2012 Retail Survey Confirms One in Forty Employees Steal from Their Employer
One (1) in every forty (40) employees was apprehended for retail theft from their employer in 2012.
This alarming statistic is based on a survey conducted by Jack L. Hayes International, a leading loss prevention and inventory shrinkage control consulting firm. This is the 25th year for the annual retail theft survey which included 23 major retailers employing over 2.8 million employees with $596 billion in total sales. Of the retailers surveyed, over 1.1 million shoplifters and dishonest employees were apprehended and $189 million in total losses were recovered.
The Focus on Employee Theft
The survey continues to highlight the overwhelming impact that employee theft has on the retail industry. Dishonest employees steal 5.5 times more than shoplifters with an average theft value of $715.24 per case where the average theft by a shoplifter is only $129.12.
Employee apprehensions included 71,095 dishonest employees based on the 2012 survey which is up 5.5% from 2011. You can access the complete survey results from the link provided.
The survey asked the question “Why does employee theft continue to be a problem in the retail industry?” Based on responses to the survey and the experts at Jack Hayes International, the increase in employee theft seems to stem from the following areas:
Ineffective Pre Employment Screening
The first step to controlling internal theft starts at the point-of-hire; do not hire the “bad apple”. Some retailers, in an effort to reduce their costs, have lowered their pre employment screening requirements and are now hiring more ‘questionable’ employees. Anytime statistics show one out of every 40 employees is actually caught stealing by their employer, there has to be some type of breakdown in the pre employment screening process.
Less Employee Supervision
With lower management levels, there is less supervision of employee activities, which results in more opportunities to commit theft.
Ease in Selling Stolen Merchandise
Merchandise stolen by employees can be more quickly and easily sold, and for a much higher price, using internet auction sites. This easy access to a much larger audience for stolen goods has resulted in more theft by those dishonest employees looking for quick cash.
Decline in Honesty
The almost-daily incidents of business, government, law enforcement, celebrities, sports figures and church leaders being involved in questionable activities make it easier for "borderline" employees to steal and to rationalize their actions. In addition, the part-time workforce is growing, and it is not uncommon to find that many such workers have less loyalty to their employer, and are more apt to take advantage of opportune circumstances.
I’ve had the privilege of working in the background screening industry for over twenty two years and I’ve seen the impact of cutting costs on comprehensive background checks and the impact of limiting due diligence. Comprehensive background checks can deter employee theft, decrease workplace safety risks, increase corporate security, protect the overall brand, and even increase employee morale. Shortcuts in the background screening process, cuts in mid-level management supervision, eroding employee loyalty, and increased access to online resources to sell stolen goods, will continue to be strong contributors to retail shrinkage for years to come.
Background Checks Bring ROI to Retailers
The survey confirms that employees steal merchandise with an average value that is 5.5 times greater than shoplifters. Yearly survey results confirm this staggering statistic and this year’s numbers are at an all time high with the average employee theft value now over $715 per case. A comprehensive pre-employment background check can be conducted at a fraction of that cost. Cutting retail background check budgets will only multiply the negative impact on retailers and retail shrinkage.
Here are a few tips for U.S. retailers when conducting comprehensive background checks:
- Properly identify your subject up-front to be sure you have the right candidate when conducting a background check. Background screening professionals use electronic database information that helps them connect the dots when identifying aliases and other names that may not be disclosed by the subject. This is especially true for criminals trying to hide identity and prior criminal activity;
- Conduct a criminal background check where the subject has lived and worked using all disclosed and developed names and addresses for an extensive period of time (typically 7 years, if not more);
- Search criminal court records within county, state and federal courts using information as described above. Utilize national electronic criminal history information to help fill-in the gaps and conduct a criminal search with a national and international scope;
- Search numerous government agency lists to be sure that your candidate is not currently being pursued by law enforcement agencies or may have an outstanding warrant for arrest;
- Verify prior employment credentials to help identify any prior activity of theft, fraud or performance related issues.
- Conduct employee drug testing to ensure that your employees don't add to additional security and safety risks.
- Incorporate on-going and periodic screening to detect changes in employee criminal conduct and financial status that could aid in potential theft.
Employment Background Investigations Inc., (EBI) provides some of the most prominent world retails with background screening and drug testing solutions that add value and ROI to their businesses. Excellence in screening is about delivering all of the key services retailers expect at the highest possible level. EBI’s “Just One” philosophy of solutions is a combination of experience, innovation, efficiency, scalability, integrity, security, compliance and speed of delivery, which is delivered through our industry leading global background screening platform J-One.
EBI is a technology driven innovator and leader in providing domestic and global pre employment screening, drug testing, occupational healthcare, and I-9 compliance solutions. With emphasis on business process optimization, EBI services over 5,000 clients in over 200 countries and territories worldwide and specializes in the development, implementation and management of comprehensive and customized employment screening programs for large and multi-national clients. EBI is a founding member and active participant within the National Association of Professional Background Screeners (NAPBS). EBI is the only background screening firm to hold an ISO27001:2005 certification for information security and to be accredited by the Background Screening Credentialing Council (BSCC) created by the NAPBS.
EBI is committed to providing employers with valuable education and resources to help combat employee theft and fraud. EBI is not providing legal advice or counsel and nothing provided in this publication should be deemed as legal guidance or advice. Readers should consult with their own legal counsel to determine their responsibilities or if they have questions on any information provided by EBI.