Employee Theft: It is Not the Cost of Doing Business!
Theft is due to bad economy or personal hardships. It is driven by bad people. It results in loss of profitability and reduced compensation. It is not the cost of doing business.
That is according to Gene W. James, CPP, Director of Asset Protection for Jack in the Box.
In a webinar presentation titled Employee Theft: It is Not the Cost of Doing Business!, James focused on how employee theft impacts the profitability of business. James examined the causal factors of employee theft and how security professionals need to address and resolve theft in the workplace.
There are several types of theft, according to James:
- Theft of Cash
- Theft of Inventory
- Theft of Product
- Theft of Time
- Credit Card Theft
- Workers Compensation Theft
- Theft from Customers
- Theft from Fellow Employees
- Theft of Supplies
“Small companies are particularly vulnerable as they have fewer resources,” James said. “Many see their companies as family environment so they may not get rid of bad employees. For security executives, many managers forbid to acknowledge it.”
The US Chamber of Commerce reports that $400 million is lost annually due to theft. And an Ernst & Young report says that 90% of all business acknowledge some sort of employee theft. In addition, 30% of all business failures are due to business theft, which results in loss of profitability. Theft kills profitability, James said.
James also noted that the indirect impact of employee theft can take a human toll. “Honest employees become discouraged. Employers lose good employees who don’t’ want to be around thieves. The cost of replacing one employee could result in lost profits.”
James also noted that throwing money at a theft problem does not solve it. “You should be the agent of change, but you cannot do it alone, it has to be a team effort,” he said. “You need to drive compliance and ethics into the culture and revamp policies and procedures. If you haven’t changed the culture, what makes you think there will be compliance? Also, don’t over rely on prosecution. Yes, thieves should be punished. However, rarely will the police conduct an investigation for you. Often, you may want to receive some sort of restitution. Not all cases are worth prosecuting.”
James asked the question: as security professionals, what is more important? Eliminating all theft in our organizations or maximizing the profits in our organization?” They do not always coexist,” he said. “My preference is second; our role is to maximum profits. To be recognized as a full fledge business partner, we need to proceed as business partners and not be company cops.”
James also discussed theft protection techniques, such as background techniques, which he said is the absolute cornerstone of any program, but is only as good as the information provided by the applicant. It is essential that management reviews every employment application, he said. He also mentioned conducting pre-employment Behavioral Testing and the establishment of an Interview Protocol.
Ethics & Security Awareness/Training are important as well, and training programs need to encompass new hires, he said. “You also need policies and procedures that lay out who investigates theft and how terminations are handled after you find a theft. “Inspect what you expect,” he says.
James stressed not being a “lone ranger” to mitigate theft in your enterprise. You have partners within your organization, he noted, such as
- Human Resources
- Operational Partners
He also stressed implementing an ethics hotline so that people can call in and anonymously report theft.
One final trap, he warned of, is not making changes once a theft is found. “First, you need to understand what occurred, make management aware, and ensure that changes are made. Do not walk away and think getting rid of a bad apple resolved your problem. It did not. At the end of the day it is about leadership.”