Economic Consequences of Dishonesty in the Workplace

Employee theft is very expensive for many organizations.

Employee theft is very expensive for many organizations.

Dishonesty at work can range from minor actions such as filching pens and paper clips, to more serious issues such as falsifying a time sheet, embezzlement or corporate-wide dishonesty such as the Enron debacle. Theft alone results in an estimated annual business loss of $50 billion, according to an article at Easy Small Business HR. The article adds that 75 percent of employees have stolen from an employer at least once in their careers and that employee theft causes one-third of all bankruptcies.

Minor Theft

Although you may not have deliberately taken office supplies home, it’s easy to forget that the pen in your pocket was paid for out of the company coffers. Those minor mistakes can add up; a $2 pen once a month times 100 employees is $2,400 a year. Some employees take office supplies on purpose or use the copier for personal projects. Remember, if you don’t ask permission, it’s theft. In addition to the potential loss to your organization, you may lose your job.

Cash and Other Financial Fiddling

Employees who handle cash have the opportunity to steal with minimal risk of detection if the organization does not have a good system of checks and balances. Employees in direct sales may overcharge a customer for an item and pocket the extra. Small businesses are often more vulnerable because there may be only one employee responsible for financial transactions or bookkeeping. In 2004, small businesses suffered an average loss of $100,000 from fraud and theft, according to BusinessKnowHow.com.

White-Collar Crime

White-collar crime, of the sort that brought Enron down, includes computer and Internet fraud, tax evasion, bribery, kickbacks, public corruption and economic espionage. White-collar crime is committed by people who are considered to be respectable and who have high social status. It is estimated to cost over $300 billion each year in the United States, according to Cornell University Law School. In the case of Enron, senior company officials hid debt through a complicated series of business dealings and repeatedly lied about their activities. A Time magazine article reported the company went bankrupt in 2001 and their stock dropped from $75.09 to $.06 a share in the course of 10 months.

Embezzlement

Embezzlers, according to a January 2012 article at Inc.com, are more likely to be female and over the age of 40. However, the article says men who embezzle steal the largest amounts. Most embezzlement occurs at the hands of employees in finance and accounting departments. The thefts averaged $750,000 per firm in 2011, according to Inc.com, and many employees stole over an average of five years.

 

About the Author

Beth Greenwood is an RN and has been a writer since 2010. She specializes in medical and health topics, as well as career articles about health care professions. Greenwood holds an Associate of Science in nursing from Shasta College.

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