June 18, 2009

Employee Theft in Your Small Business: What Are the Causes?

This is the first article in a four-part series on employee theft. In this series I will cover some of the major causes of theft among workers as well as the extensive and often disastrous effects these occurrences bring to smaller businesses and their customers. Finally, I will end this series with some tips for theft prevention in addition to a few tips on conducting an investigation should you suspect employee theft or fraud within your business.

With all the alarming and emotionally-charged news out there clamoring for our attention, small business owners could easily miss a very important piece of information: One of the biggest threats to the success of a small business is employee theft, and these days it is on the rise.

The statistics are staggering. The U.S. Chamber of Commerce estimates that 75% of employees steal from work in some way and that 30% of corporate bankruptcies are a direct result of employee theft. This means that employee theft may be a bigger concern to small business owners then shoplifters.

So why is this happening?

Many experts in the area of corporate crime immediately point to the credit crisis, the slump in the housing market, and the resulting recession as the main causes behind the rise in employee theft. An increasing number of Americans are losing their jobs or experiencing cuts in wages, benefits, or hours. As their take home pay declines, people have less money available for daily expenses such as food and fuel. The rise in home foreclosures, loan defaults, and bankruptcies is blatant testimony that many are just not keeping up with their financial obligations.

Several small business owners also site a reduction in the number of employees as another contributing factor. As operating budgets get squeezed, small businesses have been forced to cut back on their workforces, and that means fewer watchful eyes. It’s an open door for would-be employee thieves, and small business owners can not afford to ignore it.

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