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Employee Theft Can Be curtailed by Careful Hiring Screening

According to the U.S. Chamber of Commerce, about 75% of all employees steal from work in some way. What’s worse is that about 30% of all corporate bankruptcies are a direct result of employee theft. The National Retail Security Survey in 2009 said retailers suffer a whopping $15.9 billion in losses each year just from  employee theft.

With the problem so widespread, many companies simply factor those losses into their yearly projections and then hope it’s not worse by year’s end. But Denis Collins, author of Essentials of Business Ethics (, believes there is a better alternative - simply hire better.

“Although it may seem complex, one hedge against employee theft and fraud is to redesign the hiring process to help screen for employees who suffer from ‘selective integrity,’ ” said Collins, a former business manager and tenured college professor who holds a Ph.D. in business environment and public policy. “After an employer fires someone for theft, the natural question they ask is, ‘How’d we even hire that guy?’ Well, by changing your hiring practices, you can screen out people who are more likely to steal, and reduce the number of times you ever have to ask yourself that question again.”

Collins’ tips for managers who screen new job candidates include:

  • Obey Legal Ground Rules - While antidiscrimination laws forbid managers to ask many questions, many other questions are still permissible.
  • Use Ethics-Based Interview Questions - Too many interviewers gloss over questions that test an individual’s character. Ask the candidate how he or she responded at a previous job to someone's stealing, engaging in sexual harassment, or cutting corners at the cost of high ethical standards. Ask them whether a superior ever requested that they do something unethical and, if so, how they reacted. Even those who are dishonest with their answers can reveal how they feel about ethics in general.
  • Review Behavioral Information - Behavioral information can be gathered about job candidates through resumes, reference checks, background checks and some basic integrity tests that quiz candidates through “what would you do” style situations. Three standard integrity tests come from the Reid Report, the Stanton Survey and the Personnel Selection Inventory (PSI), which are easily found with a Google search if one doesn’t already have access to them.
  • Test Personality Traits - The traits that govern whether an employee is more or less inclined to be dishonest include conscientiousness, organizational-citizenship behavior and social dominance. For the first two, managers want to see high scores - not so much on the last one. Again, personality tests are widely available to test these traits.
  • Other Tests - Some of the most revealing tests are the obvious ones - alcohol tests, drug tests and even polygraph tests, when permitted by law. Many candidates may object to these as employment requirements, but in a world in which 7% of our entire economy goes up in smoke from employee theft and fraud, companies shouldn't feel shy about drawing a line in the sand. While those who refuse to take those tests may not have anything to hide, it’s clear that those who agree to those tests have nothing to hide.

“Fraud and malfeasance at the highest levels of some of the country’s largest companies contributed to the 2008 to 2010 recession, and have been a willing assistant in keeping our economy down,” Collins added. “It would be interesting if we could have turned the clocks back and run those executives through an ethics-oriented hiring process, and perhaps eliminated some of the fraud and theft that helped level our economy. Short of that, all we can do is pave the way for a better future by taking some very basic steps to help weed out the unethical and dishonest from our nation’s talent pool.”

Dr. Denis Collins is professor of business at Edgewood College in Madison, Wisc. Prof. Collins currently serves on the Editorial Board of Encyclopedia of Business Ethics and Society, Journal of Business Ethics and Journal of Academic Ethics. He has served on the Board of Governance for the Social Issues in Management Division of the Academy of Management and the International Association for Business and Society.


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