How to reduce employee theft without nagging: 4 tips from behavioral economics

image by Nisha A

Employee theft is extremely common. I would hazard that even the best of us has stolen something from an employer. Most people do not view taking a few pens or printing personal material as a big deal. In fact, some people view it as an unpaid benefit of the job.

But all this pilfering adds up. Employee theft is estimated to cost businesses $50 billion annually. In retail, theft is especially troublesome as goods valued at more than $30 billion is lost to dishonest employees. The attention paid to shoplifters makes us forget theft is typically an inside job: for every $1 stolen by shoplifters, $11 is lost to employee theft. (Statistics from Preventing employee theft: a behavioral approach)

What’s the answer?

If you are an owner, it can be extremely frustrating to deal with dishonest employees. Directness may be right, but it can often fail. If you tell them to stop using the postage meter, or send an email urging them not to steal, you are quickly going to lose goodwill. Fair or not, employees are likely to resent you for scolding them over a few dollars of supplies, and you will lose goodwill among people who have given hours of unpaid overtime and sacrificed for the company.

The solution to theft lies, therefore, in a middle ground. You want to make sure employees don’t steal, but you want to be subtle about it. Behavioral economics is an exciting field that combines psychology and economic reasoning to bring about precisely this kind of change.

In fact, there are several case studies of employers reducing theft in creative ways. Here are four examples that can help you reduce theft without having to look like a bad guy.

(Editorial note: this is the first time I’ve split up this post into multiple pages, so sorry if there are any issues, I’m still learning the ropes.)

Go to Tip 1: Kill the thrill