6 Types of Employee Theft and How to Prevent Them
There are all kinds of counterproductive work behavior (CWB), and each of them impacts a company differently. While some instances of CWB create a hostile and toxic environment for employees, others are quieter, even if they still do serious damage to a business. Employee theft, which costs US businesses $50 billion per year, often falls into the latter category, since those stealing from their place of employment aren’t likely to make a show of it.
Additionally, workplace theft comes in many forms, some of which don’t automatically come to mind when discussing CWB. Each of these can have a profound impact on a company, its employees, and its bottom line. As noted by Andrew Neiner, Ph.D., Director of Research and Analysis at Verensics, “Whether an employee steals himself or covers for a coworker’s theft, the outcome is the same for the organization – and it is not good.”
One of the most common types of stealing in the workplace is petty theft. This type of CWB ranges from stealing small amounts of cash from a company to stealing items like post-it pads and pens. The latter may not sound that costly for a business, but the losses can begin to add up over time.
Apart from the obvious impact to a company’s bottom line, small instances of theft can also embolden other employees to take liberties, something that could eventually move into other categories of stealing. Although workers taking office supplies is often overlooked by managers, it’s something to keep a careful eye on. It can have greater consequences than you’d think.
Bribery may not be as common as other types of workplace theft, but it does happen. As evidenced by the 2020 case of an Apple security chief offering law-enforcement officers iPads in exchange for gun licenses, such behaviors can even take place at major companies. And when instances of bribery do occur, they cost the business in multiple ways.
If a company catches someone bribing others after the fact, the consequences go beyond the economic impact. Corruption in the workplace has been shown to lower overall morale. Highly publicized cases of bribery can also lessen public trust in a company, something that could take years to gain back.
Theft doesn’t need to involve material objects, and having information stolen is arguably more detrimental for a company. Data theft occurs when an employee takes information that’s stored in a company’s database. In some instances, this could include private details about clients or customers.
Having data stolen can prove a major liability for a business, particularly if that business is legally required to ensure privacy to those who frequent it. If consumer information is stolen or leaked, companies could face lawsuits and fines of their own. Additionally, trust between a business and the public could be irrevocably broken.
Stealing time isn’t the first thing many of us think of when it comes to theft, but according to the American Payroll Association, time theft affects nearly 75 percent of businesses every year. Time theft occurs when an employee misrepresents the number of hours spent working, resulting in them getting paid more than they actually should be. Some ways workers get away with pilfering time from their places of employment include:
- Clocking in earlier or later than their set hours
- Having coworkers clock in or out for them
- Extending breaks without permission
- Spending time browsing the internet/scrolling on their cell phones
- Working on personal tasks while on the clock
The most obvious impact that time theft has on a company is a decrease in productivity and profit. Data suggests that time theft can cost employers up to $11 billion per year. Even worse is the fact that, if one employee gets away with this type of CWB, others may be tempted to follow suit.
A less obvious result of time theft is the decreased productivity of other employees at the company. Even those who aren’t participating outwardly in stealing company time will see others doing so and be discouraged. Time theft has been shown to decrease overall employee morale, and a subsequent dip in productivity can be expected. If all of your workers are producing less, you can expect your company to start making less. That’s a cycle that’s best avoided.
We’ve all heard of embezzlement happening at major corporations and on Wall Street, but employers shouldn’t fool themselves into thinking their company is above such CWB. Embezzlement is similar to petty theft, but it typically involves much larger funds. This category of theft sees employees mishandling or misusing funds or assets they’ve been entrusted with.
The discovery that a worker has been embezzling money can cost a company financially, legally, and in terms of its reputation. Even if a business is unaware of one worker embezzling money, consumers may begin to view that company as incompetent for not catching the theft or preventing it.
Fraudulent behavior comes in all shapes and sizes, and it’s best defined as the misuse of a company’s assets for personal gain. For example, if an employee uses company resources to offer a service the business doesn’t provide — and then collects a profit from doing so — they’re committing fraud.
Much like embezzlement and bribery, fraud can have serious consequences for a company’s reputation if uncovered. If your clients or customers realize an employee has been lying to them, they’ll lose trust in your establishment.
Fraud can also lead to a significant revenue loss. The Association of Certified Fraud Examiners (ACFE) claims that companies lose five percent of their revenues every year due to fraudulent employee behavior. Additionally, a 2014 study revealed that a single case of fraud can cost a business up to $145,000.
Avoiding Theft in the Workplace
As you can tell, theft in the workplace can cost companies in more ways than one. That’s why it’s critical to put in the additional effort to prevent this type of CWB. After all, it’s far easier to stop theft from occurring before it happens. Once consequences begin to pour in, it’s significantly harder to roll things back.
When it comes to employees already on the books, the best way to ensure theft isn’t flying under the radar is to keep a close eye on expenses. Checking receipts and purchase orders and holding informal audits are means of curbing this type of CWB. Not only will it help you catch any inconsistencies, but it will show your workers that your company takes its finances seriously. That alone could prevent them from attempting to take advantage of your business. Many organizations are already introducing ongoing screening and assessments for their employees, to make sure that the good people they hired still share their values.
Of course, hiring workers less inclined to engage in CWB is another way to prevent theft from happening at your company. Unfortunately, not everyone who might steal from a company has done so before, so background checks will only take you so far. Combining background checks with character assessments, however, is an effective way to evaluate who you’re bringing onboard.
Neiner offers this advice, “Organizations that use employment tests for assessing counterproductive work behavior should make it known to potential job candidates. Those who have something to hide will likely self-select out of the selection process. With fewer but better candidates to evaluate, the time and expense of assessing job applicants will be reduced.”
At Verensics, we offer an integrity interview that leverages the knowledge of corporate investigators and organizational psychologists to reveal details about job applicants they wouldn’t normally come forward with. Since prospective employees are unlikely to admit they’d be tempted toward theft — even if your questions are well-worded — our online interview tool can prove a lifesaver for businesses looking to avoid this CWB.