A Study on Employee Theft: Most Businesses are Unprepared

              A Study on Employee Theft: Most Businesses are Unprepared
Katie Mormann
Faculty Mentor: Dr. Rochelle Brooks, Dahl School of Business
INTRODUCTION
Recently there has been a white-collar crime that has immensely grown in popularity –employee theft. According to the Association of Certified Fraud Examiners, U.S. businesses lose 7% of their annual revenues to employee theft (Jackson, Holland, Albrecht, & Woolstenhulme, 2010). That equates to almost a trillion dollars in losses across the economy.
The statistics are alarming. It has been found that 80% of people will steal if they think they can get away with it (Gill & Woodhouse, 2013). As a business owner, one must know how to prevent theft and loss in order to succeed. It is a serious issue for every business and the loss is actually greater than we will ever know. The Association of Certified Fraud Examiners has estimated that 75% of employee theft is never discovered (Jackson, Holland, Albrecht, & Woolstenhulme, 2010).
The purpose of this research project was to investigate the circumstances that lead to increased employee theft. Additionally, an exploration of the characteristics of common theft situations was completed.
METHODS AND MATERIALS
A case study methodology was used in the research.
For purposes of this study, about 15 various situations where theft was discovered in a business were reviewed. When looking at the cases, the following questions were answered:
•What did the perpetrator steal?
•How long were they with the firm?
•What was their job title?
•Have they stolen from an employer before?
•What kind of punishment did they face?
•How was the theft discovered?
Interviews were completed with two Subject Matter Experts (SMEs) who provided information on how their organization handles employee theft. Interviews were with Kim Smith, HR Director at WisDOTand Sonya Ganther, HR Director at Viterbo.During the interviews the following questions were answered:
•How does your company prevent employee theft?
•Is there a checks and balances system in place for handling money and important assets?
•When discovered, does your business report employee theft to the police?
•How do you go about terminating employees who steal?
•Does your company have specific rules or regulations regarding theft?
•Do all employees go through a background check?
•Do you check employees’ personal references?
•Do you do theft audits?
•Do you have security systems?
Upon completion of gathering the cases and information from interviewing, analysis was completed. This information was analyzed by comparing and contrasting similar situations and also comparing the interviews to the cases and seeing where the room for error was.
RESULTS
Upon final analysis of my research, the following was found:
•Most businesses in the La Crosse area are not equipped to handle a large employee theft
•Most business do have some type of check and balance system for handling money
•Smaller businesses do lack the checks and balances necessary because they do not have enough employees
•Many businesses do not complete background checks because it is costly
•Typically a perpetrator of employee theft is not a first time offender
•Typically a perpetrator steals to fuel an addiction
•Many businesses simply fire an employee rather than report it to the police because it is cheaper
RECOMMENDATIONS
Upon completion of this study, the following recommendations are for all businesses:
•Complete background checks on ALL employees
•Do yearly audits
•Have a checks and balances system for handling of all money
•Have a security system of some sort
•Ensure that there are written policies in place and all employees are aware of them
A corporation must ensure that they protect themselves from employee theft and also ensure that they do not take too many losses in revenue. A corporation must have rules and regulations in place to prevent and protect their company from fraudulent activities.
REFERENCES
Access to the Public Records of the Wisconsin Circuit Courts. (n.d.). Retrieved July 2015.
Gill, J.,& Woodhouse, H. (2013).Theft by an employee.Chartered Accountants Journal,92(4), 36-38.
Jackson, K., Holland, D.V., Albrecht, C., & Woolstenhulme, D.R. (2010). Fraud isn’t just for big business: understanding the drivers, consequences, and prevention of fraud in small business. Journal of International Management Studies, 5(1), 160-164.