At times, even good employees may be prone to the temptation to steal. But what can possibly motivate an honest person to make a bad decision?
Other than employee theft being wrong, it is a criminal offense. There is no valid excuse for stealing and if an employee does steal from an employer, he/she should be terminated. Many excuses have been given in an attempt to justify the act. Some acts of theft may not necessarily be as a result of malice but instead, could be as a result of an economic need. Employers need to understand, as much as possible, the economic state of their employees so that they prevent corporate fraud.
The most common employee theft rationalization is the desire to live beyond their current economic means. These are good people who have a basic need that they cannot economically meet. In these cases, they may be facing an economic hardship as a result of a divorce, death of a spouse, home foreclosure, a spouse who has lost their job, mounting credit card debt, filing of bankruptcy, the costs associated with taking care of elderly parents, car repairs, unusual family medical bills, children’s braces, investment losses, a spouse’s failing business, or trying to meet the academic needs of children. While employers can be sympathetic, theft is theft regardless of the heart-tugging explanation.
Another reason would be Addictions. These employees experience some sort of an addiction whether it is drugs, alcohol, sex, pornography, gambling, or even food or shopping. They have an impulse that they cannot fiscally meet and therefore steal to meet it.
Some people are just motivated by greed. “Greed” is a very powerful financial crime motivator. They want what others have. In some rare cases of uncontrollable greed, they will attempt to take every last company morsel!
Finally, a small number of people are “Outright Thieves” that an employer should never have hired in a trusted position in the first place. Had the employer performed a reasonable background check, these individuals’ past criminal convictions would have been identified. Of all of the reasons identified above, this one, if missed, is detrimental and its consequences rest solely on the employer for not doing their personal due diligence.
Keep in mind that just because an employee demonstrates a red flag does not mean that they are an embezzlement risk. Many employees can face a multitude of financial challenges and fail to steal. Many would never think of stealing no matter how dire the economic hardship is. Staying informed about your employees may tell you if they have an economic need or not and whether that economic need may be a an internal struggle that could lead to theft.
How to control?
Management controls promote honesty, integrity and leadership by example. For instance, conduct a surprise audit such as asking for a payroll register or a list of all new vendors. And certainly do not joke about running personal expenses through the company.
The management also has a responsibility to take care of the employees. How? They should pay them well, not delay salaries and should be listening to employees when they need financial assistance. When a company is making too much money but pays its staff very little, that is exploitation and it is demotivating. Employees will feel used while the good ones will start feeling detached from the company, as well as achieving its goals. This is also the first step to the employees thinking of how to keep some money or company assets for personal use.
Another way of controlling theft is through outside controls. Outside controls provide checks and balances to maintain a low risk-fraud environment. They include outside counsel and external auditors. However, they should not be expected to detect or report irregularities out of the scope of their engagement.
Lastly, personnel controls are critical in limiting motive and opportunity. Examples include mandatory vacations and rotating duties to disrupt fraud. Training opportunities have been shown to decrease the motive to commit fraud. Since tips are important in fraud detection, an anonymous hotline helps encourage employees and others to report suspicious activity.