Understanding Material Theft

Material theft is a never-ending concern for all businesses. Managing this threat in a growing business is especially difficult, given that the more employees you have, the more chance of material being stolen. Fortunately, the concept of the ’Theft Triangle’ can help identify and mitigate the risk of material theft.

The theft triangle

The Theft Triangle explains why employees might steal from a company. The three parts of the triangle are as follows:

Low perception of risk

Some employees will steal items if they know they will not get caught.  If employees feel that they may get caught stealing, they will be less likely to take the risk. Here are a few safeguards you can put into place to make these employees think twice.

• A clean and organised warehouse
  Your warehouse needs to be in order. Having a designated space for all your material items will make it easier to detect whether items are missing. If items are stacked on top of one another, you won’t know what is in the warehouse and what is missing.
• Recording material transactions in a system
  Simply recording stock and stock activity in a system can deter most employees from stealing. Ideally, the system would record who has booked a material item out from the warehouse, how many material items each employee currently has, and a complete stock activity history.
• Reference number needed per stock movement
  Make it mandatory that employees give a job reference or a purchase order number each time they need material items. This will also help with tracking job costs.
• Stock-taking
  Now that you have a system in place that records stock activity with a job reference and/or purchase order number, you should know what your current stock levels should be. Performing stock takes is a great way to compare what your recorded stock levels are with your actual stock levels.

Opportunity / access

Since employees must have some level of access to material items to successfully complete their jobs, this factor is always present. However, you can take steps to limit the access an employee has to an item.

• Separation of duties
  Ensuring one employee does not have sole control of a transaction will minimise the risk of theft. This could be done by making it mandatory that two employees sign off each time material is taken from the warehouse.
• Having to log in
  Having a system that forces employees to log in to check out items makes accessing the item more difficult and therefore reduces the likelihood of theft.

Motive or justification

An employee must be motivated or have a justification to steal from you. The reasons may vary from monetary gain to pure resentment towards the company. A common justification for employees to steal is broken promises.

Employees may feel promises that were made when they began working at your company have not been met. Common promises consist of promotions or flexible hours. If an employee feels ‘wronged’ or feels as though you have broken your end of the contract, they may experience a series of negative emotions, feel vengeful and be more likely to steal from you.

What can you do to prevent this motivation?

• Do not make promises you cannot deliver on
• Document the promises you make
• Be honest with your employees
• Have constant and open communication
• Engage in regular one on one catchups.

Knowledge is power

Material theft by staff is an unfortunate fact of life. But with the awareness of the theft triangle concept, you can think about ways to prevent material theft in your business.

Author – James Whitworth.
Customer Service and Technical Support

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