Organizational Structures to Deal with Employee Fraud
This survey shows how many different types of organizations deal with employee theft and fraud. It was very interesting to read how companies deal with internal fraud and theft, and how little research had actually been done into this area of employee theft. It was also quite interesting to see that the relative responses were so low from both internal auditors and corporate security -- below 40% in both cases. It would seem that more companies would have been interested in responding so they could learn more from the final results. If people are "too busy" to respond to the survey, then I wonder how they find time to deal with the ultimate problem of theft at all. I also found it pretty amazing that even a few internal auditors and security personnel did not think prevention was part of their task or responsibility or ability. This seemed short sighted at best, and pretty ignorant at the worst. It seems that some companies are not developing concrete ideas about how to handle and prevent employee theft and fraud, even though it is such an important problem, and that seems funny or odd to me. It was also pretty amazing that so many of the respondents did not have formal ways to report fraud. That seems like it would apply to smaller companies, but certainly not some of the largest corporations in America!
What this article says to me is that corporations really do not know how to deal with corporate fraud, and that because of that, they are wide open to fraud and theft. It's almost as if they are opening the doors wide and saying "come on in!" It seems there is a real lack of communication between corporate security and corporate auditors, and that they have different agendas and different ideas of what is important and what is not. Management in many companies needs to address these issues and make clear-cut guidelines that apply both to internal auditors, the legal department and security personnel, so "one hand" knows what the other hand is doing. It seems that many of these organizations are really disorganizations and disasters waiting for fraud to happen. Then they'll deal with it and clean up the mess.
This article makes the article about peer reporting even more frightening to me, because there is so much confusion about who is responsible for what in fraud investigation and detection in most organizations. If an employee does turn in another employee, who is going to investigate the charge, and who is going to make sure the charge is even correct? There is so much wrong with fraud and theft investigations in the organizations that responded to this survey that the thought of them handling important investigations is kind of scary and a bit laughable, too.
Another interesting thing that caught my eye was the fact that companies spend a lot more money investigating fraud than they do preventing it. That seems kind of backward to me. So does the fact that so many auditors do not know whether employees are terminated, prosecuted, or both, or none. If employees do not know the consequences of stealing, then what is to stop them from testing the system? As noted, some people are just predestined to steal, and these people may get a thrill out of "ripping off" their employer just to see if they can get away with it. Without any idea of what punishment they will face, it seems like the corporation is not concerned, or worse, has no clue about their day-to-day operations and policies. I think the results of this article were disturbing and unsettling, and it shows just how little corporations really think about fraud and theft.
Peer Reporting to Control Employee Theft
This paper deals with "peer reporting," which is an internal method of controlling and finding employee theft (shrinkage in business terms). The article is well written, but it is a bit technical and hard to understand sometimes, which often comes from writing in a technical or trade journal. It goes into great detail about the problem of employee theft and what employers can do about it, and is quite thought provoking. It made it quite clear that employee theft is the biggest part of company shrinkage, and it gave many ideas for employers to control employee theft efficiently, including surveillance cameras, software that monitors transactions, etc. It also went into great detail about peer reporting programs, and that is where this article made me uncomfortable. It seems there is something creepy about employees being encouraged to turn in other employees for theft, and it seems that there are many ways this peer reporting system could be abused and add stress to the workplace.
I understand that employee theft is costly and damaging, but creating and workplace where the "incentives" and "environment" support what amounts to employees tattling on each other seems like a very sick and dysfunctional workplace to me, and I would not want to work there. The attitude seems to be that no one is honest or trustworthy, and that simply is not the case. I understand that the wrongs of a few can ruin it for the majority, but this just seems like a bad way of dealing with the problem.
For example, in a company that encourages employees to watch each other or "spy" on each other could encourage a very negative attitude in the employees, where no one trusted each other, and people who did not like each other might report each other to be vindictive, rather than solving a theft problem. I think if implemented incorrectly, employees could really abuse this type of system and that it might cause more problems than it solves. An anonymous hotline might even add to this problem, because a vindictive employee could report an "enemy" anonymously and supposedly never get caught.
I do agree with the idea that many employees steal because they feel they are under paid and the employer "owes" it to them or that they may feel insecure in their jobs and they may feel justified in stealing. I understand why employers would want to know about this, and that other employees might be the only way they can find out about this type of theft. It still makes me feel uneasy and uncomfortable. I have worked in retail stores that used private "shoppers" to uncover theft, and most of what they uncovered was theft from outsiders. I know that inside theft must have occurred too, but I never saw it myself. I did not feel uncomfortable when the "undercover shopper" was in the store, and I saw a need for her to be there. However, if my manager had asked me to spy on people or turn someone in, I'm not sure I could have done it, unless I disliked the person, and that is my point about this type of monitoring going too far. I just think there are other ways to manage the problem of employee theft rather than turning employees against each other.
Fiddling in Hotel Bars: Types, Patterns, Motivations and Prevention
At first, this article was confusing to me because of the term "fiddling," which meant absolutely nothing to me but playing music on a fiddle. I finally figured out that fiddling in England must be like "filching" or stealing here, and when I read the definition I knew I was right. Then I began to understand the problem and what food & beverage establishments are trying to do to handle the problem. It's not hard to see why it exists. It seems like stealing food or drink would be one of the easiest thefts to accomplish, because the evidence is gone afterwards, and an employee might not see taking an occasional sip or taste as stealing at all. However, that's not what this article is discussing, because the problem is much bigger than an occasional sip or taste.
It also seems that this environment would encourage stealing because traditionally food & beverage and hotel staffs are paid very low, and so, they will steal because they feel they are "owed" additional compensation for their time. It was also interesting that the article said that fiddling is "part of the culture" of this kind of environment.
I think part of the most amazing or disturbing part of this article was the fact that employees (and some employers) go to such lengths to think up ways to steal from the company or the customer. Some of these fiddles are pretty elaborate and quite clever, and it is frightening to think that people spend so much time developing them and carrying them out. It was also amazing that some management condoned the cheating. If attitudes like this are prevalent in management, then how are employees ever going to be kept honest and aboveboard? If the other articles made me think and ponder the problem,…