The Increasing Problem of Employee Theft - Term Paper Example

The Increasing Problem of Employee Theft Introduction The UK economy relies a lot on the retail sector. This is the reason why there is an increasing need to help it grow as a way of boosting the economy (BRC Survey). Employee theft has been identified as a long-standing concern when it comes to the accountability of the employees and their roles in the business set up. Various factors have been identified as leading to the increasing cases of employee theft. Some of them include poor pre-employment screening and poor supervision while the employees are working (Brooks, 2013). Many employers tend to over trust their employees to a point that they think that they can rely on them to make their business rise. However, surveys have shown that in such set ups the employees may tend to take advantage of the situation to defraud the business. Employee ethics is supposed to play an important role in this case where the employees are supposed to take care of the enterprise on behalf of the employer (Riley, Wells & Kranacher, 2010). Various studies have addressed factors such as workplace culture where in a given company, employees are used to stealing, economic need which is seen as the major reason why employees engage in the act. In various case, employees who are underpaid will tend to improvise a way that they can use to get the extra coins needed to sustain their living. This is often done by stealing from the business. Personal predisposition is also seen as a major reason why employees are involved in such cases (Schrager, 2014). In cases where the employee feels that the employment relations are not fair, the employee often tend to cover that up by engaging in such felonies such as stealing. This will give him/her temporary contention regardless of the damage that the act may cause to the business. Survey This report on employee theft will be written in reference to the British Retail Consortium Retail Crime Survey 2013. According to the survey, the direct cost of retail crime was £511 million in 2012/2013. The recorded results were lower than what had been recorded in 2011/2013. However, there is an acute rise in the cases of employee theft looking at the values in 2007/2008. In fact, the cost in 2012/2013 is 166% of the value recorded in 2007/2008. The offences reported in the retail industry were 766, 227. This being just a small percentage of the total number of cases supposed to be about 2.7 million. This is a huge value which shows how serious the offense is and calling for immediate measures to curb it as the economic pressure continues to predispose the employees to such cases of theft. Another emerging issue that accounted for about 82% of all the cases of retail offenses is customer theft. It was however established that in various occasions there is a collaboration between the customers and some of the employees in the retail businesses who act lenient therefore allowing the customers to go away with it. Employee theft did not account for majority of cases compared to customer theft with 5.3% of all reported cases accounting from it. However, this was just 0.7% of the total volume of valuables stolen or damaged. In 2012/2013 the reported incidents of employee theft were 5,051. It was also established that there were 9.5 incidents of employee theft per a thousand employees. Employee theft was noted as a major drawback to the success in the retail business due to the loss made in both value and volume as per the survey. Due to the measures put in various businesses to curb the problem, a drop in the number of offenses by 7% was noted compared to the results the previous year. The drop was seen as a positive step towards eliminating the social ill. Referring to the results from the study, years 2007/2008 and 2008/2009 recorded the least reported crimes of employee theft. This was 4 employees in every bunch of 1000. 2006/2007 recorded the third highest value having more than eight employees in every 1000 employees. 2011-2012had the highest number of reported crimes with the value being more than ten employees in every 1000. Albeit the drop in the number of employee theft cases reported, 2012-2013 was second in the list. The average cost of employee theft per incident was £600 in 2006-2007, the value dropped significantly to almost £200 the following year. In 2008-2009 the value shot up above £800. This was followed by a significant drop in 2009-2010 with the value being approximately £300. The value was maintained in the following year failing to reach £400 per incident. However, 2011-2012 recorded the highest value in terms of the average cost of employee theft per incident with the value recorded being more than £1500. This was followed by a ‘slight’ drop the following year with the value being approximately £1200. It is important to note that though the customer thefts cases reported maybe far above those of the employees, the cost of each employee theft is about seven times the value of the one committed by a customer. The number of reported cases of employee theft to the police were less than forty per cent of the total which was funny considering that the employer feels betrayed in such an instance and so he may decide to solicit the services of the police to have a compensation for the stock stolen or lost. There are various ways however used by various employers to handle the vice and ensure that the perpetrators are caught and made to serve as a warning to the rest who may be in for the same. Some of the strategies employed in the bid to counter employee theft include strict supervision where the employee may have no chance to steal. Conduction of regular random audits on the sales to establish if there are any hitches or unexplainable losses, and raising of employee remunerations to deter them from trying to get more money to compensate for the deficit with the recession just seen and the economic hardships in the country and elsewhere in the world. The cost per incident has been changing in each year. In 2006-2007 the cost per incident was £597. The cost per incident dropped sharply in the following year with the value being £235. The change must have been due to stern measures put forward and the publicity that followed the reports made on employee theft. However, though the number of employees in 1000 remained the same in 2008-2009, the cost per incident rose to £872. In the following year, the number of employees went up with the cost per incident dropping to £290. The following three years saw a rise in the value of cost per incident with 2011-2012 recording the highest value of £1, 597 followed by 2012-2013 with £1, 192. In 2012-2013, the drop in the number of employees per 1000 employees was 7.2% compared to the value recorded in 2011-2012. The average of the years was seven employees per 1000. Comparing the cost per incident in 2011-2012 (£1, 577) and 2012-2013 (£1, 192), the drop was by twenty four per cent while the average cost per incident of all the years reported was £729. Discussion Looking at the results, one will note that the number of employees engaging in theft is rising steeply with the values recorded in 2011-2012 showing the highest numbers. The cost per incident is also going up which also explains the individual’s ideology while engaging in the act. It shows that the person is also concerned with value of the item or the money they get through with so that in case they are caught, it would be for a good reason. One of the major reasons that have been highlighted as facilitating towards the rising employee theft is recession. The economic status in various regions of the world is getting harder with the United Kingdom being no exception. In the recent economic downturn and the economic crisis that lagged to the time in 2011-2012 when the highest cases were reported, it was noted that many employees could have been forced, or be predisposed to such an act by the changing economic times and the need to supplement the little they were getting from their genuine pay (Wojcik, 2013). The economic hardships makes the people less sensitive to cases of dishonesty and end up engaging in such acts as fraud and stealing directly from their employees. Another report published by the Austin, Texas-Based Association of Certified Examiners in the United States showed closely similar values with the explanation being the same. Explaining the increased employee theft case, more than half of the examiners attributed the numbers to the great recession and the increasing need for money. Other factors that were highlighted as facilitating employee theft included little or no supervision. In case one feels that he is dealing with a group that is not trustworthy, or in such times as this when the economic state of most people is bad, it is important to employ stringent measures that can curb employee theft. Such include fitting the business area with CCTVs that should be monitoring the employees on a full time basis. This is important to eliminate cases of stolen goods especially in large retail centers where such may not be noted unless the loss is too much. Conduction of random checks on the cash books or the way the business is running is also a good way of ensuring that the employees will not have a chance of engaging in fraudulent actions as they can never be sure when an audit may be conducted and unearth the activities that have been going on. Promoting employee honesty and culturing trust among the employees is a good way of ensuring that such activities will be stopped or at least reduced. In cases where the employees feel oppressed, they will less likely make a report to the authority or the person in charge if they realize that some of the employees are engaging in fraudulent actions. However, in a set up where there is cohesion between the administrators or the managers and the employees, it will be hard for one employee to be deviant and start engaging in such activities. However, since most employees tend to abuse the trust the employers bestow upon them, it is good to be conducting audits secretly and call for an explanation whenever there is the possibility or a suspected case of theft (McGoey, n.d). Though this can be used to depict cases of lost trust between the employee and the employer, it will also be sued to ensure that the cases are minimized and the team one is working with will not engage in theft. Conclusion The issue of employee theft has been hard to come into terms with especially for the employers. Most of them cannot really comprehend how they can entrust someone with the business then the same person go ahead to steal from him. The rising number of cases is worrying (Lasky, 2013). As indicated in the report, employee theft can take many forms, some of which have not been documented such as stealing time where the employee can fail to report to report to the job at the right time or work on a go slow with no apparent reason. Other forms which have been discussed well especially in this work include stealing merchandise, stealing of intellectual property or confidential information and stealing of money by fraud (Paulsell, n.d; Stell, 2006). To stop this vice in the sector, there are various strategies that can be put in place which include; - doing of background checks on the employees, this is important especially in cases where the employer my rush to get employees without getting to know why they left their previous jobs. Second, they should ensure that they remove an opportunity to steal (Shulman, 2006). Checking balances and the business books is important to that respect. It is also important to note that paying employees well is not always a remedy to employee theft. However, paying them well maybe the key to the solution (Chen, & Sandino, 2012). It is also important to include the employees when drafting or coming up with a strategy to curb theft. This will ease your work. It is hard to enact any strategy against employee theft if there are no clear policies which are consistent and comprehensive in dealing with the problem (Pedneault, 2010; Basset, 2008). It is important to create an environment where employees can approach the employer in case they have financial problems as that can reduce the temptation to steal. This put in place will help to reduce the cases of employee theft and in return be a boost to the nation’s economy. Bibliography Basset, J. W. 2008. Solving Employee Theft: New Insights, New Tactics. Charleston: Book surge Publishing. British Retail Consortium (BRC). Retail Crime Survey 2013. Brooks, C. 2013. Employee Theft on the Rise and Expected to get worse. Business Daily. Available at. http://www.businessnewsdaily.com/4657-employee-theft-rising.html Chen, C. X., Sandino, T. 2012. Can Wages Buy Honesty? The Relationship between Relative Wages and Employee Theft. Journal of Accounting Research. 50(4). Kranacher, M., Riley, R. & Wells, J. T. 2010. Forensic Accounting and Fraud Examination. New York: John Wiley and Sons. Lasky, S. 2013. Growing Internal Employee Theft Crisis Creates Havoc for major Retailers. Available at. http://www.securityinfowatch.com/article/10964917/jack-l-hayes-internationals-annual-retail-theft-survey-shows-disturbing-trend-of-internal-employee-theft. McGoey, C. E. Employee Theft: Retail Loss Prevention. Available at. http://www.crimedoctor.com/employee_theft.htm Pedneault, S. 2010. Preventing and Detecting Employee Theft and Embezzlement: A practical Guide. New York: John Wiley and Sons. Schrager, A. 2014. Underpaid Employees are a Cyber Security Risk. Bloomberg Business Week. Online at. http://www.businessweek.com/articles/2014-10-06/underpaid-employees-are-a-cybersecurity-risk Accessed January 14, 2015. Shulman, T. D. 2006. Biting the Hand that feeds you… The employee Theft Epidemic: New Perspectives, New Solutions. Excerpt. Michigan: Infinity Publishing. Stell, R. 2006. Preventing Employee Theft. NFIB. Available at. http://www.nfib.com/article/preventing-employee-theft-29624/ Wojcik, J. 2013. Recession gets the Blame for Recent Uptick in Employee Theft. Available at. http://www.businessinsurance.com/article/20130407/NEWS06/304079971?tags=|338|302 Read More