Small Business Employee Theft and its Rippling Effect

Even though the flexibility of small businesses has often been viewed as one of their positive attributes, the important issue of employee theft is related to some degree and can be considered a major downside. Recent statistics indicate that small theft by employees is only reported to the police at a rate of 16 percent. Employers have been known to restrain themselves from reporting small business theft for a number of reasons including worries regarding the criminal justice system and emotional distress.

It also seems that employers may not see employee small theft as that big a deal. There is a common perception that few people harmed very much when this occurs, or at least not harmed enough that a business owner cannot handle the issue on their own. It probably doesn’t help that many attorneys don’t think business owners should report it to the police. Why? They may think the criminal justice system lacks in suitable solutions or isn’t up to the task in preventing theft. Many lawyers suggest that the employer may never get back their stolen money or property. It may be more efficient and cost effective to simply fire the employee, rather than take the issue to court.

Impact on National Economy

This lack of communication between small businesses and authorities could mean something bigger, other than a huge inconvenience and monetary loss for a business owner. Theft poses a direct threat to the overall U.S. economy—especially since small businesses as a whole are major players—97 percent of businesses in the United States are small (90 percent with 100 or fewer employees). There is no doubt that something which affects that large a segment of the economy would ultimately impact all of it very much. Perhaps the primary concern is the loss to the overall tax base when small business employee theft happens at this scale.

Impact on Employees and Business

The majority of theft occurs over time by one person who keeps stealing undetected. Often theft is only discovered by chance, perhaps by a worker filling in for the absent employee thief. The substitute may notice something odd and begin asking questions. This kind of discovery usually occurs after a great loss to an owner may have already occurred.

Generally speaking, money is the most commonly stolen entity, followed by merchandise and other miscellaneous items such as tools and equipment. The employees most likely to steal are first line workers—those without supervising responsibilities—and perhaps employees under less scrutiny. Employee theft at small businesses often goes unnoticed thanks to the flexibility these entities offer, which is said to have a massive impact on the American economy. Companies of all sizes would be wise to step up their security regardless of whether they have experienced theft first hand.