KEY POINTS:
Is it ethical for a courier driver to use his Fly Buys card when filling up his company van?
Would a shop assistant be dishonest if she swiped her own loyalty card each time a customer had forgotten theirs? No one else would have been able to claim the reward points in either situation, so would it be fair for those employees to do so?
Workplace ethics are a minefield for employers. As technology and corporate culture have changed, the forms of staff dishonesty have become more diverse, which leaves many grey areas. Office deception is no longer limited to petty cash theft and dodgy, late-night bank transfers.
Small frauds are now being recognised, from the misuse of taxi chits to the overuse of Facebook during work, extended smoko breaks and stealing reams of printer paper.
These seemingly minor liberties are not new but in the current economic climate, employers are realising the cost of overlooking them.
Businesses have the tools to prevent the loss of finances and resources from within, but they remain highly vulnerable, according to research by PricewaterhouseCoopers, Grant Thornton and KPMG. Half of Kiwi firms have experienced employee theft or fraud, yet less than a third have adequate systems to prevent it.
Recessions often cause a rise in theft and shoplifting, but while businesses fight those external risks, staff who misuse resources or abuse their privileges also threaten productivity. The Retail Institute estimates New Zealand businesses lose $350 million each year because of employee dishonesty.
Retail security expert Steve Davis has seen it all. "Restaurant owners used to worry about their fine wines, steaks and prawns. Now, it's the bread, butter and bacon.
"Staff pinch cleaning products, stationery and computer software. Some buy food using their company credit card. They call overseas relatives using the office telephone. These things are all happening."
NOT ALL workplace theft is for personal consumption. Retail workers can use their staff discounts and access to wholesale rates to buy items to on-sell for a profit. As online sites such as Trade Me become more popular, it is easier to sell stolen goods anonymously.
Fraud experts say businesses that sell distinguishable goods should check those sites. In addition, freebies, giveaways and mates' rates sap resources, says Davis.
"I know of a supermarket worker who gave away more than $100,000 worth of groceries to friends and family who came through her checkout. Some food service workers cost their employers thousands each year, simply by giving away unauthorised freebies.
"In fact, a quarter of alcohol sales in New Zealand are lost to theft or giveaways. Employees may not be trying to defraud, but businesses need guidelines on what is acceptable."
Local research shows that businesses' systems are not strong enough to show how much money is being lost, or where the losses are occurring. This is a particular challenge for large firms with high staff turnover.
James McIntosh, national operations manager of Hoyts cinemas, emphasises the need for strong auditing systems and consistent reporting processes. "It's not a case of banging out a memo and expecting staff to take notice. You have to constantly reinforce the rules and create a culture in which they can take ownership. Where there is smoke, there is fire.
"If our staff are giving away free popcorn, what else are they doing? We have strong inventory systems; the devil is in the detail.
"Each cinema does a detailed weekly stocktake, down to the last Coke cup. If there's an issue in one location, we will get counts done every day. We can analyse each ticket sold. "
EXPERTS CHALLENGE the notion that workplace theft is committed by those at the low-skilled, low-paid end of the workforce. KPMG's 2006 Fraud Survey suggests a fifth of theft and fraud is committed at the managerial level. Senior staff are familiar with their firm's systems and have been placed in positions of authority. Many are long-serving employees.
"Workplace culture is vital," says PricewaterhouseCoopers' forensic expert Alex Tan. "If the rules of the game are clear, most people will comply. Some senior staff will think they don't need to follow process. But if a supervisor is caught giving away free food, he or she should be treated the same way as a new staff member." Tan says many companies' policies on employee perks are too vague. He says there should be clarity about which benefits are acceptable, and staff should be encouraged to use them.
Business New Zealand chief executive Phil O'Reilly says employers can accommodate workers' desires without becoming distrustful and seeing a thief behind every cash register.
"Rather than banning personal internet use, put a computer in the tearoom for them to buy cheap airfares or check the cricket scores during their breaks. But make it clear that spending time on YouTube during work time is unacceptable.
"Allow staff to use the photocopier on the odd occasion, but give them the impression that you won't be pleased if they print off 200 invitations to their rugby club barbecue. There has to be give and take."
Many businesses use freephone hotlines, or even icecream boxes, for staff to report concerns relating to the behaviour of other staff members. Bosses who suspect staff dishonesty have options to investigate.
The Privacy Commissioner says that, ordinarily, employees should be consulted if they are to be subjected to cameras and computer monitoring devices, but if there is a specific threat, employers may use their discretion.
Bell Gully partner Andrew Scott-Howman says if a dishonest worker is caught, a fair investigation and disciplinary process can prevent a personal grievance for unfair dismissal.
"Employers worry that they won't be able to prove anything in court. But it should not be a defence for an employee to say, 'I didn't know this was wrong, because you don't have a policy that tells me not to do it'. If you are unable to dismiss the employee, you can take disciplinary action.
"By the same token, the employee needs a chance to respond, rather than being marched into a room, played a security tape, and told to get out."
THE INSTITUTE of Economic Research says one in three firms will cut staff this year; a prospect that may challenge staff morale and loyalty. Fraud experts say it is crucial to create a "culture of deterrence", but O'Reilly believes a "culture of trust" is more appropriate.
He challenges employers to ditch the "crime and punishment" approach. O'Reilly says employers should not panic about employee dishonesty. They should treat it like any other risk, using good business practice, strong human resources strategies and open communication.
"It is true that workers who face redundancy or restructuring are more likely to turn to theft, fraud, petty damage or absenteeism.
"Some feel they are being victimised by their employer; that secrets are being kept from them.
"But even if the temptation to pilfer is powerful, the prospect of being dismissed is stronger. If employers treat their staff with dignity, most will be scrupulously honest."
