Employee theft statistics report that dishonesty at the workplace costs American businesses billions of dollars every year—more than $50 billion, according to the U.S. Department of Commerce.
These figures bring to mind embezzlement cases that make headline news, but on the contrary, most cases of employee theft actually occur at small companies.
Nevertheless, it can happen to any business. And whether small or on a grand scale, untrustworthy employee’s actions have an impact on your business.
Understanding the magnitude of the problem can help business owners be proactive about preventing workplace theft and dishonesty. Here’s a snapshot of the situation.
What is Employee Theft?
Theft in the workplace comes in many forms. It is defined as any stealing, use, or misuse of an employer’s assets without permission to do so.
Some of the common types, and their descriptions, are:
- Money theft: One of the most common and wide-ranging, money fraud can happen through skimming, cash larceny, overcharging customers, payroll theft, and more.
- Theft of time: According to employee time theft statistics, this type of theft happens most often through falsifying time records or not working while on the job.
- Company property and supplies theft: When an employee steals items like computers from their employer or takes company supplies such as stationery for personal use.
- Theft of merchandise and inventory: This is the theft of products that are yet to be sold. An employee stealing inventory can be done by physically taking items or diverting the inventory in some way.
- Theft of services: Where an employee misuses company services or company-funded services. This is a common form of corporate theft.
- Data theft: Product designs, trade secrets, customer data—company data is extremely sensitive, and this form of theft can be extremely damaging.
The Impact of Employee Theft
The effects of employee theft are farther reaching than the tangible losses quantified in workplace theft statistics. It can have serious effects on the businesses that fall victim to it:
Theft of money, inventory or any other kind affects the bottom line in more ways than one. On top of the cost of what is stolen, businesses have to incur extra expenses in the aftermath. Legal action, tightened security, and other measures also put an extra load on the company budget (44% of retail professionals allocated more budget towards loss prevention in 2019) and take away from other company operations, throwing its accounting into turmoil. These financial losses can be crippling to many a business.
Disruption of Operations
Employee theft causes disruption of day-to-day operations both as it is taking place, and in the period after. An example of this is when inventory theft leads to interruptions in production or a store running out of stock. Investigations and follow-up actions are also time-consuming and can throw a company’s operations into disarray.
Employee thefts not only affect the business, they also affect colleagues. The secrecy employed often creates an uneasy environment in the workplace, corroding trust and destroying any culture of honesty and open working relationships. On the other hand, increased surveillance and rules put in place to prevent theft causes tension between management and staff. If employee theft statistics are anything to go by, these situations can easily create a toxic work environment if not handled well.
Damaged Business Reputation
Cases of employee theft can tarnish a business’s reputation, alienate customers, and even be a PR disaster. A customer who has been overcharged could leave a negative review or an embezzlement case highlighted by the media. All these instances create a bad impression among the general public.
Employee Theft Statistics by Industry
What percentage of employees steal from their employers? According to Statistic Brain, over 75% of workers admit to pilfering on the job. These internal theft statistics get even more staggering:
- 95% of all businesses have experienced employee theft.
- 3 out of 10 employee theft cases lasted for more than five years.
- One-third of business bankruptcies in the US are caused by employee theft.
- Employers lose 20 cents of every dollar to workplace fraud.
- 60% of employees would steal if they knew they wouldn’t get caught, while 34% of millennials justify stealing from their job.
By industry, research from the Association of Certified Fraud Examiners (ACFE) found that embezzlement is highest in the banking and finance sectors.
Finance is also the industry with the highest cases of occupational fraud, followed by manufacturing, government, and public administration, healthcare, and retail. The retail industry is especially notorious for inventory theft, with 42.7% of inventory loss in US stores being caused by employee theft.
The tech industry has also seen increased cases of fraud in recent years. 21% of tech employees have been reported to steal from work, with 66% of them regularly taking items valued between $1–$19. 14% steal high-value items of over $100.
Who commits employee theft? These statistics will surprise you:
- Managers account for 55% of all employee theft.
- The average age of a perpetrator is 48 years old. In general more employees under the age of 35 commit employee theft, older employees take much more when they do steal from the company.
- 59.1% of men and 40.9% of women commit employee theft. Losses caused by men were 72% larger than losses caused by women in 2020.
How to Prevent Employee Theft
It is important to establish employee theft-prevention policies and implement them effectively, especially as a small business. Here are some strategies that employers can use to accomplish this:
- Select employees carefully—Conduct background criminal checks, reference checks, and education verification of every new hire.
- Employees should be supervised on a regular basis by trusted management.
- Install supervision equipment such as cameras to monitor employee’s actions. Security alarm companies can put in place systems that create a report for each unreasonable entry into the company facilities after hours.
- Limit access to company data, safes and access codes, and other sensitive areas to few employees.
- Ensure efficient and transparent inventory management and accounting systems that are constantly kept up to date.
- Hire an external, professional security services company to prevent collusion between your employees and guards.
- Conduct regular surprise audits to limit theft opportunities.
Security For Peace of Mind
Employee theft and fraud take many forms, all with varied incentives, and if the numbers are anything to go by, businesses must do everything they can to avoid falling victim to it.
The Guard Alliance Inc is ready to help you do that. We ensure a stringent selection process for all our security staff that goes through multiple levels of background checks, drug tests, and interviews, meaning you get complete peace of mind knowing your business is in safe hands at all times. Contact us to learn more about our security services today.