Small business owners are hesitant to report an employee stealing from their company as they do not want to involve the police, new research finds.
Employee theft may not be the number one concern that keeps a business owner awake at night, but it can bring about negative impacts on a company. Besides hurting the morale of employees and damaging a brand name and reputation, it can drain a significant portion of annual revenues and profits that eventually kicks a business out of the competitive race. In the wake of challenges and the ever-evolving mindset of stealing, companies cannot expect to survive for long. So, companies need to come up with loss prevention strategies and implement the proper tools and techniques to prevent employee theft and embezzlement.
Statistics Reveal a Different Picture
According to the study conducted and reports filed by the University of Cincinnati, research shows that 64% of employees steal from small businesses while only 16% of employers report the theft to the police. There is certainly no denying the fact that cheating employees are ever-ready to steal from a company whenever they get the opportunity. Small businesses are more susceptible and vulnerable to employee theft and embezzlement.
One report finds that companies with fewer than 100 employees have a higher percentage of theft and embezzlement cases. A staggering 92% of theft cases bear testimony to the fact that employees feel more inclined to steal from small companies due to their freedom to handle important business affairs like business management, bookkeeping, or accounting on their own. The University of Cincinnati research also found out why employers are reluctant to get the authorities involved and you may be surprised to know the reasons which include concerns about the criminal justice system and emotional ties.
What Makes Small Business Owners Hesitant to Report Theft?
There are reportedly four reasons why employers feel reluctant to report employee theft to the police and we will discuss those below.
No Real Victims
The nature and approach of business owners plays a significant role in determining the fate of an employee stealing from a company. Some owners are more concerned about recovering their losses than actually reporting the fraudulent activity. This category of people may even forgive their employees and give them another chance to prove their worth and loyalty or perhaps, under extreme cases to set a precedent, fire them after recovering their losses without reporting them to the authorities. Many business owners do not see victimization as a serious offense to be prosecuted officially and causing troubles beyond firing the employee stealing from the company. They believe that are many more things to worry about rather than this.
Attorney Advises Against It
The costs of prosecuting a perpetrator may be much more than what an employee actually stole from your company. Small businesses usually have scarce resources to deal with employee theft that restricts them from prosecuting a case in court. However, for large businesses and corporate level frauds, $20,000 or more, prosecuting a case is advisable. Still, the slow restitution could take ages when you recoup the stolen funds. Therefore, many attorneys advise against reporting employee theft to law enforcement, especially if the successful prosecution outweighs any likely benefits that the employer intends to attain for their time and efforts.
Since trusted and seasoned employees often have a long work history and good reputation, they tend to steal more from a company than those who just joined the work force. Because of this, business owners often forgive the convicted employee based on emotional ties and history. This is probably one of the biggest precincts faced by small business owners that prevents them from reporting a crime to the local authorities.
They See the Criminal Justice System as Ineffective
Small business owners are often reluctant to get involved with the police in complicated issues involving employee theft. Obviously, the police are going to investigate the matter and may look for evidence of theft, which may involve interaction with coworkers that will create a negative vibe in the organization. On the other hand, there are some business owners who consider criminal justice proceedings as ineffective or incompetent. Quite often, there have been reported cases of law enforcement personnel caught in taking bribes from perpetrators which poses a question on the credibility of the justice system. So, rather than getting involved in lengthy and complicated prosecution methods, small business owners bare themselves from the trial.
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