No matter what type, size or location of your business, you are at risk of employee theft. There are a variety of reasons why an employee chooses to steal from their employer. These range from pre-meditated theft to stealing due to convenience to an opportunity even when it wasn’t planned. By knowing the causes of employee theft, you can create extra security measures to ensure your company has the best possible chance at avoiding acts of employee theft and deceit.
Causes of Employee Theft
Lack of Internal Controls
One of the leading causes of employee theft is lack of internal controls and absence of strong leadership, as determined by a study performed in 2010 by the Association of Certified Fraud Examiners. The Global Fraud Study came to the conclusion that businesses with 100 employees or less had staggering rate of 47% in terms of employee theft, making it the number one cause of employee theft among small and medium-sized companies. Businesses with strong leadership qualities and strong internal controls gain the employee’s respect and thus have a lower chance of employee theft.
Another common cause of employee theft is opportunity, whether it be due to having a business with a higher chance of theft or being in a situation where stealing might take little effort. Some types of businesses run a higher risk of giving the opportunity of theft to their employees, especially those with little security of where employees handle cash flow like retailers, restaurants, or professional service companies. Other areas of opportunity exist when the employee is handling an employer’s books, such as those with bookkeeping, accounting, or banking responsibilities. If an employee is under the impression that his or her employer does not pay close attention to the accounting or bookkeeping practices, they potentially have found an opportunity for deceitful acts, like stealing.
A variety of motives may lead to an employee stealing from his or her employer. Some of the more common motives include being addicted to drugs or alcohol, gambling addiction, being overwhelmed financially, or even the recession. In some instances, an employee is suffering financially and therefore decides to steal from their employee, regardless of the potential consequences. In other instances, some employees feel they are entitled due to feeling like they are underpaid or passed over for a promotion.
The Bottom Line
A number of reasons exist as to why employees choose to steal money or goods form their company, which may or may not be pre-meditated. When you understand each of the most common reasons for employee theft, you can work toward preventing these types of occurrences, such as having stronger security in place, and erasing the theft opportunity and convenience in the first place.
Keep in mind, employee dishonesty insurance coverage can help protect you and your business in the event you are a victim of employee theft.