The Rising Threat of Employee Theft
Protecting Your Business in Challenging Times
As businesses face the ongoing pressures of a rising cost of living, a disturbing trend has emerged – an increase in employee theft. This issue is not only financially debilitating but also erodes trust and can severely damage a company’s reputation.
At Cutts and Co Accountancy, we believe it is crucial for business owners to be aware of this growing problem and to implement robust measures to prevent and manage it.
The Alarming Statistics
Recent data indicates that employee theft in England and Wales has surged by a significant margin. According to new statistics, there has been a 19 percent increase in workplace theft across the UK, largely attributed to the escalating cost of living.
In London alone, the number of employee theft incidents rose by 32 percent in the past year, with 874 incidents reported.
These numbers are part of a broader trend where almost 9000 employee thefts were reported in England and Wales from 2019 to 2020, resulting in losses of around 190 million pounds annually for UK businesses.
The Financial Impact
The financial consequences of employee theft are staggering. In 2022, reported cases of corporate employee fraud led to a total loss of 227 million pounds – a five-fold increase from the previous year. The average loss per incident was an astonishing 256,668 pounds.
These figures underscore the critical need for businesses to be vigilant and proactive in preventing such crimes.
Types of Employee Theft
Employee theft is not limited to one area. It takes many forms, each bringing its own risks and complexities.
Inventory Theft
This involves the theft of goods or products from the workplace.
Data Theft
With an increasing reliance on digital systems and data handling, this type can result in serious breaches and the loss of sensitive business information.
Cash Theft
This can include theft from tills, petty cash, or unauthorised access to financial resources.
Time Theft
Employees may misrepresent their working hours or take unauthorised breaks or absences.
Payroll Theft
This can involve manipulation of payroll systems to receive unauthorised payments.
Theft of Services
Employees might take advantage of company services for personal use, or extend such benefits to friends or family without permission.
Causes and Motivations
Understanding the underlying reasons behind employee theft is essential when crafting preventative strategies.
Job dissatisfaction plays a significant role. Reports suggest that 12 percent of retail employees admitted to stealing due to dissatisfaction with their roles.
In parallel, the increasing cost of living has created heightened stress among workers, prompting some to justify theft as a means to cope with financial pressure.
Preventing and Managing Employee Theft
Mitigating employee theft involves a range of preventative measures and cultural improvements within the workplace.
Implement Robust Internal Controls
Ensure financial processes are transparent and subject to regular audits.
Use technologies such as CCTV and inventory tracking to monitor business assets.
Limit access to cash, stock, and sensitive information to essential personnel only.
Foster a Positive Work Environment
Address job satisfaction by focusing on employee morale, offering fair compensation, and providing growth opportunities.
Cultivate open communication to encourage reporting of wrongdoing, without fear of retaliation.
Conduct Thorough Background Checks
Screen candidates thoroughly before hiring to identify potential risks.
Regularly assess employee behaviour and performance for early warning signs.
Educate and Train Employees
Provide ethics training and make sure all staff understand the consequences of workplace theft.
Reinforce the value of integrity and clarify where employees can seek help or report concerns.
Monitor and Respond Promptly
Remain alert to potential theft, as fraud often goes undetected for upwards of 14 months.
Act swiftly and fairly when theft is discovered to support company standards and deter others.
Legal and Reputational Implications
Beyond financial damage, employee theft carries serious legal and reputational consequences. Companies that do not act to prevent and respond to employee theft can suffer long-term brand damage and lose the trust of clients and partners.
In the UK, new legal measures are being developed to assist companies in addressing fraud. Having strict controls and processes in place could provide legal protection and help demonstrate that the business has taken all reasonable steps to prevent theft.
Conclusion
Employee theft is a growing threat to UK businesses. In a time when the cost of living continues to rise, many businesses are left vulnerable without effective preventative strategies.
By understanding the different types of theft, their causes, and the financial risks involved, businesses can take clear steps to safeguard themselves.
Establishing strong internal controls, building a workplace culture of trust and fairness, training employees, and responding decisively to incidents are essential elements of a successful prevention strategy.
At Cutts and Co Accountancy, we are committed to supporting businesses through these challenges. If you suspect theft within your organisation or need help setting up preventative measures, contact us today. Together, we can secure the future of your business.
