry about these small discrepancies. The outcome, however, is unpleasant. In 2007, firms lost an average of USD 2.4 million to fraud, the majority of it by employees, up from USD 1.7 million in 2005, according to a survey by PricewaterhouseCoopers LLP. Internal theft can include false claims, false statements or client transactions, missing stationery items, misappropriation of office funds, and stealing office equipment and retail goods. Many HR professionals consider stealing of time too as a major internal theft. This means employees who spend time looking for other jobs during their working hours, in the face of an impending or anticipated layoff, commit 'theft of time'. Pocketful!
With the current financial meltdown, lay-offs and insufficient cash flow, employees are resorting to thefts. "In leaner financial times, people have a tendency to give in to temptation to commit criminal behaviour," agrees Brian J. Mich, head of anti-corruption compliance and investigations, at BDO Consulting in New York. "They're thinking, 'I'm not being treated fairly by my employer anyway so I'm going to take this indulgence here,'" adds Brian. In a survey by the Institute of Corporate productivity Inc.: - Around 20 percent of employers have stated that office theft has become a major issue over the past few months
- About 18 percent have reported to have lost cash or important transactions
- Nearly 24 percent have reported to have witnessed theft of office supplies
Many of the surveyed organisations are unaware and many others unsure of such happenings.
However, it is the retail sector that has confirmed and sound information on internal theft. As retail firms watch their stocks closely and track all major and minor transactions, the data is clear. A survey in the retail sector pointed out that "on an average one employee out of 28 was held for theft in 2007, an increase of 18 percent from 2006". Reprimand or remind
While some employers have gone ahead and fired deviant employees, few have slapped civil lawsuits against such workers. Experts, however, say that a sound internal work culture can tackle such issues. Many a times, fear or anxiety prompts employees to commit theft. This can be avoided when managements understand employee concerns. In this ongoing crisis, employers are worried about their firms, which is understandable. However, ignoring valued employees can cause a plethora of problems. Even installing of video cameras is not welcome by all employees. Unless it is a warehouse, many employees consider this as a breach of privacy. Resolution
In the wake of such problems, most employers have resolved to handle issues of internal theft with more tact and prudence. - As many as 17 percent of the respondents of a recent survey confirmed that they have beefed up security measures
- Another 20 percent increased audits
- About 28 percent encouraged internal communication to counter the problem
When the going gets tough
As mentioned, when the management disregards the employee's fears and anxieties, the employee disrespects the values of the organisation. For instance, when a manager terminated 12 employees from a team of 18, the team was shaken. Added to this, he uttered to the rest of the team: "You guys narrowly escaped the axe." This communiqué did not help pep-up the employee morale. Talk to employees
Address issues that cause concern, however, insignificant or immature they appear to the management. A certain HR manager cited an instance of an administrative clerk 'picking up office stationery and some cash' without any regret. After a few sessions of counselling, she revealed that her husband was fired from his job and this built a lot of stress on her home and mind. Most experts agree that instances like these are never out in the open and employers remain unaware of the turmoil in employees' professional and personal lives. While communication and empathy play an important role, managers and supervisors need to stay calm, and clear doubts of the employees. A well-established firm going through crisis adopted a 'rumour mill meeting' strategy that takes place every month. Basically, all the managers and supervisors meet their staff every month 'just to clear the air' surrounding certain issues. The management at the firm believes that many a time wrong information and rumours lead to unnecessary stress and it is important to make things clear. While a supportive management can keep out thefts and fraud, the staff must be clear on disciplinary action that can be taken against them in case of misdemeanour. A work culture must espouse integrity, but also come clear that any kind of wrongdoing will be dealt with severity. With cutbacks in pay and perks, employees tend to feel cheated. Graham Weston, co-founder and CEO of the San Antonio based Rackspace Managed Hosting, peps up his employee morale in a rather interesting way. Deserving and well-performing employees get to drive the CEO's BMW M3 convertible for a week. "When someone gets to drive my car for a week, they never forget it," says Graham. To conclude, internal theft is a sensitive matter and both the employer and the employee are vulnerable. Dealing with such issues needs tact, and employers who encourage communication and a positive work environment at all times stand with an advantage of sorting the problem better.
Published by TheManageMentor. Contact us at memberservices@cnkonline.com Bhavana
Related Reading: 1. "Businesses say that Theft by their Workers is up", By Sarah E. Needleman
2. "Leading your Workforce through an Economic Crisis", by Gregory P Smith.
3. "Tough Economic Times Call for Stiff Safeguards against Employee Theft", by David Landman Top
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