Business owners who think their employees would never steal from them may want to think again. That's because, according to new research, employee theft costs firms $200 billion a year. However, the real surprise in that number comes from the fact that $80 billion of that theft is a result of employees participating in a practice called "sweethearting," where they will give free services to customers in the hope of receiving better tips and similar treatment at that person's place of business.
According to the research, conducted by Clay Voorhees, an assistant professor of marketing at Michigan State University, and Michael Brady and Michael Brusco of Florida State University, 67 percent of employees admitted to sweethearting in the past two months. This study was the first to look exclusively at the role of sweethearting in employee theft.
"I was surprised by how pervasive this behavior was across a wide range of service industries," Voorhees said. "I fully expected to see this behavior in bars and restaurants, but I was surprised at how prevalent it was in industries like retail, sports and recreation, and even with insurance claims."
To show just how problematic sweethearting is for businesses, the researchers surveyed nearly 800 employees in a variety of industries, ranging from restaurants and hotels to car washes and cable repair companies, to compile their findings. The information in this study is set to be published in an upcoming issue of the Journal of Marketing.
While employee theft may be a growing problem for business owners, Voorhees said, this behavior can be solved only if employers get out ahead of the problem.
"Our results show that by adding a few screening questions that focus on the potential employee's risk-taking, ethics and need for social acceptance, employers could identify 'bad apples' up front and simply avoid hiring them," Voorhees said. "In the long run, this approach would address the issue. Simply reminding individuals of their ethical obligations can greatly reduce deviant behavior."
Reach BusinessNewsDaily staff writer David Mielach at Dmielach@techmedianetwork.com. Follow him on Twitter @D_M89.