2. THE WHAT, WHY AND WHERE OF CRIME IN THE WORKPLACE.
When looking at crime in the workplace it is important to distinguish what types of crimes are being committed, why these crimes are taking place, and why some employees steal as well as where they are occurring,
2.1 WHAT: What types of crimes comprise crimes in the workplace?
Usually workplace crime comprises a deliberate act motivated by profit but technically it can be anything from walking out of work with that work pen still in your pocket, to embezzlement and fraud. Most common workplace crime consists of “consumer fraud, tax swindles, insider trading, security violations, corruption, bribery and kickback schemes, computer fraud or corporate misconduct such as occupational health and safety offences” (Griffiths, 2004).
On a smaller scale it also includes the employee that pockets petty cash or fails to return change, pilferage such as using company supplies for personal use, forging receipts and over billing expense accounts. Often missing stock after deliveries occur as well as making out phony return or sales slips. Computer related crimes relating to confidential client information, and new product plans. As well as stealing merchandise in consumer related businesses.
2.2 WHY: Why do some companies fall prey to workplace crime and WHY do some employees commit workplace crime?
“KPMG’s fraud awareness survey revealed that fraud occurred mostly because of poor internal controls, as well as collusion between employees and a third party” Griffiths, 2004. These poor internal controls exist in so many companies big and small, but research has shown that workplace crime in smaller businesses is more common.
Often companies may give off the impression that theft or fraud will go unpunished, it is not spoken about or a company may have unwitedly created a norm where certain type of behaviour and certain unethical practices are just accepted. Also it is found that few employees who steal from work regard it as theft. Many believe it was ‘owed’ to them by the company, they may legitimize their stealing with rationalization like “I worked 10 hours overtime last month and this is my compensation” often seeing their theft as a “well deserved perk”.
There have been variables identified that relate to dishonesty and theft (adapted from Table 4.1 HCREVA-X Tutorial501/2006), they include:
Unreliability, some people are irresponsible and careless by nature and often don’t care about the good of the company. Employees who have problems socialising often have underdeveloped values, employees who have problem with authority relationships and have difficulty conforming to a companies values may steal. Individuals who seek excitement may steal. Employees with low levels of work motivation may become frustrated or bored and steal to alleviate this frustration. Frustration may also occur because an employee is not ‘getting anywhere’ in their job.
Addictions too may be a precursor as to why people steal from the workplace. A drug addiction or gambling addiction usually takes more than a monthly salary and therefore an individual may steal to feed their addiction. Similarly anyone living well above and beyond there means may steal to fund their lifestyle.
Workplace crime is not motivated solely by financial gain. Examinations of the motives and reasons for committing white-collar crime also report interesting results. Scotland’s “White-Collar Criminals” (vol II, p.21) lists desire for money, threat of loss, sense of superiority, ego, power, group forces, and benefits to the victim as motives for white-collar crime. Banson and Moore’s “Are White-Collar and Common Offences the same?” (vol. I, p. 496) lists three paths to white-collar crime: Those with low self control who commit crime when the opportunity arises, those who do it for ego gratification, and those who commit crimes depending on personal situations in their lives (cited in Fraud: Organization, Motivation and Control, Levi: 1999).
2.3 WHERE: WHERE does workplace crime often occur?
Robert Gray ( 1997) in his article on Clamping down on worker crime notes that small firms are especially susceptible to theft and fraud by employees. These small businesses are particularly vulnerable because owners generally don’t have effective systems to monitor key workers who are given major responsibilities.
A repot based on experiences of members of the association of certified Fraud Examiners says “the costliest abuses took place in companies with fewer than 100 employees (Gray, 1997). It would seem in these small companies perhaps the norms and attitudes toward theft are created by the company and their employees as they believe theft to go unpunished or unnoticed, also these small companies can ill afford to lose any amount of profits to theft. The larger corporate, white-collar crimes such as kickbacks and embezzlement of millions is more likely to occur in large companies where it is assumed the loss will go unnoticed for a period of time as the scale of the company may absorb the losses.
In companies where morale is low or employees are dissatisfied with their jobs or pay, employees may be more inclined to steal. It is true that one cannot put a price on job satisfaction.
3. THE SIGNS: What to look out for in employees that may indicate they are committing workplace crimes.
In 90% of the cases in which people steal from their companies, the employer would probably have described that person, right up to the time the crime was discovered, as a trusted employee (Gray, 1997). There are signs to look out for in trying to detect workplace crime, but one should be aware that these ‘signs’ do not produce ‘conclusive’ proof and a more thorough investigation needs to be done, otherwise a company may find themselves in a very costly lawsuit.
Employers, if suspecting workplace crime is taking place should be on the lookout for employees that show a sudden and unexplained rise in standard of living. Such as buying property, a new car an employee would not afford on their salary alone, extravagant vacations and expensive clothes or jewelry.
Employees who do not take time off work may be suspicious too as they fear in their absence their embezzlement or fraud may be uncovered. Similarly employees who insist on handling everything on their own and taking on jobs that are not required of them, such as filing their own receipts.
4. DETERANCE AND DEFENCES AGAINST WORKPLACE CRIME
4.1 Pre-employment
When it comes to hiring a potential employee a few simple background checks may go a log way in hiring an honest person. Call law enforcement to conduct a background check with regards to any prior offences. Contact previous employers to confirm the validity of references and specifically ask the previous employer if they had any problems with left.
If you are hiring someone who will be dealing with any financial issues conduct a credit history check. There are companies that specialize in pre-employment screening and one can even make use of tests to asses applicant’s honesty. If you go it is advisable for “employers to have applicants sign release forms authorizing background checks” (Gray, 1997).
Drug testing is another tool that may help prevent future problems, as anyone dabbling in drugs may form a habit and will need to fund it somehow.
4.2 Eliminating Opportunities
The best form of prevention is knowing your staff and their attitudes to company policies. Also only trusted and senior level employees should have access to funds and finances.
Keep company morale high by having fun days and open forums where any grievances can be discussed. Review salaries and keep them at market value so employees do not become disgruntled. If an employee feels they are not being paid what they worth, they may steal to ‘compensate’. “Four areas identified by Analoui and Kakabadse (1991) – bad working conditions, lack of comprehensive recruitment and training program, inadequate pay and reward systems, and inadequate supervision by management – are able to, and should be addressed. Attempts to make wok interesting, varied and fulfilling are also of value” (Challinger).
“Develop and implement clear policies on using company supplies, computers, printers and phones” (Safe at Work, 2004). This will leave no grey areas where people can deny knowing “the rules”.
4.3 Preventing Employee Theft
Have a controlled accounting systems in place and conduct both internal and external audits randomly. Keep records current and orderly as embezzlement is easier to miss if records are not current and organized.
Encourage honesty on behalf of your employees, have an open-door policy and have an anonymous ‘whistle-blowing’ policy so employees will be encouraged to report employee theft.
What has proven successful is to split financial responsibilities “an employee should not both issue checks and reconcile bank statements” (Grey, 1997). This eliminates opportunities for employees to make phony ‘balances’ and keeps internal controls strong. And with two minds the chance for spotting any discrepancies is higher.
Finally it should be remembered that the only way that employees get into positions where they can steal is by the company putting them there!!!
Bibliography:
Challinger, D. 1995. Feeling Good at Work – An Antidote to Workplace Crime. Canberra
Gray, R. 1997. Clamping Down on Worker Crime. Nations Business. USA
Griffiths, H. 2004. The Hidden Cost of White-Collar Crime. Hi-Tech Solutions
Levi, M. 1999. Fraude: Orgainization, Motivation and Control. Ahgate Publishing
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HCREVA-X Tutorial 501/2006
