"Employers are hot targets for theft because workers know their systems, controls and weaknesses, and they can bide their time waiting for the right opportunity," according to a Dec. 11, 2008, Wall Street Journal article. The U.S. Chamber of Commerce estimates that employee theft may cost American businesses as much as $50 billion on an annual basis.
The Chamber has also reported that 30 percent of small business failure is caused by employee theft and estimates that 75 percent of all employees steal once, and one-half of those steal a second time.
The things that employees steal generally falls into two categories -- tangibles and intangibles -- and employees generally steal one of three ways: directly, by manipulation or by siphoning.
Tangibles includes both the company's inventory -- for example, the widgets and the parts or resources that go into making the widgets -- and the items the employer keeps on hand to help it conduct its business, from postage stamps and envelopes to telephones and gasoline fueling company cars. Intangibles include money, time and information. These intangibles are often stolen electronically. Commonly understood as embezzlement, the employee manipulates company data in order to steal money indirectly.
For example, the payroll manager places a "ghost" employee on the payroll and keeps the money herself; the sales clerk takes the employer's customer's credit-card information to make purchases for himself; or the AP/AR clerk creates fake vendor invoices and then prepares checks to pay the invoices, and keeps the money for himself.
Theft of time is another form of intangible theft. This form of theft is accomplished by siphoning or slowly wasting the employer's assets over time. For example, employees take long or frequent paid cigarette breaks; spend excessive time on non-work related internet activities such as Facebook (which may be considered both theft of company time and misuse of company property); or engage in work off the books for another employer while on paid workers' compensation leave for a workplace injury.
In industries in which client names are particularly valuable, such as financial services, employees may misappropriate client lists or clients' personal information. Other intangibles include client lists and personal information, and intellectual property about processes, strategy, and research. Employers need to proactively respond to the issue of employee theft, or they risk becoming a statistic. One of the most effective ways human resource leaders can play an influential role in by make sure the organization is hiring the right employees.
A good start is by using pre-employment tests specifically designed to predict and forecast potential theft problems, performing criminal-conviction checks, drug screenings and reference checks in an attempt to minimize employee theft. Performing thorough and effective background checks is critical too. Another way of reducing, if not eliminating, employee theft is for the employer to create a perception of detection. Generally speaking, employees who fear they will be caught stealing are less likely to steal. Internal controls and procedures, audits, job rotations, and employee education are additional ways employers are taking a proactive approach.
Learn more about pre-employment tests.
Perfect Labor Storm Warnings
Women accounted for 51 percent of all workers in the high-paying management, professional, and related occupations. They outnumbered men in such occupations as public relations managers; financial managers; human resource managers; education administrators; medical and health services managers; accountants and auditors; budget analysts; biological scientists; preschool, kindergarten, elementary, middle, and secondary school teachers; physical therapists; writers and authors; and registered nurses.
Source: Bureau of Labor Statistics
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Q: One of our top candidates has refused to complete the pre-employment test you recommended. He really impressed us and has great references. He said it was demeaning for someone of his calibre and experience to "take a stupid test." Is it ok to waive the test this time?
A: This is always an interesting question. Ironically he actually took a "test." You asked him to participate in an assessment and he refused. If you're looking for an employee who will question your authority, your procedures, and your processes... he's passed the test without answering a single question.
But in my opinion, he failed. A pre-employment test is as much as part of the selection process as the resume, interview, and reference checks. If a candidate refuses to submit a resume, participate in a 2nd or 3rd interview, or agree to background checks, would you still want to hire them? It's unlikely. Then why is it acceptable for the candidate to refuse to participate in any part of your selection process? If the assessment adds so little value for this candidate, I'd recommend seeking another tool that wouldn't be so easy to dismiss. But unless you're looking to hire a maverick or prima donna, I would not excuse him from completing the assessment. And if teamwork and adaptability are two skills you are seeking, I'd reject him and keep looking.
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Quotes from Hire Authorities
"Life is what we make it, always has been, always will be."
Grandma Moses
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