Workplace Crime and Honest Dealing - Essay Example

Workplace Crime and Honest Dealing Introduction Retail companies around the world suffer from losses that are sometimes related to theft from customers and sometimes from its very own employees. Staff dishonesty, in particular, is oftentimes neglected by companies as a contributing factor to company losses and business failure. However, it has been found that this is as serious a problem as customer shoplifting, and the general consumers could pay for dollars lost as retailers pass on their profit losses by increasing the prices of merchandise. It is, therefore, essential for the retail industry to recognize this problem, determine its root causes and driving factors, and formulate effective measures to combat and prevent it. Staff dishonesty is a crime committed against companies and does not solely consist of theft. Matthew Liew asserts that "crime encompasses exposures to loss from the dishonest acts of people within or outside the company." This may involve money or property of the company. Staff dishonesty could also include other types of misbehaviors such as "rule-breaking, destructive practices, non-cooperative practices, disruptive practices and misuse of facilities" (Challinger 2). One of the most common forms of staff dishonesty is theft. "Employee theft from a retail store is a term that is used when an employee steals merchandise, food, cash, or supplies while on the job" (McGoey). Theft can also be in the form of misusing employee discounts, offering discounted prices to friends, and cheating by reporting incorrect number of hours of work (Adjudicative Desk Reference). It can be assumed that this type of crime can be more damaging to retail companies because the involved persons are part of the organization, are usually trusted, and should be well-informed about the crime prevention measures that the company is adopting (McGoey). Matthew Liew adds that staff dishonesty can be detrimental to the company, especially since it may take a long time before it can be detected. Prevalence of Staff Dishonesty Although employee theft is listed as one of the most unlikely crimes to be reported, according to the Adjudicative Desk Reference, its prevalence in the workplace, especially in retail companies cannot be denied. Several authors believe that around 50% to 60% of employees in retail companies are guilty of dishonest conduct (Adjudicative Desk Reference). Studies conducted also indicate that staff dishonesty can equate to thousands of dollars in losses. Dennis Challinger notes that employee theft or pilferage, as opposed to other workplace crimes, is easy to measure, translating to around 1.8% of the gross national product in Britain and $40 billion a year in the United States, causing the failure of around 20% of companies in the U.S. (2). According to Kevin Philip, "staff dishonesty could account for up to 60 per cent of business losses" (9). In a separate survey by the University of Florida in 2002, employee theft accounted for disappearance of around 48% of store inventories, translating to $1.5 billion per year. The same survey found that compared to shoplifting, employee theft equated to an average loss of $1,341.02 for each case of theft, while for every shoplifting incident, average dollar loss was only $207 (McGoey). What is obvious in several studies conducted on the prevalence of workplace dishonesty is that some of those who committed such offense are managers or those in authority. It was reported that in Britain, 8% of managers have been involved in workplace crime (Challinger 3). In a study conducted by Kevin Philip, it was found that dishonest employees in supermarkets include managers, head cashiers, front-end supervisors, cahiers, floor staff and store men. In a study that involved 1,408 retail employees in the Minneapolis area, 60% of those surveyed admitted to having committed an illegal activity, with 57% having been involved in misusing employee discount, while 12% admitted having taken a merchandise without paying for it (Adjudicative Desk Reference). Even though there are statistics to show the negative impact of employee dishonesty to a retail company, there is still no globally accepted definition of workplace crime because of the differing company rules that could set the boundaries for acceptable behaviors or "perks" (Challinger 2). In other words, what may be considered by one employer as a dishonest behavior may be allowed by another, more lenient employer, making it difficult for criminal authorities to classify certain actions as criminal. Causes of Staff Dishonesty In order to effectively address the problem of staff dishonesty, it would be worthwhile to look into the root causes that drive an employee to commit such a crime. Dennis Challenger identifies several root causes of dishonesty in the workplace, and notes that one distinct notion among dishonest employees is that they do not consider themselves as thieves. "They may feel certain legitimacy attached to their stealing" (3). Some employees behave in dishonest manner to "get back" at their employers. Here, they intentionally do damage to the company by stealing merchandise, especially if they realize how much more money their employers are making compared to them. A majority of dishonest employees also demonstrate a lack of loyalty to the company, a general feeling of discontent with their employment status, or may feel that they are not being properly compensated (Challinger 3). Engaging in dishonest acts is one way for them to express discontent and disapproval of the company's system of management. Unlike shoplifters, employees in retail companies can easily commit theft, with enough motivation and the desire to engage in such activities (McGoey). This is because as employees, they are knowledgeable of the security systems within the store, and are aware of the company's regulations that they can bypass in order to commit dishonest actions. Dishonest employees also tend to justify their actions by thinking that they are only giving themselves the compensation that their employers do not willfully accord them. Employees in retail companies are also constantly exposed to products and goods that they may desire, but cannot afford because of their meager compensation. Seeing that so many other people are able to purchase those products may lead some to be tempted to steal products when they can (Challinger 4). Solutions Employee dishonesty is a serious issue that has to be addressed by retailers if they are to succeed financially in their business. One of the reasons for the difficulty to detect this kind of behavior in job applicants is that it usually cannot be found among criminal records (Adjudicated Desk Reference). Chris E. McGoey also states that there is no definite profile of a dishonest employee as "they come in all shapes, sizes, ages, sexes, ethnic backgrounds, religions, levels of education, and economic status." On the other hand, employees who do not engage in dishonest practice are not inclined to cheating only because they are inherently honest, and possess discipline and a respectable character. This inherent character may be difficult to detect in applicants as well. According to the Adjudicative Desk Reference, "information is likely to be obtained only through self-disclosure, source interviews, or polygraph examination." Despite the difficulties associated with the determination of likely dishonest employees, retail companies still need to come up with measures to prevent and arrest this type of behavior among employees. One of the common measures that retail companies employ in their aim to eliminate employee theft is the adoption of systems designed to discourage employees to commit such a crime. Although employees, because they are knowledgeable of the technologies that their companies have, may know ways of bypassing the systems, it would still help these companies if all different approaches are taken to mitigate the problem. This would also convey the message to employees that the management is serious about protecting its inventories. Retailers can prevent the occurrence of dishonest conduct by employees through careful screening of prospective employees. Already, there are human resources examinations that test the integrity of applicants. These tests either asks direct questions regarding the applicant's perception of dishonest behaviors, or they may be a personality test to determine the applicant's "conscientiousness, reliability and trustworthiness" (Adjudicated Desk Reference). These tests may not be perfect, as applicants who have the tendency to cheat, may know the idea behind such tests and therefore provide answers that will help him or her pass the examination undetected. The Adjudicated Desk Reference states that these types of tests is only probabilistic, although careful scoring may lead to a 60% to 70% chance of accuracy. Challinger also reports that supermarkets that conducted integrity tests see lesser incidents of employee theft in terms of dollar losses, as compared to those supermarkets that did not conduct integrity tests (Challinger 7). Employers also need to consider that the tendency towards staff dishonesty can sometimes start when the employee begins to work in the company. Since most cases of employee theft and other dishonest behaviors are due to employee dissatisfaction, companies would have to develop measures to address such an issue. Among the complaints of discontented employees are bad working conditions and insufficient compensation and reward systems. Providing for the financial satisfaction of employees and making the work more interesting can uplift the morale of employees, thus preventing tendencies to commit dishonest acts. It would also be necessary for employers to provide ample training that would help employees to be more involved in the company's business, and that would increase their loyalty and sense of belonging within the company. Dennis Challinger asserts that people who feel a sense of belongingness within a group are more likely to care about their job and the victims of their dishonest actions. Sense of belongingness can be instilled in employees through company programs such as team building sessions, or through privileges and access to company facilities (Challinger 8-9). Management involvement in the affairs of employees is also essential in developing loyalty and strengthening morale of the employees. This can be done through communication to the group of employees or through close interaction with employees to ask them about their concerns and working condition. Employers also need to provide clear-cut procedures and policies within the organization in order to discourage dishonest behaviors. This includes implementing strict penalties that may include prosecution of offenders. Adequate security personnel to escort visitors and unauthorized personnel into restricted areas would also help deter incidents of internal theft. Rules must be broadcast to all employees so that they are aware of company policies and the consequences of breaking such rules. These rules, however, should not cover the rank and file employees only, but should also be followed by the management as well. Dennis Challinger emphasizes that "an organisation that is not only ethical and responsible but seen by its employees to be ethical and responsible, has a very good chance of suffering less workplace crime" (Challinger 10). Companies wanting to protect themselves from staff dishonesty could also take advantage of crime insurance, which "can protect a store against burglary, robbery and employee dishonesty" (Liew). This can help them recover from unwanted losses from external or internal forces. The Retail Traders' Association of New South Wales provides other guidelines to prevent losses through employee theft, including control over the locks and security systems, and delegating control over the receiving of goods only to authorized personnel. Retailers also need to have strict supervision of employee discounts, refunds and charge accounts as well as a well-organized system in the handling of cash registers, safes and banking (Retail Traders' Association of NSW). These control systems would send a signal to employees of management's intention to prevent crime from occurring within the premises. There are several ways for a retail company to reduce or eliminate the problem of staff dishonesty, but one general strategy is to adopt and implement sound management of worker situation. Providing answers to grievances and understanding worker situation could still be the best means towards preventing losses due to employee dishonesty. Conclusion Staff dishonesty is a serious problem that all companies, especially those in the retail industry, have to consider in their overall management program. Retail companies are more vulnerable to employee theft because of the inventories of products they keep that employees can easily access. Even as some managers dismiss this as a minor problem, statistics show that this can be detrimental to the retail company's success and can translate to millions or billions of dollars in annual losses and may even lead to failure. The preponderance of employee theft and other workplace misbehaviors could also result to higher merchandise prices as retailers try to pass on the burden to consumers. People say that ethical commitments can solve problems in the company, lower transaction costs, and increase trust both within the organization and between organizations engaged in partnerships or strategic alliances. (Bowie, Norman 1997). In fact. problems result when a company cannot effectively monitor its employees to insure that they put the interests of the company over anything else. Indeed, hiring trustworthy people lowers the costs of monitoring. Transaction costs include lawyers, security systems, credit checks, and the like. Honesty among stakeholders and employers promotes trust and increasing trust reinforces honesty in a kind of virtuous circle. Indeed building trustworthy relationships should enhance employees' cooperation and this cooperation will enhance firm profitability (Bowie, Norman 1997). For a retail company to succeed in the highly competitive market, human resource management has to play an important role in preventing and mitigating employee dishonesty. Retailers need to understand the true reasons why people commit such crimes for them to implement different measures that will prevent and stop dishonest behaviors. The retailer also needs to be equipped with advanced security systems and other advanced technologies that can help it deter employee dishonesty. The problem should not be ignored and dismissed as trivial because it could be a molehill that can turn into a mountain. Proper people management, well-established regulations as well as good compensation for workers should help stop the prevalence of staff dishonesty in the industry. REFERENCES Adjudicative Desk Reference. Criminal Conduct. Retrieved July 19, 2008 at: . Bowie, N. Should Multinationals Practice Abroad what they practice at home Leadership Challenges. Hong Kong Ethics Development Centre, ICAC.1997. Retrieved July 19, 2008 at: http://www.icac.org.hk/hkedc/txt_eng/speech4e.htm Challinger, D. 1995. Feeling Good at Work - An Antidote to Workplace Crime.. Australian Institute of Criminology. Retrieved July 19, 2008 at: . Liew, M. June 2001. The Basics of Business Insurance for Retail Operations. Pacific Business News. . Retrieved July 19, 2008 at: < http://www.bizjournals.com/ pacific/stories/2001/07/02/smallb3.htmlpage=1> McGoey, C. E. Employee Theft: Retail Loss Prevention. Crime Doctor. Retrieved July 19, 2008 at: < http://www.crimedoctor.com/employee_theft.htm>. Philip, K. 1995. Theft and Fraud in Supermarkets. Australian Institute of Criminology. Retrieved July 19, 2008 at: . Retail Traders' Association of New South Wales. 10 Mar. 2004 Crime Prevention Series Appendix II: A Checklist for Preventing Loss. Australian Institute of Criminology. Retrieved July 19, 2008 at: . Read More