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Criminal versus Control

Posted on 4/8/15 1:37 PM

bigstock-bad-man-smelling-money-46607497In a market where brand recognition, market share and high competition have most businesses working overtime to reduce cost, there is little room for the losses caused by internal theft. Industry reports suggest that as much as 43% of all losses are caused by dishonest employees, totaling $16 billion annually in revenue loss.

Obviously with so much at stake, an honest employee is a key element to business health - but is there a magic bullet? How can we tell if an employee is likely to engage in dishonest behavior?

Why Employees Steal: Criminal Theories

The prevailing explanation of crime is known as the Cultural Deviance Theory, which is a sociological study of deviant behavior, the recognized violation of cultural norms and the creation and enforcement of those norms. Unfortunately, this theory of criminality doesn't always apply in retail environments, and even our own experience with employee theft tells us that this classic model of crime and criminal behavior does not fit neatly into the categories describes by the Deviance Theory.

In fact, this explanation creates more questions than answers. Of course all theft is criminal, but there is an inherent difference between someone who commits armed robbery and someone who simply steals merchandise. If, as the theory suggests, crime is the result of 'cultural forces,' then stores in crime-ridden neighborhoods should have higher losses than those in more affluent. And, if crime is the result of 'strain' to achieve material goods, theoretically, lower paid employees should steal more than those that are paid higher wages.

So why are we continually surprised by an otherwise 'nice' employee's involvement in theft? It's obvious that the Cultural Deviance Theory does not fully answer all of the questions posed in the retail environment. Even if we accept the contention that "criminals commit crimes," it does nothing to help us explain the nature of the small number of employees that actually steal, nor how to identify the differences between the honest and dishonest employee.

To compensate for these shortcomings, many theorists have placed white collar and retail crime into a separate category model; however, even this model identifies the catalyst for behavior as the socialization of the individual and unknown personal motives.


Criminal Versus Control

A new theory has been posed that may offer more insight into the trend of employee theft in retail environments. In Gottfredson's and Hirschi's "General Theory of Crime," (1990), it is suggested that the one factor common to all types of crime and deviant behavior are as a result of low self-control. It is argued that when the components of crime are carefully reviewed, we observe that it is a lack of control by the individual that results in engagement, regardless of any social or economic factors.

If their model is valid, then it should be fairly easy to not only explain retail theft in terms of low self-control, but also to design an environment that minimizes the opportunity for those losses to occur.

  • The authors explain that all types of crime have the same universal characteristics:
  • It provides immediate gratification
  • It is easy and simple
  • It provides excitement
  • There are no long-term benefits
  • It requires little skill and planning
  • It results in pain and discomfort for the victim

These characteristics appear appropriate to retail crime. For example, we know that the majority of employee dishonesty falls into the category of merchandise theft; i.e. pass-offs, merchandise in personal bags, or brought out with the trash. This is a relatively easy-to-commit crime that does not require much skill or planning. Even in cases of refund and credit card fraud, it is rare that we see any elaborate or new method of operation. Additionally, when one compares the long-term benefits of stealing to those of continued employment, it is clear that employee theft is not a successful endeavor - they are never going to get rich or retire from their activity.

So how does low self-control fit into our environment? As explained by Gottfredson and Hirschi, like criminal acts, there are universal characteristics of a person with low self-control, including:

  • No concern over the rights and privileges of others if they interfere with the individual's personal satisfaction
  • Impulsive behavior
  • Inability to form deep and persistent attachments
  • Poor judgment and planning in attaining goals
  • Apparent lack of anxiety or distress over social (group) maladjustment
  • Tendency to project blame onto others
  • Inability to take responsibility for failures
  • Lack of dependability
  • Tendency to create drama over trivial matters

A careful review of these characteristics provides greater understanding into retail crime behaviors. First, it makes sense, according to the "low self-control" theory, that the majority of employees would be honest. In order to maintain a job an employee needs to have a fairly stable level of self-control. They need to show up for work, do their job and perform to the company's acceptable level of standards.

Secondly, in our own experience, we have seen that some of the stores with the lowest amount of loss and smallest number of employee theft cases are in fact located in the highest-risk locations.

This concurs with the theories' contention that the characteristics involved in criminal and deviant behavior are not founded in social causes, but rather individual levels of control. Additionally, almost all associates are exposed to the same level of opportunity to steal, so it seems reasonable to conclude that the decision to steal is based on internal factor, rather than external.


Employee Theft: Deterrence and Prevention

Obviously if we accept this theory, then opportunity still plays a key role in theft. As we have established that employee theft is relatively an easy method that requires little skill or planning, we need to ensure that the level of difficulty for success is high.

The best way to accomplish this is through consistent presence in all of your stores, as well as targeted training and awareness programs. Consistency in presence can be executed through several venues, such as monthly audits, store security visits, even a mystery shopping program, all of which communicate to associates at all levels that operations are being monitored continuously, thereby reducing the opportunity available to steal.

Training and awareness also plays a key function in the reduction of opportunity for theft. Communicating your policies on operations and suspected/confirmed cases of theft, whether through training meetings, printed materials in all stores, and so on, acts as an effective deterrent for most associates with low self-control.

More importantly, this model dictates that the best prevention and deterrence in employee theft starts with hiring the right employees. It may be appropriate to consider an applicants' previous demonstration of self-control to ensure a good fit into your business culture.

Through the application and interview process, we can look for clues to levels of commitment and dependency (multiple job changes, corrective actions for being late, etc.,) and ask questions that better determine their level of impulsive behavior, ability to accept responsibility and sense of drama.

Our experience already tells us that most dishonest employees are neither hardened nor career criminals. We also realize that the vast majority of our employees are honest and hardworking. However, by understanding the theory of 'low self-control' in relation to your associates, as well as applying deterrence measures in your policies and procedures, employee theft can be effectively reduced throughout your organization.



Theft statistics  from the National Retail Security Survey (Dr. Hollinger, University of Florida)- Dr. Hollinger's survey finds that 90% of employees have never stolen from their employer.


nterested in learning more about Sustaining A Profit Improving Loss Prevention Program? Click here to download this free eBook. 



Topics: loss prevention, Audits and Investigations, Calculating Shrink

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