Category Archives: Theory/Research

Economic Crime Goes Up in Recession?

In the October issue of Security Management magazine, there is yet another article, “Corporate Crime in Hard Times,” that tries to tie an increase in business crime to the economic downturn despite decreases in violence and property crime over the same period.  As is the case with most of these types of articles, they rely on whether crime is occurring during the period (e.g. “35 percent of American companies said they had been the victim of at least one significant economic crime from August 2008 through July 2009”) and perceptions of executives (e.g. “..the majority of U.S. executives (53 percent), perceived that the most likely reason for their increased risk of fraud could be attributed to increased pressure during these difficult economic conditions”).

Everytime we go into an economic downturn, I know to expect calls from newspaper reporters and TV producers wanting me to say that there will be more theft from both shoplifters and employees due to increased financial need.  Of course, I refuse because there is no way that we can know whether this occurs since we don’t have measurements to this very issue.  As for theory, there are some research studies that suggest employees are less likely to participate in workplace deviance when it is harder to replace their job such as is the case when unemployment is higher.

Still, the article does make some excellent points about the importance of employee awareness programs and internal hotlines in combating internal fraud.  Also, there are quite a few references to the PriceWaterhouseCooper’s Global Economic Crime Survey.

HR and Surveillance Programs

In reading a recent issue of HR Magazine, I took note of an article on the role of the Human Resource department when it comes to video surveillance programs in the workplace.  This article addresses the employment law ramifications of a video program and the special circumstances of video surveillance in a union environment.  Some states – California, Connecticut, Delaware, and Massachusetts – have requirments to disclose workplace monitoring or risk a potential invasion of privacy action.

The article can be viewed here.  Another resource to check out is the 2007 Electronic Monitoring & Surveillance Survey conducted by the American Management Association.

ACFE Fraud Survey – Importance of Training Programs

According to the recent fraud survey conducted by Association of Certified Fraud Examiners (ACFE), the most effective fraud prevention tactics were “non-accounting controls” such as hotlines and training and support programs for both employees and managers.  The human factor also played a significant role in the discover of fraud.  The most common method of catching a fraudster is a tip-off.  In fact, tips expose fraud three times as often as do management reviews, internal audits, and account reconciliations.

For more information, click here.

Why Employees Don’t Speak Up

There is a good post over at the Harvard Business Review blog about some research conducted on why employees don’t speak up in the workplace.  This research doesn’t focus only on whistle-blowing or fraud scenarios but also on innovative ideas, concerns over marketing strategies, or witholding information that could help shape strategy for the organization.  Potential retribution, lack of personal gain from speaking up, or viewing the effort as futile were all cited as reasons for what the authors call “organizational silence.”

If your employees are unwilling to speak up on business ideas, what are the chances they will speak up when faced with a higher stakes issue such as fraud, policy violations, or harassment issues?  Our experience shows us that it is rarely sufficient to simply post a hotline number on a wall or on a business card and expect that employees will automatically call when they see an issue of theft, fraud, or harassment.  The cited research also suggests that simply having an “open door” policy or a suggestion box is not enough to encourage employees’ input.  An organization and its management must actively cultivate and seek out employee input.

Read the blog post here and let us know if we can help your organization improve its communication in both directions.

National Retail Security Survey – 2009

The final report for the 2009 National Retail Security Survey has been published.  As previewed at this year’s NRF Loss Prevention Conference, the shrink results from this report are tied at an all-time low of 1.44% of sales.  Despite the “sky is falling” mentality reflected in many articles and press releases over the past year and a half, retailers are actually seeing a decrease in shrinakge.  This mirrors what I’ve been hearing from loss prevention executives across the retail spectrum and what I predicted in our NRF panel this year the day before Dr. Hollinger released his preliminary report.

The last three years of this report reflect three lowest shrink figures in the eighteen years of this study.  Maybe it is time we start to celebrate some of the success we are seeing in our industry and take some of the credit?  What do you think?