In 2015 there were 24,965 cases of stock theft reported. That’s up 1.8% from 2014. Despite assurances from the ministerial choir that a downgrade and recession are off the table, we know times can get tough easily. And when times get tough, well, fingers get a little longer.
‘Shrinkage’ is the official name given to the expected reduction in earnings due to wastage or theft. The fact that it is an established term should communicate its prevalence; it doesn’t just happen to you – it happens on a global scale, and costs the global economy billions every year.
Now we know we’ve been focusing almost exclusively on the tried and tested ways of ensuring you employ the most honest job seekers with background screening and pre-employment polygraph testing, and then keeping them honest with periodic polygraph testing.
But could there be other ways to achieve the same result, and build a positive company culture at the same time?
We’ve gone digging to come up with an effective strategy that you can use right now to reduce the potential for workplace theft in your business.
Share Business Profits
Profit sharing is among my favourite methods of combating workplace theft because it’s so straightforward, and because it has more benefits than merely curbing stock losses.
But let’s put it into context:
One study revealed that roughly 79% of US employees steal from their employers. Of the more than 500 employees surveyed, it was found that 21% were basically honest to the core, 13% are more than likely to attempt theft, and the remaining 66% were likely to try their hand at theft after seeing co-workers getting away with it.
- Likely honest
- Likely dishonest
(Of course, these figures are for US-based employees, but similar figures were echoed in other Western countries, making it possible to get an idea of what might be happening locally – because local stats can be ridiculously hard to get hold of).
With profit sharing you allow your staff to take responsibility for their own success. When they’re aware that stock losses affect what they earn, you’ll find that the 66%ers are less inclined to follow the example of the 13%ers, and more willing to side with the 21%ers.
Those 66%ers are also more likely to keep dishonest employees in check by discouraging bad behaviour, or by reporting it. After all, allowing a colleague to get away with theft is allowing them to steal a bit of the pay check. And that’s money that could have been put to good use.
Profit sharing also brings the added benefit of increased productivity and everybody pitching in to do more than what’s on their job description. Everybody knows somebody – and there’s somebody out there who could use what you’re offering.
Now profit sharing doesn’t mean you have to commit to huge payouts every month. A quarterly bonus can do the trick, especially if you don’t have a profit sharing system in place yet.
Teach Financial Responsibility
But the reality is that the financial troubles of many employees stretch far beyond what a quarterly bonus check can remedy.
If staff can’t manage their money, it’s likely that they’ll find other ways to make up for the shortfall. Debt leads to more debt until these debts can’t be paid. The money they need to survive and to continue earning a salary (yes, it costs money to earn a salary) has to come from somewhere. Sometimes that ‘somewhere’ is business stock.
Now let’s be clear. Being unable to manage your money matters effectively isn’t a disease or an indicator for a low intelligence. More often than not its simply how an individual was brought up. Maybe there was never enough money growing up which means they don’t know how to cope with what they’re getting, or they received bad examples from parents or peers.
Which is why, for your benefit and theirs, it’s important that they are taught:
- how to manage their money
- how to use the little they have and grow it into additional income streams
- how to invest in their own futures
Again, there’s more than just one benefit here: you’re giving them value far beyond the monetary. You’re teaching them a skill to ensure their own future security and prosperity. The irony is that this is something that all the money in the world can’t buy – just look at how long many lotto winners manage to hold onto the millions they’ve won. Not very long.
So, does this mean you should discard background screening and polygraph testing in favour of these value-based approaches? Of course not. There will always be a bad egg in the batch. There will always be someone who can be swayed to do the wrong thing. These screening methods can help you catch them before they’re employed, or even after they managed to slip through the net.
But by creating value among your employees, you’ll find that their loyalty will come naturally, and that they’ll go out of the way to create an environment where illegal activities such as stock theft is reduced to a minimum – an environment where everyone can prosper.