Thursday, December 4, 2008

A Hand in the Till

Question: How does a respected, trusted (and trustworthy) employee become an embezzler?

Answer: Slowly at first, but the transition becomes rapid thereafter.

A Clean Start
Nearly all employees that later steal from their employers never intended to do so. At first they were grateful to have a good job and benefits, anxious to demonstrate that they were capable and trustworthy.

How then, does one become a thief? In most cases, it really comes down to a little motive and opportunity and the beguiling situation that opportunity represents for too many. Let's illustrate the concept with an example.

An Illustration
In September of 2003, Bridget Ganier was employed by the Orange Coast Memorial Medical Center (Fountain Valley, California) as an Executive Assistant. Ganier had several duties to fulfill in that capacity, but among them was the responsibility to turn in the cash receipts from the cash registers in the hospital cafeteria. Her responsibility for cash receipts provided the opportunity.

At the time that Ganier began the theft, she had hoped to be promoted into her predecessors position but was not, as Ganier was not a registered dietician. Her inability to secure the desired promotion provided the motive.

Ganier ended up stealing nearly a quarter of a million dollars ($234,000) but it didn't happen all at once. It didn't even begin with a significant sum. It began with $50 stolen from the till in a week. She covered her tracks by falsifying the records. When no one alerted to the first theft, she was emboldened to continue the theft (again small amounts $50-100 per week).

Even with several weeks of this petty theft occuring, no one seemed the wiser. The temptation to continue, and up the ante, must have been powerfully beguiling as that's just what she did. Ganier was responsible for three cash registers at the cafeteria. Her thievery grew incrementally worse until it became so bad that she was stealing the entire take from two of the cash registers and reporting only one of the three (stealing approximately $3,000 per week).

She was completely out of control and she knew it but wasn't willing to stop. Moreover, she was worried that if she did stop, someone would notice the extra money. In fact, that's just what happened. Five years of theft ended when Ganier went on vacation for just two days. Prior to her leaving for vacation, the average (reported) cash receipts were between $300-500, but for the two days she was out, the daily intake was over $1,000.

Orange Coast Memorial Medical CenterThe Orange Coast Memorial Medical Center Finance department became suspicious and contacted police. An investigation was begun and shortly thereafter, Ganier was confronted with the facts. Initially, she lied about the theft, but later admitted that she was in way over her head.

The Prescription
So, what might have the hospital done differently? Well, one thought is to have much tighter controls on cash (start there). But that is not all. The hospital might have chosen to screen prospective employees and discovered their propensity for theft. Had Ganier been screened with Merchant's Tescor Survey, she would likely have failed the theft category and never been hired.

There is a tendency, in difficult financial times such as those we now find ourselves, for organizations to look for ways to reduce costs. Skimping on the tools (Pre-Employment Background Checks, and Behavioral Assessments) are sometimes (mistakenly) looked at as possibilities for cost reductions. Examples like this one make it very easy to illustrate the value proposition of pre-screening services (Ganier's theft estimated at $234,000 versus the cost of a thorough background check).

So the next time your organization needs to fill a position, make sure to do your homework. Learn what issues lurk in a person's past and what propensities they have for acts that can damage the financial health and reputation of your organization. Screen them first with Merchants (every candidate, every time).



Anonymous said...

I had a similar experience with a bookkeeper in my company. She stole more than $40,000 from me over a years time. For some companies, that gets lost in the rounding but for me that was a huge sum. It was a very difficult loss to endure.

I had been doing background screens of my employees, including the bookkeeper, before I offered a position to them. However, I have since discovered that not all background screenings are the same and some not nearly as thorough as they should be. In my case, we provided the name, address, SSN (along the with required signed authorization). What we got back was a search of criminal history for our state. What we didn't know at the time was that she had been convicted of a similar crime in another state. Had we known about that conviction, we would not have hired, and I could have saved myself the $40,000 she stole from me and the six months of grief that followed as the legal system chewed up a lot of my time.

Next time, I'll make sure that the background search is solid, because the $8 I saved was money I would have gladly spent to avoid the grief I went through.

MGM said...

Thanks for the comment. Too few seem to understand (as you clearly do) that even in difficult financial times, it still makes sense to thoroughly qualify your candidates. The consequences of not being rigorous (as you have illustrated) are painful and expensive.