Effects and causes of employee theft

 Employee theft.

Strange as it may seem, a growing number of employees do not think they are stealing when they walk off with company merchandise.

They think of themselves as honest people who would never dream of burglarizing a store or a home.

They would not countenance shoplifting.

Yet they think nothing of carrying home from their place of work manufactured products without paying for them.

But is there any real difference between taking merchandise or money that belongs to a corporation and burglarizing a private home, perhaps a home of a company executive?

This stealing is done, not by professional criminals, but by common people who, to all outward appearances, are honest, upright pillars of their communities.

What are some of the effects of this vice?

Crippling effects of employee theft

As a life-destroying disease works unseen within a human body, sapping vital energies until the body dies, so do dishonest employees sap the vital strength of the business that provides them their live hood.

They cripple its ability to operate at a profit, and this leads to its destruction.

In highly competitive businesses many companies operate on a very low margin of profit.

Thieving employees do not have to steal much to reduce that margin to the vanishing point.

For example, a company with a profit ratio of 2.5 percent must sell merchandise worth $4,000 to cover the loss of $100 in stolen goods.

When the loss to employee theft runs into the thousands of dollars, the results can be disastrous to the company.

This was the case with a company that manufactured television sets and radios.

In a period of six months thieving employees made off with 100,000 radio  and about 700 complete television sets.

When the thieves were apprehended approximately $100,000 worth of merchandise was recovered.

But the company was hurt badly by this employee dishonesty, and it gradually died.

The dishonesty of those employees not only put it out of business but put them out of employment.

Estimates have been made that employee dishonesty causes from 3 to 7 percent of all business failures.

The figure is much higher for mercantile failures.

In a recent 10-year period, it was estimated that one-third of such failures were due to stealing by employees.

By stealing, the employee harms himself as a consumer as well as an employee.

To compensate for their losses, companies must charge the consumer higher prices.

Reduced profits because of the thefts mean decreased earnings for the worker, perhaps even unemployment.

When theft is eliminated by the management of a company, the consequent rise in profits can mean an economically stronger company, a raise in pay for the workers and better worker morale.

What is Stolen?

There is little that dishonest employees will not take from their employers.

Companies that manufacture electronic parts, cosmetics, drugs and other small items are particularly vulnerable to employee theft.

Even size does not stop the thieves.

A department store employee managed to steal twenty-eight refrigerators, fourteen gas ranges and other bulky kitchen hardware.

A machinery plant was relieved of $16,000 worth of pipe, brass, copper and steel by trusted employees who sold the metal to scrap dealers.

The manager of the carpet department of a large store stole carpets from the store and sold them to the store’s customers at a reduced rate.

Tin plate packed in large wooden boxes was stolen by the employees of another large company.

The corporation calculated that its losses totaled about $250,000.

Over a 14-month period in a meat- packing plant employees stole $30,000 worth of meat.

So it goes in industry after industry and store after store.

 In most instances, small merchandise is carried away secreted in lunch pails, hand bags and clothing of employees.

Or it is thrown into bushes near windows and picked up later.

When large items are stolen, several employees in different departments usually work together. It is estimated that 50 percent of employee crimes involve collisions.

Why employees steal?

Most thieving employees rationalize their actions, so they do not regard themselves as criminals.

When an employee first embezzles money from his employer, he may tell himself that he is not stealing but only borrowing the money.

In due time, he tells himself, he will repay the money.

Usually the money is never repaid.

In one case a bank teller “borrowed money” from the bank to gamble in the hope of getting what he felt he needed to meet his living expenses.

Gambling losses soon had him owing the bank $30,000.

He became frightened and fled, but was soon arrested.

Yes, gambling and extravagant living standards appear to be principal factors contributing to employee dishonesty.

Some companies blame gambling for 75 percent of their losses from employee dishonesty.

An otherwise honest employee is pushed by gambling debts to the point where he feels forced to steal.

Another common rationalization by thieving employees is that the firm “owes it to me.”

An employee might feel that he is worth more than he is being paid, so he salves his conscience by telling himself that what he steals is due him.

Still other employees rationalize by saying, “Everybody else is doing it.”

So they think it is all right for them to steal from the company.

This is certain to be their thinking when they see their superior helping himself to company property.

Some dishonest employees rationalize that taking office supplies, merchandise and equipment from a company is all right because the company is rich and can afford to stand the loss.

Usually the thieving employee lives in constant fear of being exposed.

For this reason he manifests exceptional diligence in his work.

Very often he is the first employee to be at work in the morning and the last to leave in the evening.

He might even eat his lunch at his desk.

If he has manipulated financial or inventory records, he is fearful that someone might examine them too closely when he is not present.


The chief reason for this theft is actually a moral one.

No matter how rich an employer might be, it is morally wrong for an employee to take what does not belong to him.

He violates the trust that is put in him.

The spread of his attitude among the working people of a nation can degenerate the morals of the nation, producing social disorganization.

It acts like a destructive disease.

The spread of employee dishonesty reveals a degeneration of public thinking and morality.

It reveals that a great number of people who profess to live by high religious standards of morality do not do so in actual fact. 

The effect of this dishonesty is entirely bad.

It lowers employee morale; it creates distrust; it weakens a company’s position in its struggle for economic existence.

The economic health of a company and the continuance of employment for its workers depend in large measure upon the moral integrity of its employees.

So much has to done to stem out this vice.