Employee theft and the myth of vetting

Recently I saw a post on Linkedin advertising ready-made vetting services for new applicants. It made me wonder what the rationale behind it was…

The article continued to explain that 5% of a company’s revenue was expected to “leave the door” because of theft, fraud and embezzlement on the workfloor. Other, somewhat older research points to 7%, and as much as 33% of bankruptcies caused by employee theft . Of course that is specifically from the retail business which, next to food service and entertainment, does not have a good reputation for salaries and work benefits in America.

Warding such untrustworthy individuals from the premises would be the cure for this problem, and in order to do that, you’d have to ask the right question and search under the right rocks. I am not sure whether this is a typically American solution, given that this article’s source and target market were both the US, but it made me wonder about the origins of these numbers.

First off, why do people defraud, steal and embezzle? Certainly there will be some inherently criminal types, or people whose greed forces them to abscond with anything they can get their hands on. But my faith in Humanity makes me hope these are few and far in between (but as they say, possession is 90% of the law). These people will be easier to spot, since they likely have criminal records, shady pasts and questionable connections. Before hiring a new C-level Executive, it makes perfect sense to do a background check and verify credentials and behavior.

This post is also not about corporate espionage or selling data to competitors – those are far more serious crimes than the ones I mention here. That said, care must be taken when verifying statistics that “theft, fraud and embezzlement” statistics are not padded by adding far less serious infractions.

But what are some reasons that Joe Average steals from the company?

One first thing that comes to mind is reward and recognition. People who are paid below what would be a fair compensation for their service are more likely to augment that income by taking from the company what they believe to be their fair share. It does not matter whether it’s office supplies, misplaced articles or straight up products defrauded from customers, the stolen goods are part self-reward and part a warning that the company does not value them in their opinion. Sometimes they charge hours they did not work, or compensation for expenses they did not make.

The solution? Verify your reward system. Not just to the market, but to the people. If you find someone stealing, verify whether they are good people that feel wronged and open dialogue. Often, such thefts are also connected to a lack of connection with the company. The company doesn’t have their loyalty and their heart. This can often be remedied by drawing this person in with the company more – not less. When people feel that company success is a little bit their own success, they will feel far less likely to steal. It would feel like stealing from themselves. Now, of course, bad apples do exist. I don’t advocate a soft touch on anyone caught in this behavior, but take the time to know these people before passing judgement.

A second thing to consider is convenience. When people work late at the company and have little time for their own personal things, they will print their letters on corporate paper, take personal notes on company’s post-it blocks or grab a company USB stick for their holiday pictures. Technically, that’s stealing – and likely included in the 5% figure above. It’s as old as stone and as true as it was hundreds of years ago, that people have a blurry edge between work and personal life.

Sometimes companies have a habit of asking more time and effort from employees, without truly compensating them for it. Often heard “but if they work harder they get to keep their jobs, when otherwise I might have had to fire them, which is a reward too!” is neither true (when fired they would have had the opportunity to look for a better job), fair (the company benefits from this but the employees don’t) nor sensible (because those people now are under a lot more stress and there’s a bigger chance they feel unrewarded and unrecognized).

In food services, people often work long hours but are not always allowed to eat leftover food from the company. They will do so anyway because they are hungry and may not have the time to go home for dinner.

In most cases, it’s best to simply ignore it. The costs are minimal to a company, and this behavior can actually be turned to the company’s benefit. After all, corporate materials that are branded with the logos and mottos of the company are also marketing materials, and making sure that people use them freely means free distribution of your brand wherever your people go.

Finally, something that often comes up with companies with higher valued products is that people love their company’s products. Especially technology is something people really want to use. Often, companies have shipments of devices for their customers, but their own employees cannot get their hands on them. If the device is something usable for work, like a tablet, phone or notebook, the people in the company often receive lesser versions of the “customer model” and they can’t really upgrade to a more high-grade one because of corporate policies. Sometimes even if the employees would be willing to pay for them!

In such cases you sometimes see employees banding together to create “technically legal” schemes that allow them to use their companies’ own technology. It could be diverting budget to create an “employee reward” model for example, allowing people who do really well to obtain a company good, without it being approved by management. Or when devices that should be shipped to a customer are cancelled, distributing them to employees rather than first looking for an alternative market (again without approvals). All of these things are technically theft and fraud as well, but understandable and in a way commendable.

The key here that if this happens, you have employees who love your product and want it, but can’t get it. Maybe it’s too expensive, too exclusive or restricted by all manner of legal or economic deals. A notebook with a specific upgrade restricted to governments, a phone that can only be found in one country, or a tablet which is under NDA and not officially released to the public. The key here is that it’s not available, not just for money, but at all.

This is the time for companies to give their employees their best, not just for their loyalty, but also to show their potential customers the value of their wares. Rewarding top employees, allowing them to purchase company material from an online shop, gifting merchandise for holidays and special events are all ways to increase employee attachment.

What this means for recruitment

Vetting is good, there is nothing wrong with expending time and energy making sure the candidate is “the one”. But that is energy best reserved for Senior functions, unless you are in a legally sensitive business, like Finance. Asking questions and judging the answers, checking if their resumes match realities, and checking with their references are all good ways to weed out people who are properly dishonest.

The problem arises when you vet for lies alone. The research mentioned that 44% of people lie on their resume, and even more inflate their accomplishments. That is not so much a sign of dishonesty, but a sign of a tight labor market and people attempting to stand out among candidates.
There are also definitely gradations of lies; I would not put stock in hiring a person who has invented companies and positions that did not exist. I would be more inclined to forgive a person for being a homemaker and rephrasing it as “domestic management, duties included logistics, personal transportation and ensuring that the domestic environment upheld to agreed levels of representation; references available upon request”. Everybody lies; Doctor House taught us that.

Take time in your recruitment period to discuss expectations and how you intend for the applicant to become a “company person”, explain onboarding and the corporate culture.

What this means for employees

There are times when you will feel unrewarded and frustrated, and feel that taking things from the company is a quick way to satisfy your feelings. Without judgement on whether your feelings are correct or not, remember that these action can have big consequences later on. If found out and labeled a thief, that has a habit of coming up in job interviews.

The correct thing to do would be to go to your manager and discuss your need for recognition, reward and attention. After all, those are in many cases the underlying spurs to action. If you feel that these are not adequately addressed, start looking for a new position or an otherwise legal sideline. Think about what you really want, and how to get it in a way that makes people admire you, rather than label you.

For what vetting is worth, when you write your resume, I am among many who advise creative rewriting. But that’s not about lying, it’s about reflecting what you are actually worth in a way that fits with corporate culture. Being raid leader in World of Warcraft becomes “managing a diverse team of individuals in a challenging, high risk-reward environment” because in the end, that’s what it is. Fishing may be a hobby but it teaches patience, preparation and adapting your strategy based on the target. Those are valid skills in any environment, and (almost) fully transferable.

Conclusion

Theft and fraud on the work floor, in any sector or company, can become a major issue to your business, but it also is a sign of underlying problems that need tending. While I am not sure if it can be avoided completely, a healthy corporate culture, investment in your employees and a healthy work-life-reward balance can do much to take away the core reasons of this behavior on the workfloor.

For employees, being able to speak open and honestly on financial matters and recognition is crucial. It also means that if you feel like your company does not reward you adequately, or that you somehow feel the need to take revenge, there are deeper issues that you must tackle. This can mean looking for a different company, which is sometimes a scary prospect, or confronting what you see as the cause. If your company has some form of feedback ability or a place where you can deposit ideas and complaints anonymosly, try and do that if you cannot speak with your manager. In some cases, if you have a union, you can also turn to them for support and advice.

In all cases, reputation and trust are key items in our workforce transactions. Without trust we cannot get jobs or find people to fill open positions. When reputations are damaged, chances dwindle for everyone involved. Don’t be quick to discard, or discount, on an opportunity for improvement and positive reinforcement.

If you have a different opinions or anecdotes to add on how to handle this, feel free to comment below!

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