Using a behavior‐based method to identify and reduce employee theft

Abstract

The consequences of employee theft have a profound impact on employers, employees, consumers, and society. Estimates of employee theft range from $40 to $400 billion a year in the USA alone. Although identifying employee theft is difficult, certain behavioral‐based studies have been able to separate employee theft from customer theft (shoplifting). The current study extends a behavioral‐based technique (posting) by posting total monetary loss and total items missing rather than posting the individual targeted items as in the prior studies. The study was conducted in an retail setting (one drug store in a large chain) for a 12‐week period. Data demonstrated posting was able to lower the amount of employee theft while also providing the ability to separate most of the losses caused by employee theft versus shoplifting. Furthermore, the results appear to reinforce the hypothesis that survey data alone may underestimate the actual amount of employee theft.

Employee Theft among College Students in the Workforce

“…Experts believe, however, that the results in this study might be low because the National Service Security Council gathered this data from self-reports (Kidwell & Kochanowski, 2005). Oliphant and Oliphant (2001) indicated that several studies have attempted to identify an employee theft base rate; however, the results produced a wide range from 3% to 62%. These wide range rates were also obtained from sensitive self-report information; therefore, the results may remain inaccurate.…”

“…Unfortunately, the literature indicated that the majority of employee theft is not discovered. The data suggested that only very few employees are ever caught stealing, and it is estimated that as much as 80% of employee theft goes undetected (Oliphant & Oliphant, 2001). Additionally, there are more factors contributing to inventory loss that businesses need to consider.…”

“…This finding is another reason that contributes to underreporting of employee theft. Prior to conducting research about employee theft at a drug store, Oliphant and Oliphant (2001) had to persuade and convince the store manager that theft was occurring; however, the store manager believed that theft was a result of shoplifting. In conducting the study, although employee theft was clearly identified, the store manager still refused to report the incidents to upper management because the manager was concerned that the thefts would reflect his quality as a leader.…”

“…Many businesses, therefore, accept that shrinkage or loss of goods is normal, and they experience this normality for various reasons (Johnson & Indvik, 2002). With this attitude, employers expect employees to steal; thus, employees view this behavior as acceptable and justifiable, which creates an organizational atmosphere that condones the behavior (Oliphant & Oliphant, 2001). Employees can rationalize and exploit business owners' attitudes; therefore, stealing becomes virtually risk-free (Appelbaum et al, 2006).…”

Scoping the contextual issues that influence shrinkage measurement

“…It has been long known that shrinkage is frequently attributed to the wrong cause (Bernstein, 1963). For example, retailers often emphasise external theft as a cause of shrinkage as they are in denial of the level of theft by their own employees and therefore retailers underreport internal theft (Oliphant and Oliphant, 2001).…”