An Incident of Employee Dishonesty

An independent-agency client of ours discovered recently that an employee — a trusted employee of several years’ service — had stolen a considerable amount of money from them over a period of a couple years. They were able to recover much of it, but it was upsetting, to say the least, and an unhappy story for the employee.

For reasons of privacy we won’t go into much detail, but here are the parts you should know:

The employee was the person who reported payroll each period to the outside payroll service. Her scheme was to raise certain salaries by small amounts regularly over a couple years. Not much per incident, but it added up.The opportunity presented itself when the method of reporting changed from a live phone-call procedure to an on-line procedure.

The employee was under a lot of financial pressure at home, a situation not known to her supervisor.

When she came clean, she said that it was “too easy to pass up.” The agency is not a slipshod place. It has normal weaknesses, but it is well-run, with an experienced and hard-working person in charge of internal operations.

What points should you take from this for your own agency? Two things, we think:
The obvious one is to take a close look at your internal controls in this and similar activities, especially when system protocols have changed (such as from live-phone to on-line).
The more subtle point, and probably the one with more reach, is to examine how much you know about the outside pressures your employees may be under and how that might impact their work. Whether your instincts here are employee welfare, agency protection, or a combination, it’s something you should think about when identifying the key components of management and supervisory jobs.

February 2006