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CCH® HR MANAGEMENT - 12/29/08

Employee theft rising, companies say

The current economic downturn has led to an upturn in workplace theft, especially in large organizations, according to a recent study by the Institute for Corporate Productivity (i4cp), a network of corporations focused on improving workforce productivity. The study, released on December 11, found that 27 percent of respondents in large companies—those with 10,000 or more employees—said crime in the workplace has risen during the current economic crisis, while 15 percent of all respondents, regardless of company size, reported the same.

From an internal perspective, of those companies that feel today's economic situation has led to an increase in theft, almost a quarter (24 percent) of all respondents, and 31 percent of companies with 10,000 or more workers, said they've noticed an increase in the theft of company-owned items such as office supplies, products they produce, electronic equipment and food items since the economic downturn.

Undoubtedly the more troubling type of internal theft, however, is employee-related monetary theft (such as the padding of expense reports, the disappearance of cash and other financially related crimes), which was reported as increasing during the downturn by 18 percent of overall respondents and by 22 percent of large companies. More subtle "time theft" issues, such as employees using company property for personal use and "Web surfing" of non-company-related Web sites, was cited as being a growing problem by 24 percent of all companies in the down economy, but just 13 percent of large organizations consider it a problem.

From an external perspective, in theft issues involving people who don't work at the company, the picture is much the same. A quarter of all respondents and 30 percent of large companies reported a rise in white-collar crimes committed by outsiders, with areas such as theft of identify or breaches of secure employee data cited. In addition, 28 percent of all companies and 32 percent of large organizations reported an increase in physical external criminal activity (such as job-site robberies and break-ins) since the economic decline began.

"As economic pressures mount on employees, it's not surprising that illegal and unethical activities such as workplace theft increase," said Jay Jamrog, i4cp's senior vice president of research. "What's important for employers to recognize is that this increase is likely, and while much of their attention is probably focused externally on threats to growth in their market, they better also be cognizant that business threats can originate from the inside as well."

To address criminal activities as a result of the state of the economy, 28 percent of all companies and 38 percent % of large organizations point to increased communication with employees regarding the issue. Twenty percent are conducting additional audits (25 percent in large companies), and 19 percent of companies overall are paying more attention to background checks prior to the hiring of new employees.

The Workplace Theft Pulse survey was conducted by i4cp, in conjunction with HR.com, in November 2008. The total number of respondents was 392. scheduled to take effect pursuant to the Pension Protection Act of 2006.

Labor and employment attorneys, poignantly, reported being busier than ever. It's an unfortunate correlation: When the economy suffers a downturn and workforce reductions surge, both plaintiff lawyers and counsel for management find that business is brisk. "This is a recession-proof practice," noted one practitioner. "But we don't relish an uptick in business that comes as the result of people being laid off."

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