Internal Theft and Why Employees Steal

Internal theft – when employees steal from a business or organization – is a major risk to every organization. It can cause loss in many ways: product, cash, company property, information and time (reduced productivity). These losses can happen anywhere: In your stores, offices and distribution centers, and within your logistics process and IT systems from the central database to mobile devices. All of these losses contribu

internal theft

te to reduced profitability.

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When it comes to employee stealing the common denominator in all internal theft is people.

There are many reasons why employees steal. Financial problems, addiction (drugs, gambling, alcohol, etc.), job dissatisfaction, a sense of entitlement (low pay/deserve more) and peer pressure just to name a few. You can’t control “why” an employee steals but you can still reduce internal theft by controlling the “how.”

There is an old saying about theft; a percentage of people will never steal, and some will always steal. The remaining percentage may steal if the “opportunity” presents itself. This is the largest group.

I recommend that your focus be on the percentage of people who “may” steal. By deterring them, you will reduce your loss. Many of the reasons people steal are out of your control, but if you can reduce “opportunity,” there will be less of a chance for them to steal.

Culture of Honesty

Your goal should be to create a culture of honesty. This means making every employee part of the solution.

Make it personal. If employees understand how internal theft hurts them personally (fewer hours, smaller or no raises and/or bonuses), they will be less likely to steal and more likely to report those who do. If employees are watching out for internal theft (“peer policing”), those “eyes and ears” make every person on your payroll a deterrent. I assure you that potential internal thieves are keenly aware of an environment like that, and with the utilization of software such as this small business payroll solution, internal theft can become extremely hard for those that could potentially steal from your business revenue stream.

Good employees do not like working in an environment where there is internal theft. They can become frustrated when they see other employees stealing time, merchandise, property or information. It can even lead to stealing themselves because they see others getting away with it. I have been thanked many times by good employees after removing a person causing loss from their workplace. Making it personal can be a very important part of your efforts to reduce “opportunity”.


A culture of honesty must have accountability. If people are not held accountable for ensuring policies and procedures are adhered to, you will not maximize the deterrent value. You can have excellent controls but, if they are not being properly executed, they don’t do what they were designed for.

I personally believe that the number one deterrent to internal theft is effective supervision. Making use of cloudpay software can stop someone stealing via changing the payroll figures. Monitoring supplies stops people from freely stealing stationery for other uses, and so on. If employees know their supervisor is closely monitoring both the business and them, they will be less likely to steal.

I have interviewed numerous dishonest employees and when asked why they were able to steal they often mentioned their supervisors. It was very common for them to say something along the lines of “when Mary was working I didn’t steal, but when Fred or Sue was working, I did.” This clearly illustrates the value of every leader being fully engaged in monitoring their workplace and employees because employees do notice.

Action Items to Reduce Employee Stealing and Internal Theft

The best way to reduce opportunity is by building a loss prevention program that includes:

  • Zero tolerance for theft
  • Clear policies and procedures (that include loss control) which are supported by senior leadership
  • Accountability at every level – part of Employee Performance Reviews
  • An internal theft awareness program for all employees
  • Effective supervision
  • Audits – Inspect what you Expect
  • Strong investigative capability

In conclusion, a culture of honesty and accountability, coupled with effective supervision, will enable you to reduce internal theft and improve your profitability.


Mike Keenan
TAL Global Corporation
Managing Director, Retail Loss Prevention

internal theft
Mike Keenan
is a former Foreign Counter-Intelligence Specialist with the Federal Bureau of Investigation (FBI), with more than 35 years of professional experience and innovation in the Retail Loss Prevention world.

Mr. Keenan has managed Retail Loss Prevention for a wide spectrum of major retailers throughout North America, including Macy’s, Ross, Mervyn’s, Longs Drugs and GAP – each with its own unique set of challenges.
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