If your house is anything like mine, you have to pick up “stuff” frequently. With five people in the house, including two small children, hectic schedules and not enough space, there is always stuff laying around that is not in its proper place.
In our house, the best representative of this is our kitchen. We enter the house through the garage and everything we carry in gets put on the counter, a chair or the kitchen table. It accumulates quickly into piles of school papers, grocery bags and other “stuff.” The desk we have in our kitchen is usually also over-flowing with mail and other papers.
When it gets to a certain state, we have to pick it all up and try to put it in some kind of order. Several items go into desk drawers, the filing cabinet or in the girls’ rooms. When I do this, I’m amazed by the number of red and white Arnold Church of Christ pens we have.
How did we accumulate so many pens from our church? Did the kids put them in their bags? Did my wife put them in her purse or did I put them in my portfolio?
I don’t know how all these pens get to our house but I know one thing. We’re guilty of stealing them from church!
Ouch…stealing from church. Even worse, we’re stealing from God.
Okay, okay, I know the pens are there for people to use and take if needed. But do we need so many? As the treasurer for our congregation, I realize how expensive those pens are – I write the check.
Please don’t judge me or my family for taking these pens. I challenge you to look in your house and see what you’re guilty of stealing. If I were a betting man, I’d wager you’re guilty of employee theft.
Yep, you read that correctly. You’re guilty of employee theft. You steal from your employer.
“No I don’t,” you say. “I would never steal from my job.”
Well, look around your house and in your car.
Do you see pads of paper, pens and other office supplies. If you work in an office environment, you likely have some of those office supplies that unwittingly made it home.
I understand. You didn’t intend to bring those items home for personal use. But you did. You’re guilty. And so am I.
Employee theft is on the rise. In fact, it’s been on the rise in the past several years. The Great Recession provided circumstances where all three sides of the Fraud Triangle (opportunity, pressure and rationalization) all came into play.
It usually takes at least nine months for a fraud to be uncovered. Naturally, the longer a fraud is perpetrated the more costly to the organization it will be. The 2014 Report to the Nations on Occupational Fraud and Abuse reports that at 30 months before detection fraud can range between $360,000 to $1,250,000.
That’s a lot of money!
There are several ways to employee theft, or fraud, is committed and identified. The Report to the Nations touches on many of those ways.
For the remainder of this article, we’re going to address unintentional employee theft for which we’re all pretty much guilty. That theft is typically not intentional; therefore, I don’t call it fraud. Fraud has to have intention behind it and I believe most of the employee theft addressed here is unintentional.
The majority of people are honest. They want to do the right thing and feel bad if they do something wrong.
We, unfortunately, have the ability to justify anything. We can talk ourselves into believing something is okay.
“It’s so small, it doesn’t even matter.”
“No one will know.”
“No one will get hurt if I do this.”
Justification is a slippery slope. We have to be very cognizant of our thoughts, intentions and morals.
The most important factor in keeping justification from ruining our ethics is to make a decision early on. We need to decide that no matter what opportunities present themselves, we will always do the right thing.
If your subconscious knows and believes that your morality is of the utmost importance, you will not only resist the temptation of stealing from your company, you will also stay away from the opportunities to be tempted.
A large portion of my career has been spent helping financial institutions design processes and controls to protect employees. In other words, I identify how an employee could misappropriate assets or fudge the books, per se, and make sure controls are effectively designed and operating to keep that from happening.
The difficulty with any form of theft, is that you cannot think of everything to prevent it. If someone wants to steal, they will find a way. If only fraudsters would put that creative thinking to good use…that’s an article for another day.
The controls and processes I help identify and create will prevent many forms of employee theft. Unfortunately, the following four methods are pretty much not preventable.
We’ve each been guilty of at least one of these over our careers. In most cases they are not intentional acts. We just do them without thinking of the effect they have on our employers, co-workers and clients.
Most companies have some form of time reporting. Employees clock in and out with time cards or employees complete time reports.
Many professional services firms, such as public accounting and law firms, submit time reports where the professionals record time by the tenth or quarter of an hour. This method is used because they bill clients according to the time spent.
Both of these methods of time reporting have risk for employee theft. Employees can steal time from their companies and clients.
Let’s look at a few ways employees can steal time:
1. Fictitious time – An employee only works seven hours in a day. He doesn’t want to record any vacation so he adds an hour to his time report. Because he’s an “honest” guy, he’ll record that hour to a billing code that won’t be charged to a client.
2. Value time – The more hours you work, the better you look to your boss. So you inflate some of your time on your time report because you “provided extraordinary value” on the project so the client should be billed more.
3. Make-it-up-later time – You arrived late to work today because you had errands to run. Instead of recording your time properly, you report a full day and you’ll “make it up” later. Somehow, though, that time never gets made up.
4. Slush time – There is a code you can use in your time reporting system that is a kind of “catch-all.” You decide to record time there for time you know you were working but you can’t validate what you did in that time.
5. Vacation time – Everyone wants to build up as much vacation time as possible so they can use it for real vacations. Even though your employer’s policy states you need to work a minimum of eight hours a day, you know they only review total hours.
You work three and a half days and get in your total of 40 hours. You’ve met the total hours requirement. You either “move time around” or just record your actual hours as worked and hope no one catches that you didn’t work five eight-hour days. Either way, you’re cheating the company.
If you do not put in the most effort possible all day long while working, you’re stealing pay from your employer. You were hired not just to do a job but to do your job with maximum effort and ability.
Lazy employees are getting paid for being lazy. They’re getting paid a wage or salary to do work that is inefficient, i.e., they could have done even more if efficient, or ineffective, i.e., lack of effort leads to bad product.
How many lazy employees do you know? You have some you work with. We all do. I don’t want people to lose their jobs but it’s a shame those lazy employees are allowed to be lazy.
When management permits laziness, it has a detrimental effect on the rest of the personnel. The non-lazy personnel deem that treatment as preferential for no reason. Rightfully so! Giving preferential treatment to a superstar employee is definitely expected but not to a sloth.
I’ve stated this saying many times in the past:
No matter what your job is, you cannot put forth too much effort. Working harder and working smarter are not exclusive. You can do both! If you don’t, you’re guilty of stealing a paycheck.
Padding an expense account is one of the most common means of employee theft. Depending on your company’s expense reimbursement procedures and policy, it can be quite easy to steal from your employer (or clients) through an expense report.
If receipts are not required for all expenses, it’s easy to add a bogus expense to your report and get paid for it. Bonus for you! Too bad that’s stealing.
We’ve probably all heard of people, or even thought of it ourselves, who have stolen from their employers in this manner. There are other easy ways if one was to get creative.
Please note that I’m not condoning these actions. Nor am I describing these so someone can steal from an employer. Instead, I hope employers will add safeguards or enhance controls to their existing processes to keep this from occurring.
Following are two other creative ways employees might commit employee theft through the expense reporting process:
1. Rewards programs – Rewards programs are great. I’m a member of several rewards programs for hotels, airlines, rental cars, restaurants, etc. It’s a nice perk as an employee if you have the opportunity to even get reimbursed.
These rewards programs can be taken advantage of though. And, when employees purchase something for the sole means of getting the rewards points, then I consider that theft.
One example is with the Hilton Honors program. Almost every room you can reserve online has two payment choices. You can get the “Easy Cancellation” package or the “2X Points” package.
The first option is the cheapest and the 2X package is just slightly more expensive (maybe 10%) but you can get double the rewards points. It can be tempting to use the 2X package to increase one’s personal rewards points.
Using the more expensive option (even if only slightly more expensive) is not in the best interest of your company or your client. It’s unethical and, to me, is considered stealing.
2. Personal expenses – Traveling for business can elicit the entire range of emotion. It can be fun, boring, exciting, uneventful and all the other adjectives you can think of. It can also be frustrating – especially if you forget some of your personal items.
For one particular business trip early in my career, the hotels in the area were all booked. Just like Mary and Joseph, there was no room at the inn. Thankfully for us, we were able to get reservations in some cabins at the lake.
That sounds great, right? It was nice to stay in a cabin and be right on the water. I had even brought my fishing gear for the evenings. The cabins, however, did not have alarm clocks, irons or ironing boards.
The cabins also didn’t have wifi. Okay, to be fair, this was in probably 2001 when hotels didn’t even have wifi. It was difficult to find a hotel that even provided internet access through LAN lines.
Likewise, the alarm clock was a big deal back in those days. Smart phones didn’t exist back then. My cell phone had one purpose – to make phone calls. It didn’t contain an alarm clock function.
Nice but not equipped for business travelers. Thankfully there was a Wal-Mart in town in which I could buy what I needed.
Many people would consider running those expenses through their expense report. I knew that I would use those items at home or also take them with me for future travel so I did not run those through.
You can even think more small-scale such as toiletries. Those items should be personal in nature and not charged to the company or client.
Travel expenses are an easy means for employee theft if the employees are not ethical to begin with. Hiring good people and instructing them in the proper manner is important.
How can someone steal from the company through events put on by or in association with his job? I’ll tell you.
I’m a member (and past president) of the local chapter of a banking organization. We put on several formal events throughout the year. Because we hold these events at country clubs and provide appetizers and drinks, there is typically a cost for each event.
It’s funny how easy you can spot a pattern if you pay attention. I’ve discovered patterns of people who register for the event but who frequently do not attend.
How is that employee theft?
Let me explain. Assume each event costs $50 to attend. There are 10 events during the year and you register for all 10 individually. That’s a total cost of $500. However, you attend only three of the events. You, in essence, stole $350 from your company.
Your company paid $350 in fees for events you didn’t attend. That’s $350 that went to waste. Of course, the organization doesn’t mind getting that money but your company could put that to better use.
Low level employees would love to receive a portion of that as a bonus. That money could be used to pay for someone else to attend an event or even buy an office lunch.
The next time you register for an event and your company pays for it, commit to attending. Sure, there are instances when something will come up and you won’t be able to attend. That should not be the norm!
If you pay for that out of your own pocket (without being able to expense it), you’d probably be more likely to attend. If you don’t attend, that’s stealing.
Don’t raise your hand to answer this question. Answer it to yourself.
Have you taken advantage of your company’s policies or procedures and committed one of the acts described above? Have you been guilty of padding an expense account? I hope not!
Have you been guilty of not putting in maximum effort? Probably so.
Hopefully the items in this article will make you really think deeply about your work ethic and what effect you have on your company’s bottom line and your moral compass.
Question for you: Have you experienced someone stealing from the company or a client? How did you handle the situation?