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I hesitated before I went ahead with this month’s lead article on employee theft because I know that many of my readers are employees who, like 97% of the general population, have chosen to be honest people.
We had some impassioned debate, here in the office, about the sensitivities of those honest people and the potential for offending the innocent, but in the end my take was that if you are a law-abiding motorist, then discussions about the dangers of speeding, and the deployment of patrol cars and speed cameras to trap and punish speeders will simply reinforce the wisdom of your good judgement in choosing to obey the law.
The same goes for honesty at work, so here goes . . . .
Is It Fair To Tempt Your Staff To Steal?
There are few events that can occur that cause more wide-spread angst within a business than when an employee steps across the line and steals from the business; it’s the loss of faith rather than the loss of money that hits home hard.
One of our relatively new clients with a multi-site operation recently experienced a case in which two lots of shift takings from one of the sites never made it to the bank. This fact was picked up when doing a bank reconciliation 48 hours after the event and the initial assumption was that “the bank has messed up”, and a request for a trace on the funds was lodged.
The bank took their time, during which a third banking went astray, and our Client faced the uncomfortable uncertainty of not knowing whether they (the bank) had a major problem – or he did! With $2,000 down, the bank finally came back to say, “No, it’s at your end”, confirming the Client’s worst fears – he had a rat in the ranks.
The problem was complicated by the fact that he had employed two new staff members who were in alternating shifts – one would prepare the banking at close of business and the other would bank it at opening the following day, and vice versa the next – compounded by the fact that in two of the instances, deposits from one shift were held over to the next.
Golden Rule for Money
It is a basic management tenet that systems for the control of money should be so rigorous that they would avoid tempting a weak soul and would actively discourage all but the most determined thief from even trying to circumvent them.
The money control “system” such as it was in this case, had holes in it you could drive an armoured truck through – and someone obviously had, with $2,000 loaded into the back!
What followed was a most unpleasant three weeks for all concerned.
Both staff members were within their probation periods, and it would have been easy enough to dismiss them but that would have meant punishing the innocent to get to the guilty – something that my very fair-minded Client was averse to doing. But, he was equally stressed by the knowledge that he was having to protect himself against – while continuing to pay – a thief.
He was also extremely uncomfortable in the knowledge that he was tarring both the innocent and the guilty party with the same brush in terms of his attitude and demeanour – but who was which?
After The Horse Had Bolted
Belatedly – though predictably – the next few coaching sessions included designing a money management system that would suit his somewhat fluid circumstances – retail, overlapping shifts, absence of night banking facilities, remote site, split roles.
I calculated we spend around 70% of three sessions dealing with plugging this leak, and trying to identify the guilty party; that he spent probably 20 hours on managing the issue; and that he invested more than $1,000 in bringing in a fraud expert (an ex-detective of our acquaintance who specialises in security) to attempt to confirm his suspicions.
The latter was a good investment in that the specialist delivered a strong circumstantial case which, when viewed in the context of the behaviour and circumstances of the staff members, and our Client’s suspicions, singled out one party as the culprit. But, there was insufficient proof to involve the police.
A decision was made and the business and remaining team are in the process of healing the wounds. It will take a while, as it impacted strongly and negatively across the entire team. The monetary cost was probably around $,5000 but the loss of confidence and the negative impact on what had previously been a tight-knit team, will probably lead to far more!
Post Mortem
The Dalai Lama has said, “When you lose, don’t lose the lesson”. So, what lessons emerged from this event?
Background check your intending employees. So many smaller business operators are good souls who find it hard to think the worst of anyone, take people at face value, and don’t check prior employment history. In this case, it emerged that there had been “a prior incident in which the police were involved”. The time to know that is before making an offer of employment.- Create water-tight security systems. It is the employer’s responsibility to create systems that isolate and assign accountability so that the weak are not tempted and the guilty can be readily identified. To do less is to unfairly tempt people who, in other circumstances would act within the rules; and to create uncertainty in your own mind about who is innocent and who is guilty. Good staff will generally not hang around if they are not trusted – so you lose them because of a lack of system and the misdeeds of a bad apple. That leaves you employing . . . ? (Scary thought, huh?)
- Run your systems regularly. In the case in point, it took three thefts and bank verification days later before our Client confirmed that it was his problem. That’s two thefts too many. That’s dependence on someone else to look after his money.
- Set a strong positive example. Be honest in all of your dealings with Customers and staff. Bosses who act in any way dishonestly – whether by misrepresenting goods or services, over-charging, cutting corners on quality, cheating on tax or bending the rules to exploit others – are setting a strong, negative example for others in their team, and can provide the last bit of justification needed by someone who decides to steal from the business.
Robin Hood made it fashionable to steal from those who had acquired their wealth dishonestly – and someone who decides to be dishonest, but still needs to live with themselves, can be extremely creative about why it’s alright to do so this time.
Peter Rowe is the Managing Director of ProfiTune Business Systems, one of Australia’s foremost Business Improvement Specialists whose clients include both multinational corporations and small private companies across every quarter of the business arena. Peter’s new book ‘Solving the People Puzzle’ is due for release in 2010.
Tags: employee dishonesty, employee fraud, employee misconduct, employee stealing, employee theft, tempting staff steal, theft by employee