A recent press release from the University of Cincinnati discusses the highlights of a report from the university's criminal justice department based on a survey of small business on the topic of employee theft.
The report noted that, even though 64 percent of the small businesses that were surveyed reported having experienced theft by employees, only 16 percent of those business owners reported those thefts to police.
The report also noted that, according to the U.S. Chamber of Commerce, one-third of small business bankruptcies are the result of employee theft.
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Most of the thefts that were discovered did not involve one-time-only incidents. Rather, they involved employees who stole over time, such as a bookkeeper stealing small amounts over the course of several years. The survey found that 61 percent of reported thefts were ongoing schemes, ranging in duration from two weeks to as long as 20 years. The average duration of a theft scheme before the employee was caught was 16 months.
About 40 percent of thefts by employees in small businesses were of money, with amounts ranging from five dollars to two million dollars. The average amount stolen over time by a specific employee was $20,000.
Other types of theft included products that were being sold by the business (18%), materials that were used in the production of a business's products (12%), tools and equipment (14%), with the remaining 16 percent involving things such as theft of office supplies, fuel, and even time card manipulation.
The report added that, the higher the dollar amount of a theft, the more trusted the employee conducting the theft had been by the business owner.
About 60 percent of employees who stole were identified as general or first-line employees at the "lowest hierarchical level, without supervisory responsibility." Another 20 percent were managers and executives. Others included accountants, bookkeepers, receptionists and secretaries, and billing/purchasing people. Interestingly, only about two percent were cashiers, those who handle cash all day long at cash registers.
The reason for thefts turned out to be somewhat surprising. The report explained that, "Most people believe that employees who steal are doing so because they are poor, in desperate need of money for, say, medical treatment or other dire circumstances." However, the report's author noted in the press release that these crimes tended to be a matter of "lifestyle enhancement."
Why were small business owners so reticent to report employee thefts to the police? The report identified four main reasons. First, the business owner did not see the victimization as serious enough to warrant the time/trouble beyond firing the employee. Second, after consulting with their attorneys, small business owners learned that the time, effort, and costs associated with prosecuting employees outweighed any likely benefits to the employer. Third, there were often emotional obstacles, in that many of the employees caught in theft schemes had worked alongside the owners for years, and some were even family members. Finally, many small business owners viewed the police and/or the criminal justice system as being ineffective or incompetent.
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