Organizational responses to employee theft and fraud

Security

Employee Dishonesty

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.

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, this one was the scariest of all, because it is so easy to see how simple it is to steal in these establishments, and how many people actually encourage it.

It was also interesting to note that most employers in bars, restaurants, and other F & B. environments think that electronics will solve the problem but find they do not. It is just too easy for the staff to steal from places like these, and some managers accept that. Proving the case is even more difficult, too. So, these seem like the perfect jobs for dishonest people, because unless they go overboard, they may never get caught. In fact, they may rise through the organization and gain trust with their employers. I have to say that this article has made it clear this is one kind of industry I would never like to manage or own.

The most disturbing part of all of these articles combined is what they imply for consumers like you and me. Ultimately, we are the ones to pay for company shrinkage. It comes in higher prices for goods and services. We pay the price and many corporations in America and abroad do not seem very concerned about the problem or the additional costs. This is just another problem in corporate America that has to be addressed, but it certainly is a problem that will not go away anytime soon..