business crime: who's really at fault?

It seems every front page and every evening newscast these days features a story about someone swindling someone else or perpetrating some type of corporate fraud. By all appearances, business theft is on the rise, whether it's the pilfering of a few dollars' worth of supplies, padding expense accounts, or engaging in multimillion dollar stock option backdating schemes.

As for what's behind the spike in business crime, there's some evidence that the recession may be a factor. In a recent survey by the Institute for Corporate Productivity, 27 percent of the respondents from large companies (defined as those with 10,000 or more employees) reported that they had seen workplace crime increase during the current economic recession.

Statistics compiled by the FBI bolster that theory. According to an online analysis of social trends in America, "the FBI property crime index peaked between the two recessions in the 1980s and immediately after the 1990-1991 recession. After that, it headed down. ... Property crime is thus a reflection of our economic lives and moves in step with unemployment." (View the full article here.)

No doubt, economic need plays a role in workplace theft. But rising theft rates may also reflect frustration, cynicism, and disillusionment with the company's leaders.

Whatever the cause, crime appears to be up, and companies are responding. Some have tightened physical security, installing surveillance cameras and the like. Some have imposed stricter accounting controls in an effort to prevent fraudulent transactions. At least one observer believes that's a step in the right direction. "Quite possibly, [crime] may go down during bad times when every little dollar is focused on," says Phillip S. Kushner, a partner with Kushner and Hamed, a Cleveland law firm with a white-collar criminal practice.

But even the most sophisticated loss prevention program will prove ineffective if the company fails to get its supervisors on board, says Cleveland attorney Jeffrey Belkin, an arbitrator who has spent many years advising employers on labor relations. In terms of keeping internal crime to a minimum, "low-level management must buy into the program," he says. "Often, this element is missing. First-line supervision is critical. If you don't have that, nothing's going to work."

But that doesn't take top management off the hook. As we've been told time and again, leadership starts at the top. Whether the business is a trucking company or a machine shop or a warehouse, it is management's responsibility to lead by example, demonstrating a commitment to honest, ethical, and lawful conduct.

Unfortunately, that kind of leadership seems to be lacking in all too many organizations. The news media present case after case of top managers who have betrayed the trust placed in them. Perhaps this is the essential problem when it comes to internal company crime today. Too many top managers in business and industry have been found wanting. This can only lead to the kind of environment that allows company crime to take root and flourish.

It would behoove managers in any industry, logistics included, to make it clear to their staffs that they expect all employees to comply with the law. They must reinforce this message with their own exemplary behavior. In other words, they should invest in all the appropriate security measures, but build trust— and company loyalty as well—by example. Is that too much to ask?