This article is part of a larger series on How to Do Payroll.
No matter how much time and money you spend strengthening your company culture and investing in your people, your business may still be affected by employee theft—of money, of confidential data, of time. Understanding this issue is key to combating or even preventing it.
Use the employee theft statistics and trends discussed below to learn where your business may be at risk, how much employee theft could cost your business, and, most important, what you can do to lessen its impact.
General Employee Theft Statistics
1. 57% of fraud cases are employee-related
Fraud that involves an employee (whether working on their own or with an external party) represents over half of the fraud cases an organization experiences, according to a 2020 PwC report. Middle management are slightly more likely to be involved due to their knowledge of internal systems and controls combined with their relationships with a vast array of employees.
2. Fewer than 30% of organizations strongly agree they’ve implemented or upgraded technology to detect fraud
A variety of challenges stand in the way of organizations adopting the proper technology to combat fraud. These include financial costs, human resources, and lack of technological expertise.
3. 22% of small business owners have had employees steal from them
In an anonymous survey of 700 small business owners, 22% claimed that employees have stolen from them. Money, time, and electronics are some of the most stolen items.
4. Almost half of reported frauds happen within four departments
Most employee theft tends to happen in departments that have access to financial-related information like invoices, payroll, financial statements, and sales forecasts. Operations accounts for 15% of cases, followed by Accounting (12%), Sales (11%), and Executive/Upper Management (11%).
5. An employee theft incident costs retailers 3x as much as a shoplifting incident
According to the 2021 National Retail Security Survey from the National Retail Federation, the average loss per employee theft incident for retailers is more than $1,500 compared to $460 per shoplifting incident. Half of the survey respondents reported an average dollar loss of at least $1,000 per employee theft case.
6. 88% of employee theft cases include attempts to hide the fraud
Since employees are more likely to commit theft when they believe they can hide their misdeeds, securing your documents and having a separation of duties can go a long way in theft detection and theft deterrence
Risk-specific Statistics on Employee Theft
Listed below are some statistics that may help you uncover which theft your company is more likely to be more susceptible.
For more information on the different types of employee theft and ways to prevent it, please view our article on employee theft.
7. Billing and noncash fraud represent 38% of employee theft cases
Billing theft can include an employee inflating invoice prices to customers, submitting an invoice for non-work items, or completing false invoices. Noncash theft can include inventory theft like merchandise or data theft like passwords and user identification. These two items represented the two largest risk categories in the Association of Certified Fraud Examiners’ Report to the Nations study.
8. Small businesses are more likely to deal with check and payment tampering and skimming than other businesses
Small businesses are more susceptible to employee theft than larger businesses in two areas: check and payment tampering and skimming. This can be a result of one employee performing multiple roles with no oversight, lack of internal controls, or a high level of employee trust within the organization.
9. Over 70% of data breaches include an employee abusing their data privileges
According to a recent Data Breach Investigation report by Verizon, most employees who steal employer data are doing so for financial gain. They are also most likely to steal personal data over all other types of data types.
10. 40% of internal data breaches take years to uncover vs just 10% of data breaches in general
Data breaches that involve an insider (i.e., an employee, business partner, or subcontractor) take much longer to discover and get to the root cause than phishing exhibitions done by outside parties.
Employee Theft Prevention & Mitigation Statistics
With all of the information about the seriousness and frequency of employee theft, you may feel like there is not much that a company can do. Fortunately, there are multiple steps that an organization can take to protect itself.
11. Nearly 60% of companies that conducted an investigation ultimately ended up in a better place
One of the best ways to combat fraud is actually conducting a full investigation—figure out why the problem happened, discipline the offending employees, and bolster your company’s policies and procedures. According to the 2020 PWC Global Economic Crime and Fraud Survey, only about 50% of organizations complete the step of going through an investigation.
12. 42% of employee theft is detected by tips
Employees are more likely to detect theft by fellow co-workers than any other company stakeholder. Creating a system for employee tip reporting (via email, web, or phone); conducting company training to encourage whistleblowing; and building healthy dialogue between employees, management, and leadership can go a long way to help detect theft.
13. Companies that invest in fraud prevention tend to spend 42% less money on fraud response
Unfortunately, companies cannot be completely protected against fraud, but having a dedicated fraud prevention program can save your business money even when fraud is committed. Beyond the more than 40% savings in fraud response, companies with a dedicated fraud prevention program saved money in remediation efforts and in fines and penalties.
Employee theft, and theft in general, can be a concerning topic for many organizations and their leaders. With the statistics covered above, you can provide a strong case to implement theft prevention measures like security cameras, inventory controls, an employee tip hotline, cybersecurity software, and employee background checks. An understanding of the issue and implementation of these measures can help protect your business and lessen the impact of employee theft at your workplace.