What specific resources, support and assistance can the emergency response community offering the security manager in carrying out their duties? Specific to internal security and employees, what are the primary differences between personnel screening and backgrounding? 

SUPPORT AND ASSISTANCE TO SECURITY MANAGER

What specific resources, support and assistance can the emergency response community offering the security manager in carrying out their duties? Specific to internal security and employees, what are the primary differences between personnel screening and backgrounding?

Must be at least 350 words and have APA citations.

Introduction to Security Ninth Edition. DOI: © 2013 Elsevier Inc. All rights reserved.

283 2013

10.1016/B978-0-12-385057-7.00012-9

Internal Theft Controls/ Personnel Issues

OBJECTIVES

The study of this chapter will enable you to:

1. Understand the complexity of relative honesty.

2. Develop strategies to manage employee honesty.

3. Understand the relationship between security and human resources personnel.

4. Know the basics of background checks.

5. Understand the operation of various lie detection devices and integrity tests.

6. Know the rights of employees when confronted with wrongdoing in the workplace.

7. Identify problem areas where employee theft is most likely.

Introduction It is sad but true that virtually every company will suffer losses from internal theft—and these losses can be enormous. Early in this new century even the large corporate giants such as Enron, WorldCom and Martha Stewart have been affected by internal corruption that reached the highest levels of the organization In addition, the name of Bernie Madoff will long be asso- ciated with perhaps the greatest customer and company theft of all times. In its 2010 report, “The Cost of Occupational Fraud,” the Association of Certified Fraud Examiners estimate that fraud (employee theft) cost the world business community $2.9 trillion or 5% of the estimated Gross World Product in 2009.1 While this figure is startling, it must be remembered that there is no accurate way to calculate the extent of fraud. In 2002, Security reported that in the retail business alone 1 in every 27 employees is apprehended for theft from their employer. Internal theft in the retail business outstrips the loss from shoplifting by approximately 7.9 times.2

The significance of employee theft is pointed out in a 2010 University of Florida and National Retail Federation Report. Dr. Richard Hollinger, lead author, reported that $14.4 billion was lost to retailers thanks to thieving employees, down slightly from earlier studies.3

What Is Honesty? Before considering the issue of dishonest employees, it is helpful to understand the concept of honesty, which is difficult to define. Webster says that honesty is “fairness and

12

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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http://dx.doi.org/10.1016/B978-0-12-385057-7.00012-9

284 INTRODUCTION TO SECURITY

straightforwardness of conduct, speech, etc.; integrity; truthfulness; freedom; freedom from fraud.” In simple terms, honesty is respect for others and for their property. The concept, how- ever, is relative. According to Charles Carson, “Security must be based on a controlled degree of relative honesty” because no one fulfills the ideal of total honesty. Carson explores relative honesty by asking the following questions:

1. If an error is made in your favor in computing the price of something you buy, do you report it? 2. If a cashier gives you too much change, do you return it? 3. If you found a purse containing money and the owner’s identification, would you return the

money to the owner if the amount was $1? $10? $100? $1,000?4

Honesty is a controllable variable, and how much control is necessary depends on the degree of honesty of each individual. The individual’s honesty can be evaluated by assess- ing the degree of two types of honesty—moral and conditioned. Moral honesty is a feeling of responsibility and respect that develops during an individual’s formative years; this type of  honesty is subconscious. Conditioned honesty results from fearing the consequences of being caught; it is a product of reasoning. If an honest act is made without a conscious deci- sion, it is because of moral honesty, but if the act is based on the conscious consideration of consequences, the act results from conditioned honesty.

It is vital to understand these principles because the role of security is to hire employees who have good moral honesty and to condition employees to greater honesty. The major con- cern is that the job should not tempt an employee into dishonesty.

Carson summarizes his views in the following principles:

No one is completely honest. Honesty is a variable that can be influenced for better or worse. Temptation is the father of dishonesty. Greed, not need, triggers temptation.

Unfortunately, there is no sure way by which potentially dishonest employees can be recog- nized. Proper screening procedures can eliminate applicants with unsavory pasts or those who seem unstable and therefore possibly untrustworthy. There are even tests that purport to mea- sure an applicant’s honesty index. But tests and employee screening can only indicate poten- tial difficulties. They can screen out the most obvious risks, but they can never truly vouch for the performance of any prospective employee under circumstances of new employment or under changes that may come about in life apart from the job.

The need to carefully screen employees has continued to increase. In today’s market, there are many individuals who have been called the “I deserve it!” generation. According to a study by the Josephson Institute for the Advanced Study of Ethics, cheating, stealing and lying by high school students have continued an upward trend, with youth 18 and younger five times more likely than persons over 50 to hold the belief that lying and cheating are necessary to suc- ceed. The 2008 report showed that 64% of American high school students cheated on an exam, 42% lied to save money and 30% stole something from a store. The Institute, which conducts nonpartisan ethics programs for the Internal Revenue Service, the Pentagon, and several major

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 285

media organizations and educators, states that their findings show evidence that a willingness to cheat has become the norm. The 2008 study found that young people believe that ethics and character are important but are cynical about whether a person can be ethical and succeed.5

The Dishonest Employee Because there is no fail-safe technique for recognizing the potentially dishonest employee on sight, it is important to try to gain some insight into the reasons why employees may steal. If some rule of thumb can be developed that will help identify the patterns of the potential thief, it would provide some warning for an alert manager.

There is no simple answer to the question of why heretofore honest people suddenly start to steal from their employers. The mental and emotional processes that lead to this are com- plex, and motivation may come from any number of sources.

Some employees steal because of resentment over real or imagined injustice that they blame on management indifference or malevolence. Some feel that they must maintain sta- tus and steal to augment their incomes because of financial problems. Some may steal simply to tide themselves over in a genuine emergency. They rationalize the theft by assuring them- selves that they will return the money after the current problem is solved. Some simply want to indulge themselves, and many, strangely enough, steal to help others. Or employees may steal because no one cares, because no one is looking, or because absent or inadequate theft con- trols eliminate the fear of being caught. Still others may steal simply for excitement.

The Fraud Triangle

A simplified answer to the question of why employees steal is depicted in the fraud triangle. According to this concept, theft occurs when three elements are present: (1) incentive or motive , (2) attitude/rationalization or desire, and (3) opportunity.

In simple terms, incentive or motive is a reason to steal. Motives might be the resentment of an employee who feels underpaid or the vengefulness of an employee who has been passed over for promotion. Attitude or desire builds on motive by imagining the satisfaction or grati- fication that would come from a potential action. “Taking a stereo system would make me feel good, because I always wanted a good stereo system.” Opportunity is the absence of barriers that prevent someone from taking an item. Desire and motive are beyond the scope of the loss- prevention manager; opportunity, however, is the responsibility of security.

A high percentage of employee thefts begin with opportunities that are regularly presented to them. If security systems are lax or supervision is indifferent, the temptation to steal items that are improperly secured or unaccountable may be too much to resist by any but the most resolute employee.

Many experts agree that the fear of discovery is the most important deterrent to internal theft. When the potential for discovery is eliminated, theft is bound to follow. Threats of dis- missal or prosecution of any employee found stealing are never as effective as the belief that any theft will be discovered by management supervision.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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286 INTRODUCTION TO SECURITY

Danger Signs

The root causes of theft are many and varied, but certain signs can indicate that a hazard exists. The conspicuous consumer presents perhaps the most easily identified risk. Employees who habitually or suddenly acquire expensive cars and/or clothes and who generally seem to live beyond their means should be watched. Such persons are visibly extravagant and appear indifferent to the value of money. Even though such employees may not be stealing to sup- port expensive tastes, they are likely to run into financial difficulties through reckless spend- ing. Employees may then be tempted to look beyond their salary checks for ways to support an extravagant lifestyle.

Employees who show a pattern of financial irresponsibility are also a potential risk. Many people are incapable of handling their money. They may do their job with great skill and effi- ciency, but they are in constant difficulty in their private lives. These people are not necessarily compulsive spenders, nor do they necessarily have expensive tastes. (They probably live quite modestly since they have never been able to manage their affairs effectively enough to live oth- erwise.) They are simply people unable to come to grips with their own economic realities. Garnishments or inquiries by creditors may identify such employees. If there seems a reason to make one, a credit check might reveal the tangled state of affairs.

Employees caught in a genuine financial squeeze are also possible problems. If they have been hit with financial demands from illnesses in the family or possibly heavy tax liens, they may find the pressures too great to bear. If such a situation comes to the attention of man- agement, counseling is in order. Many companies maintain funds that are designated to make low-interest loans in such cases. Alternatively some arrangement might be worked out through a credit union. In any event, employees in such extremities need help fast. They should get that help both as a humane response to the needs and as a means of protecting company assets.

In addition to these general categories, some specific danger signals should be noted:

l Gambling on or off premises l Excessive drinking or signs of other drug use l Obvious extravagance l Persistent borrowing l Requests for advances l Bouncing personal checks or problems with creditors

What Employees Steal

The employee thief will take anything that may be useful or that has resale value. The thief can get at the company funds in many ways—directly or indirectly—through collusion with vendors, collusion with outside thieves or hijackers, fake invoices, receipting for goods never received, falsifying inventories, payroll padding, false certification of overtime, padded expense accounts, computer records manipulation, overcharging, undercharging, or simply by gaining access to a cash box or company goods.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 287

This is only a sample of the kinds of attacks that can be made on company assets using the systems set up for the operation of the business. It is in these areas that the greatest losses can occur because they are frequently based on a systematic looting of the goods and services in which the company deals and the attendant operational cash flow.

Significant losses do occur, however, in other, sometimes unexpected areas. Furnishings frequently disappear. In some firms with indifferent traffic control procedures, this kind of theft can be a very real problem. Desks, chairs, computers and other office equipment, paintings, rugs—all can be carried away by the enterprising employee thief.

Office supplies can be another problem if they are not properly supervised. Beyond the anticipated attrition in pencils, paper clips, note pads, and rubber bands, sometimes these materials are stolen in case lots. Many firms that buy their supplies at discount are in fact receiving stolen property. The market in stolen office supplies is a brisk one and is becoming more so as the prices for this merchandise soar.

The office equipment market is another active one, and the inside thief is quick to respond to its needs. Computers always bring a good price, as well as equipment used to support high- tech offices.

Personal property is also vulnerable. Office thieves do not make fine distinctions between company property and that of their fellow workers. The company has a very real stake in this kind of theft because personal tragedy and decline in morale follow in its wake.

Although security personnel cannot assume responsibility for losses of this nature because they are not in a position to know about the property involved or to control its handling (and they should so inform all employees), they should make every effort to apprise all employees of the threat. They should further note from time to time the degree of carelessness the staff displays in handling personal property and send out reminders of the potential dangers of loss.

Methods of Theft

A 2007 report by Gaston and Associates reported that the American Management Association believes that 20% of business failures were the result of employee dishonesty.6 And a 2010 report by the Association of Certified Fraud Examiners estimates that 5% of total revenue losses for most companies are from employee fraud of some type.7 Therefore, there is a very real need to examine the shapes the dishonesty frequently takes. There is no way to describe every kind of theft, but some examples may serve to give an idea of the dimensions of the problem:

1. Payroll and personnel employees collaborating to falsify records by the use of nonexistent employees or by retaining terminated employees on the payroll.

2. Padding overtime reports and kicking back part of the extra unearned pay to the authorizing supervisor.

3. Pocketing unclaimed wages. 4. Splitting increased payroll that has been raised on signed, blank checks for use in the

authorized signer’s absence. 5. Maintenance personnel and contract-service people in collusion to steal and sell office

equipment.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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288 INTRODUCTION TO SECURITY

6. Receiving clerks and truck drivers in collusion on falsification of merchandise count. (Extra unaccounted merchandise is fenced.)

7. Purchasing agents in collusion with vendors to falsify purchase and payment documents. (The purchasing agent issues authorization for payment on goods never shipped after forging receipts of shipment.)

8. Purchasing agent in collusion with vendor to pay inflated price. 9. Mailroom and supply personnel packing and mailing merchandise to themselves for resale. 10. Accounts payable personnel paying fictitious bills to an account set up for their own use. 11. Taking incoming cash without crediting the customer’s account. 12. Paying creditors twice and pocketing the second check. 13. Appropriating checks made out to cash. 14. Raising the amount on checks after voucher approval or raising the amount on vouchers

after their approval. 15. Pocketing small amounts from incoming payments and applying later payments on other

accounts to cover shortages. 16. Removal of equipment or merchandise with the trash. 17. Invoicing goods below regular price and getting a kickback from the purchaser. 18. Manipulation of accounting software packages to credit personal accounts with electronic

account overages. 19. Issuing (and cashing) checks on returned merchandise not actually returned. 20. Forging checks, destroying them when they are returned with the statement from the

bank, and changing cash account records accordingly. 21. Appropriating credit card, electronic bank account, and other electronic data.

The Contagion of Theft

Theft of any kind is a contagious disorder. Petty, relatively innocent pilferage by a few spreads through the facility. As more people participate, others will follow until even the most rigid break down and join in. Pilferage becomes acceptable—even respectable. It gains general social accep- tance that is reinforced by almost total peer participation. Few people make independent ethical judgments under such circumstances. In this microcosm, the act of petty pilferage is no longer viewed as unacceptable conduct. It has become not a permissible sin but instead a right.

In the last century, the docks of New York City were an example of this progression. Forgetting for the moment the depredations of organized crime and the climate of dishon- esty that characterized that operation for so many years, even longshoremen not involved in organized theft had worked out a system all their own. For every so many cases of whisky unloaded, for example, one case went to the men. Little or no attempt was made to conceal this. It was a tradition, a right. When efforts were made to curtail the practice, labor difficulties arose. It soon became evident that certain pilferage would have to be accepted as an unwritten part of the union contract under the existing circumstances.

This is not a unique situation. The progression from limited pilferage through its accep- tance as normal conduct to the status of an unwritten right has been repeated time and again.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 289

The problem is, it does not stop there. Ultimately, pilferage becomes serious theft, and then the real trouble starts. Even before pilferage expands into larger operations, it presents a dif- ficult problem to any business. Even where the amount of goods taken by any one individual is small, the aggregate can represent a significant expense. With the costs of materials, manu- facture, administration, and distribution rising as they are, there is simply no room for added, avoidable expenses in today’s competitive markets. The business that can operate the most efficiently, and offer quality goods at the lowest prices because of the efficiency of its opera- tion, will have a huge advantage in the marketplace. When so many companies are fighting for their economic life, there is simply no room for waste—and pilferage is just that.

Moral Obligation to Control Theft

When we consider that internal theft accounts for at least twice the loss from external theft (that is, from burglars, armed robbers and shoplifters combined), we must be impressed with the scope of the problem facing today’s businesspeople. Businesses have a financial obligation to stockholders to earn a profit on their investments. Fortunately there are steps that can be taken to control internal theft. Setting up a program of education and control that is vigorously administered and supervised can cut losses to relatively insignificant amounts.

It is also important to observe that management has a moral obligation to its employees to protect their integrity by taking every possible step to avoid presenting open opportunities for pilferage and theft that would tempt even the most honest people to take advantage of the opportunity for gain by theft.

This is not to suggest that each company should assume a paternal role toward its employ- ees and undertake their responsibilities for them. It is to suggest strongly that the company should keep its house sufficiently in order to avoid enticing employees to acts that could result in great personal tragedy as well as in damage to the company.

Program for Internal Security As for all security problems, the first requirement before setting up protective systems for inter- nal security is to survey every area in the company to determine the extent and nature of the risks. If such a survey is conducted energetically and exhaustively, and if its recommendations for action are acted on intelligently, significant losses from internal theft will be a matter of history. Security surveys and their companion, the operational audit, have been discussed in detail in Chapter 7.

Need for Management Support

Once concerns have been identified, it is especially important that the strong support of top management be secured. In order to implement needed security controls, certain operational procedures may have to be changed. This will require cooperation at every level, and coopera- tion is sometimes hard to get in situations where department managers feel their authority has been diminished in areas within their sphere of responsibility.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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290 INTRODUCTION TO SECURITY

The problem is compounded when those changes determined to be necessary cut across departmental lines, and even serve to some degree to alter intradepartmental relationships. Affecting systems under such circumstances will require the greatest tact, salesmanship, and executive ability. Failing that, it may be necessary to fall back on the ultimate authority vested in the security operation by top management. Any hesitation or equivocation on the part of either management or security at this point could damage the program before it has been initiated.

This does not, of course, mean that management must give security carte blanche. Reasonable and legitimate disagreements will inevitably arise. It does mean that proposed security programs based on broadly stated policy must be given the highest possible priority. In those cases where conflict of procedures exists, some compromise may be necessary, but the integrity of the security program as a whole must be preserved intact.

Communicating the Program

The next step is to communicate necessary details of the program to all employees. Many aspects of the system may be proprietary or on a need-to-know basis, but because part of it will involve procedures engaged in by most or all of company personnel, they will need to know those details in order to comply. This can be handled by an ongoing education program or by a series of meetings explaining the need for security and the damaging effects of internal theft to jobs, benefits, profit sharing, and the future of the company. Such meetings can additionally serve to notify all employees that management is taking action against criminal acts of all kinds at every level and that dishonesty will not be tolerated.

Such a forceful statement of position in this matter can be very beneficial. Most employees are honest people who disapprove of those who are criminally inclined. They are apprehensive and uncomfortable in a criminal environment, especially if it is widespread. The longer the company condones such conduct, the more they lose respect for it, and a vicious cycle begins. As they lose respect, they lose a sense of purpose. Their work suffers, morale declines, and at best effectiveness is seriously diminished. At worst, they reluctantly join the thieves. A clear, uncompromising policy of theft prevention is usually welcomed with visible relief.

Continuing Supervision

Once a system is installed, it must be constantly supervised if it is to become and remain effec- tive. Left to their own devices, employees will soon find shortcuts, and security controls will be abandoned in the process. Old employees must be reminded regularly of what is expected of them, and new employees must be adequately indoctrinated into the system they will be expected to follow.

There must be a continuing program of education if expected results are to be achieved. With a high turnover within the white-collar workforce, it can be expected that the office force, which handles key electronic data and related paperwork, will be replaced at a fairly consis- tent rate. This means that the company will have a regular influx of new people who must be trained in the procedures to be followed and in the reasons for these procedures.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 291

Program Changes

In some situations, reasonable controls will create duplication of effort, cross-checking, and additional work. Because each time such additional effort is required there is an added expense, procedural innovations requiring it must be avoided wherever possible, but most control sys- tems aim for increased efficiency. Often this is the key to their effectiveness.

Many operational procedures, for a variety of reasons, fall into ponderous routines involv- ing too many people and excessive record keeping. This may serve to increase the possibility of fraud, forgery, or falsification of documents. When the same operational result can be achieved by streamlining the system and incorporating adequate security control, it should be done immediately.

Virtually every system can be improved and should be evaluated constantly with an eye for such improvement, but these changes should never be undertaken arbitrarily. Procedures must be changed only after the changes have been considered in the light of their operational and security impact, and such considerations should further be undertaken in the light of their effect on the total system.

No changes should be permitted by unilateral employee action. Management should make random spot checks to determine if the system is being followed exactly. Internal auditors and/or security personnel should make regular checks on the control systems.

Violations

Violations should be dealt with immediately. Management indifference to security procedures is a signal that they are not important, and where work-saving methods can be found to cir- cumvent such procedures, they will be. As soon as any procedural untidiness appears and is allowed to continue, the deterioration of the system begins.

It is well to note that, while efforts to circumvent the system are frequently the result of the ignorance or laziness of the offender, a significant number of such instances are the result of employees probing for ways to subvert the controls in order to divert company assets to their own use.

Personnel Policies for Internal Security

There is no greater need for cooperation between two departments than that needed between human resources and security/loss prevention. The job for loss prevention is much simpler when the right person is hired for the right job. While human resources reviews all applica- tions and maintains all records on employees, the security department should be responsible for conducting thorough background checks on specific employee positions. While it would be desirable to background all employees, the amount of employee turnover or volume of new hires often makes such a comprehensive program an impossibility.

Human Resources and the Screening Process

Internal security’s objective is preventing theft by employees. If all employees were of such sterling character that they could not bring themselves to steal, security personnel would have

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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292 INTRODUCTION TO SECURITY

little to do. If, on the other hand, thieves predominate in the mix of employees, the system will be sorely tried, if indeed it can be effective at all. Basic to internal security effectiveness is the cooperation of that majority of honest personnel performing as assigned and in so doing refus- ing to initiate or collaborate in conspiracies to steal. Without this dominant group, the system is in trouble from the start.

The first line of internal security defense is the human resources department, where bad risks can be screened out by use of reasonable security procedures. Screening is the process of finding the person best qualified for the job in terms of both skills and personal integrity. This process may or may not involve a background check (which will be discussed later), but it must include at least a basic check of an applicant’s references and job history.

In some industries, especially those with high technical requirements, screening can be a problem because qualified personnel may be difficult to find. Resistance can come from the human resources department when an otherwise qualified applicant is disqualified on the mar- ginal grounds of a potential security problem. Security management must undertake the job of convincing objectors that a person who may later embezzle from the company is a poor risk from many points of view, no matter how highly qualified that person may be in the specific skills required.

Rejecting bad risks must be made on the basis of standards carefully established in coop- eration with the human resources director. Once established, these standards must be met in every particular circumstance, just as proficiency standards must be met. Obviously such standards require reviewing from time to time to avoid dealing with applicants unjustly and placing the company in the position of demanding more than is either realistically possible or available. Even here, however, a bottom line must be drawn. At a certain point, compromises and concessions can no longer be made without inviting damage to the company.

Such a careful, selective program will add some expense to the employment procedure, but it can pay for itself in reduced losses, better employees, and lower turnover. And the sav- ings in terms of potential crimes that were averted, though incalculable, can be thought of as enormous.

Employment History and Reference Checking

The key to reducing internal theft is the quality of employees employed by the facility. The problem, however, will not be eliminated during the hiring process, no matter how care- fully and expertly selection is made. Systems of theft prevention and programs of employee motivation are ongoing efforts that must recognize that elements of availability, susceptibil- ity, and opportunity are dynamic factors in a constant state of flux. The initial approach to the problem, however, starts at the beginning—in the very process of selecting personnel to work in the facility. During this process, a knowledgeable screener who is aware of what to look for in the employment application or résumé can develop an enormous amount of vital informa- tion about the prospective employee. Some answers are not as obvious as they once were, and the ability to perceive and evaluate what appears on the application or résumé is more impor- tant than ever as applications are more restrictive in what they can ask.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 293

The increased focus on screening and background checks over the past decade is a direct result of the following:

l A rise in lawsuits from negligent hiring. l An increase in child abuse reporting and abductions which have results in new laws

that require criminal background checks for anyone who works with children, including volunteers.

l September 11, 2001 has resulted in heightened security and required identity verification. l The Enron scandal has increased scrutiny of corporate executives, officers and directors. l Increasing use of inflated and fraudulent résumés and applications. l New federal and state laws requiring background checks for certain jobs, i.e., armored-car

employees. l The information age has added to the increase in checks as information is now available

through many computer databases.

Privacy legislation coupled with fair employment laws drastically limits what can be asked on the employment application forms. The following federal legislation relates directly to hiring and dealing with employees:

l Title VII of the Civil Rights Act of 1964 l Pregnancy Discrimination Act of 1978 l Executive Order 11246 (affirmative action) l Age Discrimination in Employment Act of 1967 l National Labor Relations Act l Rehabilitation Act of 1973 l Vietnam Era Veterans’ Readjustment Assistance Act of 1974 l Fair Labor Standards Act of 1938 (The Wage and Hour Law) l The Federal Wage Garnishment Law l Occupational Safety and Health Act of 1970 l Immigration Reform and Control Act of 1986 l Employee Polygraph Protection Act of 1988 l Consolidated Omnibus Reconciliation Act of 1985 (COBRA) l Worker Adjustment and Retraining Notification Act (Plant Closing Law) l EEOC Sexual Harassment Guidelines l The Americans with Disabilities Act of 1990 l Family Educational Rights and Privacy Act (FERPA) l Bankruptcy Act l Fair Credit Reporting Act (FCRA) l Equal Pay Act 1963 l Privacy Act of 1976

Table 12-1 summarizes the protected classes covered under these and other federal acts, and Table 12-2 provides examples of acceptable and unacceptable inquiries for preemploy- ment screening based on these laws.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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294 IN

T R

O D

U C

T IO

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C U

R IT

Y

Legislation Race/Color National Origin/ Ancestry

Sex Religion Age Disabled Union Covered Employers Federal Agency

Title VII Civil Rights Act

X X X X Employers with 15+ EEs; unions, employment agencies

EEOC

Equal Pay Act (EPA) as amended

X Minimum wage law coverage (“administrative employees” not exempted)

EEOC

†Age Discrimination in Employment Act (ADEA)

X 40+ 20+ EEs (unions with 25+ members), employment agencies

EEOC

*Age Discrimination Act of 1975 (ADA)

X Receives federal money EEOC

*Executive Order 11246.11141

X X X X X All federal contractors and subcontractors

OFCCP

*Title VI Civil Rights Act

X X X X Federally-assisted program or activity— public schools and colleges also covered by Title IX

Funding Agency and EEOC

*Rehabilitation Act of 1973

X Receives federal money: federal contractor, $2,500+

OFCCP

National Labor Relation Act (NLRA)

X X X X X X ER in interstate commerce

NLRB

Civil Rights Act of 1866

X All employers Courts

Civil Rights Act of 1871

X X X Private employers usually not covered

EEOC

Revenue Sharing Act of 1972

X X X X X X State and local governments that receive federal revenue sharing funds

OFCCP

Table 12-1 Who Is Protected/Who Is Affected Federally Covered Employers and Protected Classes

Fischer, R ., H

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C hapter 12

l In tern

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n el Issu

es 295

Education Amendments of 1972 Title IX

X Educational institutions receiving federal financial assistance

Dept. of Education

Vietnam Era Vets Readjustment Act—1974

X Government contractors—$10,000+

OFCCP

Pregnancy Discrimination Act of 1978

X All employers 15+ EEs EEOC- OFCCP

Fair Labor Standards Act

Includes minimum wage law and equal pay act with DOL complex method of coverage

*Rehabilitation Act of 1973

X Receives federal money: federal contractor, $2,500+

OFCCP

Americans with Disabilities Act of 1990

X Covers employers with 15 or more employees

EEOC

Federal Privacy Act of 1976

Federal agencies only

Freedom of Information Act

Federal agencies only

Family Educational Rights and Privacy Act

Schools, colleges, and universities, federally assisted

Immigration Reform Act of 1986

All employers INS

*Applies to federal agencies, contractors, or assisted programs only. †Mandatory retirement eliminated except in special circumstances. EE = Employee ER = Employer EEOC = Equal Employment Opportunity Commission OFCCP = Office Federal Contract Compliance Programs NLRB = National Labor Relations Board DOL = Department of Labor INS = Immigration and Naturalization Service

Fischer, R ., H

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. (2012). Introduction to security. P roQ

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296 INTRODUCTION TO SECURITY

Subject Unacceptable Inquiries Acceptable Inquiries

Address or duration of residence

Do you own or rent your home? What is your place of residence?

How long have you resided in this state or city?

Age How old are you? What is your birth date? What are your children’s ages? Dates of attendance or completion of elementary or high school

Are you 18 years of age or older? If not, state your age If hired, can you show proof of age? If under 18, can you submit a work permit after employment?

Arrest and convictions records

Have you ever been arrested? Have you been convicted of a crime? If so, give details. Are you authorized to work in the United States? Can you, after employment, submit verification of your legal Right to work in the United States? Statement that such proof may be required after employment

Birthplace, citizenship Of what country are you a citizen? Are you naturalized or a native-born citizen? What date did you acquire citizenship? Please produce your naturalization or first paper Are your parents or spouse naturalized or native-born United States citizens? What date did your parents or spouse acquire United States citizenship?

Disability What is your corrected vision? Have you ever been unable to cope with job- related stress? Do you have a disability that would interfere with your ability to perform the job? When will your broken leg heal? Can you stand? Can you walk? How many days were you sick last year? Have you ever been treated for mental illness? Do you have asthma? Do you have any physical disabilities or handicaps? Questions regarding receipt of workers’ compensation

Do you have 20/20 corrected vision? How well can you handle stress? How did you break your leg? Can you stand for 5 hours? Can you walk 20 miles in one day? Can you meet the attendance requirements of this job?

Table 12-2 Examples of Acceptable and Unacceptable Inquiries for Preemployment Screening

(Continued)

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 297

(Continued)

Subject Unacceptable Inquiries Acceptable Inquiries

Discharge from military service

Did you serve in the armed forces of another country? Did you receive a discharge that was less than honorable?

Have you ever been a member of the United States armed services or in a state militia? If so, what branch? If so, explain your experience in relation to the position for which you are applying. Did you receive a dishonorable discharge? (A statement should accompany inquiries regarding military service that a dishonorable discharge is not an absolute bar to employment and that other factors will affect the final decision.)

Education Describe your academic, vocational, or professional education as it relates to this position. What private or public schools did you attend?

English language skills What is your native language? How did you acquire your foreign language skill?

What foreign language do you read, write, and/or speak fluently?

Experience Inquiries include those regarding work experience

Marital status, number of children, child care, sex

Are you married? Single? Divorced? Separated? What is your spouse’s name? Where is your spouse employed? What is your spouse’s salary? What are your child care plans? Who can we contact in case of emergency? (This question can be asked after a person has been hired.) Do you wish to be addressed as Miss? Mrs.? Ms.? Questions regarding pregnancy, childbearing, or birth control.

Information such as this, which is required for tax, insurance, or Social Security purposes, may be obtained after hiring.

Lawful inquiries include those regarding one’s ability to travel if the job required it. However, all applicants must be asked the same question.

Notice in case of emergency

Name and address of person to be notified in case of accident or emergency. (Information obtained after the applicant has been hired.)

Name and address of person to be notified in case of accident or emergency. Name and address of a relative or spouse to be notified in case of accident or emergency.

Table 12-2 (Continued)

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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298 INTRODUCTION TO SECURITY

Subject Unacceptable Inquiries Acceptable Inquiries

Name Please state your maiden name. If you have worked under another name, state that name and dates.

Have you ever worked for this company under a different name? Is additional information relative to change of name, use of an assumed name or nickname necessary to enable a check on your work record? If yes, explain.

Organization, activities List all clubs, societies, and lodges to which you belong.

Please state your membership in any organization(s) that you feel is/are relevant to your ability to perform this job.

Physical description, photograph

Questions as to applicant’s height and weight. Any questions that have an impact on one’s ability to perform the job requirements.

Require applicant to affix a photograph to application.

Statement that photograph may be required after employment.

Request applicant at his or her option to submit a photograph. Require a photograph after interview but before employment. Inquiries include those that are not related to job requirements.

Race, color, religion, or national origin

Questions as to applicant’s race or color. Questions regarding applicant’s complexion or color of skin, eyes, hair. Questions regarding applicant’s religion. Questions regarding religious days observed. Does your religion prevent you from working weekends or holidays? Questions as to nationality, lineage, ancestry, national origin, descent, or parentage of applicant, applicant’s parents, or spouse.

Statement by employer of regular days, hours, or shifts to be worked.

References Questions of applicant’s former employers or acquaintances that elicit information specifying the applicant’s race, color, religious creed, national origin, ancestry, physical handicap, medical conditions, marital status, age, or sex.

Who referred you for a position here? Names of persons willing to provide professional and/or character references for applicant.

Table 12.2 (Continued)

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 299

In some aspects, these regulations had a streamlining effect, eliminating irrelevant questions and confining questions exclusively to those matters relating to the job applied for. The subtler kinds of discrimination on the basis of age, sex, and national origin have been largely eliminated from the employment process. In making these changes to protect the applicant, state and fed- eral laws have created new dilemmas for employers and their security staffs.

Various federal and state laws prohibit criminal justice agencies (police departments, courts, and correctional institutions) from providing information on certain criminal cases to non–criminal justice agencies (for example, private security firms or human resources depart- ments). The Fair Credit Reporting Act requires that a job applicant must give written consent to any credit bureau inquiry.

All states have some type of privacy legislation meeting the guidelines set forth in the Federal Privacy Act of 1976:

The most controversial portion of the Act states “that information shall only be used for law enforcement and criminal justice and other lawful purposes.” The crux of the issue is the way that “other lawful purposes” is defined. Does this meaning include human resources depart- ments and private security operations? The verdict is mixed. Human resources, security, and loss-prevention operations must be aware of the interpretation of the privacy legislation in each state in which they operate. Recent legislation as discussed in Chapter 5 regarding the Department of Homeland Security has allowed for greater access of government agencies and private security firms to criminal histories, financial records and medical records.

Understandably there is some confusion regarding the rules governing employment screening. In spite of such confusion, the preemployment inquiry remains one of the most useful security tools employers can use to shortstop employee dishonesty and profit drains. Security management should consult with legal counsel to determine which laws relate to their locality and establish firm and precise policies regarding employment applications and hiring practices. An employer should be as familiar as possible with the federal Fair Credit Reporting Act (FCRA) which governs what employers must do when contracting record checks with third parties.

Generally speaking, look for, and be wary of, applicants who:

1. Show signs of instability in personal relations 2. Lack job stability: a job hopper does not make a good job candidate 3. Show a declining salary history or are taking a cut in pay from the previous job 4. Show unexplained gaps in employment history 5. Are clearly overqualified 6. Are unable to recall or are hazy about names of supervisors in the recent past or who forget

their address in the recent past

In general all or some of the following information might be included in a background check.

l Driving records l Vehicle registration

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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300 INTRODUCTION TO SECURITY

l Credit reports l Criminal records l Social security number l Educational records l Court records l Workers’ compensation l Bankruptcy l Character references l Neighbor interviews l Medical records l Property ownership l Military records l State licensing l Drug tests l Past employment l Personal references l Arrest records l Sex offense lists

If the job applied for is one involving the handling of funds, it is advisable to get the appli- cant’s consent to make a financial inquiry through a credit bureau. Be wary if such an inquiry turns up a history of irresponsibility in financial affairs, such as living beyond one’s means.

Application forms should ask for a chronological listing of all previous employers in order to provide a list of firms to be contacted for information on the applicant as well as to show continuity of career. Any gaps could indicate a jail term that was “overlooked” in filling out the application. When checking with previous employers, dates on which employment started and terminated should be verified.

References submitted by the applicant must be contacted, but they are apt to be biased. After all, since the person being investigated submitted their names, they are not likely to be negative or hostile. It is important to contact someone—preferably an immediate supervisor— at each previous job. Such contact should be made by phone or in person.

The usual and easiest system of contact is by letter or in recent years by email, but this leaves much to be desired. The relative impersonality of these forms of communication, espe- cially one in which a form or evaluation is to be filled out, can lead to generic and essentially uncommunicative answers. Because many companies as a matter of policy, stated or implied, are reluctant to give someone a bad reference except in the most extreme circumstances, a written reply to a letter will sometimes be misleading.

As noted, over the past several years the letter has often been replaced with an e-mail. What has been noted as pitfalls of the letter apply to e-mail, although the ease of use and virtually no cost benefits often puts this form of reference check at the top of many budget-conscious man- agers’ preferred means of contact.

On the other hand, phone or personal contacts may become considerably more discur- sive and provide shadings in the tone of voice that can be important. Even when no further

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 301

information is forthcoming, this method may indicate when a more exhaustive investiga- tion is required.

Backgrounding

It may be desirable to get a more complete history of a prospective employee—especially in cases where sensitive financial or supervisory positions are under consideration. In-depth investigations will involve extra expense, but may prove to be well worthwhile. Backgrounding, which involves a discreet investigation into the past and present activities of the applicant, can be most informative.

An estimated 90 percent of all persons known to have stolen from their employers were not prosecuted. While this is a disturbing estimate the U.S. Chamber of Commerce estimates that approximately 75% of all employees steal at least once. But 50% do it a second time. Experts believe that we generally catch only chronic offenders.8

A thorough investigation of potential employees is certainly justified, especially the back- grounds of persons being considered for jobs with responsibility for significant amounts of cash or goods, or those seeking management positions in shipping, receiving, purchasing, or paying.

Also significant to note is that there is agreement among personnel and security experts that 20 percent of any given workforce is responsible for 80 percent of personnel problems of every variety. If backgrounding can turn up this kind of recorded or known employee behavior, it is well worth the expense.

Backgrounding is also employed to investigate employees being considered for promotion to positions of considerable sensitivity and responsibility. Such persons may have been the very model of rectitude at the time of employment but may since have had financial reverses threatening their lifestyles. If a background investigation uncovers such information, a com- pany is in a position to offer assistance to that employee if it so desires, relieving both strain and need, which can lead to embezzlement. Such action can boost company morale as well as reduce the potential for theft committed out of desperation.

With today’s access to Internet resources, security staff can subscribe to any number of Internet investigative resources. The cost associated with these services ranges from as low as $25 per inquiry to several hundred dollars. The cost is often a reflection of the depth of the inquiry. Common resources include:

l www.instantpeoplecheck.com l www.uscriminalcheck.com l www.accuratecredit.com l www.web.public.records-now.com

In addition to paying for Internet searches, employers are also making use of Internet networking sites, such as Facebook, Xing and Linkedin, as well as Google. While the infor- mation can be valuable, it may also lead the company into problem areas. These may include legal risks that can cost the company. It is therefore wise to follow established prac- tices and remember the limitations of information posted on public sites. This practice and developing trends are worth monitoring. The New York Times reported in August of 2010

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302 INTRODUCTION TO SECURITY

that Germany had drafted a law that would place restrictions on the use of Facebook profiles for hiring purposes.9

Integrity and Lie Detection Tests

Another option in lieu of a full background investigation is the use of various integrity and lie detection tests. In states where their use is legal, these tests, according to some experts, can be useful tools in determining the past and current records of candidates for employment or pro- motion to sensitive positions.

Using integrity and lie detection tests is controversial, as is the discussion among practitio- ners about the relative merits of different types of tests. Many security people look on integrity tests as invaluable tools, but generally agree that their use should be restricted to the hands of competent, trained professionals for productive results.

The three main categories of integrity and lie detection tests are (1) the polygraph, (2) the Psychological Stress Evaluator (PSE), and (3) the Personal Security Inventory (PSI). The first two are machines that operate on the same basic physiological principle. The third is a psycho- logical pencil-and-paper test. Controversial recent entries into the area of truth/stress detec- tion are infrared heat scanner and MRI brain scans. In addition, recent research has indicated that eye-tracking technology might be a cost-effective alternative method of lie detection. Current research at the University of Utah reports that accuracy in measuring deception ranges between 82 and 91 percent and requires only 20% of the amount of time needed for polygraph tests.10 Whether these new technologies will survive is speculative.

The polygraph, PSE, MRI scan and infrared face scan operate on the premise that lying cre- ates conflict, which in turn causes anxiety leading to stress reactions. Stress reactions typically include increased respiration, increased pulse rate, higher blood pressure, digestive disorders, perspiration, temperature change, muscle tension, and pupil dilation. The polygraph and the PSE measure some of these changes. Most polygraphs measure galvanic skin response, blood pressure, and respiration. The PSE measures changes in voice quality from tension in the vocal cords. The readouts of both devices may be recorded on paper tape and the responses to vari- ous questions are analyzed in terms of the charted reactions, which are compared with reac- tions to simple test questions establishing an individual’s normal response to lying. Digital readouts are now more common, and although the PSE has not been as well publicized as the polygraph, portable PSEs are now available. Manufacturers claim that the digital device is the world’s first portable lie detector.11

Do these machines really work? The controversy over this question continues to draw attention in professional publications. The Employee Polygraph Protection Act of 1988 strictly limits the use of the polygraph to certain industries and for specific purposes. It prohibits preemployment polygraphs by all private employers except those whose primary business is providing security personnel for the protection of currency, negotiable securities, precious commodities or instruments, or proprietary information. Companies who manufacture, dis- tribute, or dispense controlled substances may use the polygraph for any employee having direct access to the manufacture, storage, distribution, or sale of these controlled substances.

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Chapter 12 l Internal Theft Controls/Personnel Issues 303

To determine whether the polygraph or PSE is worth using in a security operation, vari- ous factors need to be considered, such as “What is a lie?” According to the American Heritage Dictionary of the English Language, a lie is making a statement or statements that one knows to be false, especially with the intent to deceive. Because a lie is really a subjective evalua- tion, what these machines record is what a person believes to be a lie. In addition, because the machines measure only stress, the subject must believe that the machine works so that enough stress is produced to record.

Because these machines simply measure the physiological symptoms of stress, other stressors may also be recorded. For example, a question concerning drug history may evoke a dramatic response from a subject who has lost a close relative to drug abuse. The subject’s physical condition at the time of the test can also influence the tracings. Fatigue, drugs, and alcohol are the biggest culprits in this category, but even simple things like needing to use the bathroom or suppressing a cough can affect the tracings.

Can someone beat the machine? The answer is both simple and complex. A subject can affect the tracing of the machine by saying prayers or counting holes in acoustic tiles, but a good examiner can and will note these changes. Although the machine registers only physi- ological changes and thus cannot be beaten, the accuracy of the machine is determined solely by the quality of the examiner.

Problematic to the issue of accuracy, then, is the training of examiners. Training can range from as little as 6 weeks to as long as 6 months. Still a 2003 National Academy of Sciences report concluded that research on the polygraph’s efficacy was inadequate.12 Today the polygraph and related lie detection tests continue to generate discussion about their use and reliability.

What is the role of these devices if such doubts can be cast on their accuracy and on the skill of examiners? Jerome Skolnick, noted criminologist, suggests that their results should be used “to open up leads to further investigation of information rather than being itself prima facie evidence.”13

Much case law regarding the use of the polygraph has been added since the 1988 Polygraph Act. Still, the polygraph’s advocates are striving for national recognition for the professional use of the instrument through improving standards for operators. In Illinois, a licensed school must certify polygraph operators before they can operate a machine. Even so, Illinois does not allow polygraph evidence to be presented in its courts.

As for the PSE, the question remains whether polygraph case law will apply to this type of testing as well. Since both machines operate on the same principles, it is likely that much of the established case law relating to the polygraph might be applicable to the PSE. It is interesting to note, however, that during the past 10 years, little has changed in reference to the use of the PSE, but the polygraph continues to struggle to survive under legal fire.

As previously mentioned, the PSI is a psychological pencil-and-paper exam. Many varia- tions of this test exist throughout the United States (for example, the California Personality Inventory [CPI], the Minnesota Multiphasic Personality Inventory [MMPI], Inwald Personality Inventory [IPI], Wonderlic), but they all have common traits. These tests are designed to eval- uate prospective employees for honesty and integrity, drug or alcohol abuse, and violence or emotional instability. Most of these tests can be administered on company property and are

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304 INTRODUCTION TO SECURITY

relatively inexpensive. The test questions are designed to make consistency (veracity) checks by comparing responses and to provide clues for the psychologist evaluating the personality of the potential employee tested. For example, a typical question might be as follows:

You are riding on a bus. A sign indicates “No Smoking.” A person sits down next to you and lights a cigarette. What would you do?

1. Inform him that he is not allowed to smoke 2. Point out the “No Smoking” sign 3. Move to another seat 4. Get off the bus 5. Say or do nothing

Adherents of this system claim a high degree of accuracy for such tests when they are con- ducted by properly trained personnel. Table 12-3 provides a list of pointers that can be used in evaluating pencil-and-paper tests.

It is important for security managers to research the limitations on the use of such instruments in their state. Some states forbid their use as a requirement for employment but permit such test- ing to be used on a voluntary basis. Other states forbid their use under any circumstances.

In general, organized labor has lobbied diligently for legislation banning the use of so-called integrity testing and lie detectors for all industrial or commercial applications, their efforts proving successful with the passage of the 1988 Polygraph Act. The American Polygraph Association, which opposes the use of the PSE on grounds that it has not yet proved itself, has endorsed legislation setting stricter standards for polygraph operators, but naturally fights labor’s stand on the issue.

Table 12-3 Scrutinizing Vendor Pencil-and-Paper Tests Twelve Pointers in Evaluating a Test’s Relevance for Meeting Your Hiring Goals

1. Beware of tests for which little or no validation research exists. 2. Beware of tests that claim they “only replace the polygraph.” 3. Beware of studies that are not based on the predication model of validation. 4. Beware of studies that do not tell you how many people were incorrectly predicted to have job problems. 5. Beware of tests that claim to predict dangerous or violent behavior or tendencies. 6. Beware of studies that report “significant” correlations as evidence of their validity. 7. Beware of studies that use small numbers of people to predict important job-performance outcomes. 8. Beware of studies that have not been cross-validated. 9. Beware of claims that tests are valid for use with occupational groups for which validation studies have not yet

been conducted. 10. Beware of studies based on questionnaires or tests filled out anonymously. 11. Beware of studies that have not used real job candidates as subjects in their validation efforts. 12. Beware of tests whose validation studies have been designed, conducted, and published only by the test

developer or publishing company without replication by other, totally independent, psychologists or agencies.

Source: From materials developed by Dr. Robin Inwald, Hilson Research Inc., February 1988.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 305

Despite the 1988 Polygraph Act limitations on preemployment usage, many firms continue to use the polygraph in various types of investigations. Firms using these machines in this manner have generally found them to be useful. The federal government still performs tens of thousands of polygraph tests each year.14

According to the 1988 Polygraph Act, the polygraph may be used on existing employees under the following circumstances:

1. In connection with an ongoing investigation involving economic loss or injury to the employer’s business (that is, theft, embezzlement, or misappropriation)

2. If the employee has access to the property that is the subject of an investigation 3. If the employer has reasonable suspicion that the employee was involved in the accident or

activity under investigation 4. If the employer provides to the employee before the test the specifics of the inquiry—that is,

what incident is being investigated and the reason the employee is being tested

Even if the employer meets the above criteria, employees cannot be disciplined or dis- charged solely on the basis of the results of the polygraph examination or for refusing to take the polygraph test.

Such examinations can cost from $50 to $150, depending on the length of the test, geo- graphic location and firm, so not every firm will find using them practical. Firms finding the expense acceptable usually limit the polygraph’s application to particularly sensitive investi- gations and then only after deciding whether the risk is such that the expense is warranted. Even so, these companies first explore whether they can be satisfied by an evaluation based on other, less expensive methods.

Of recent interest is the use of MRI technology to scan brain activity. Functional MRI technology expands the traditional static picture MRI to allow for a series of scans that show changes in the flow of oxygenated blood preceding neural events. The theory is that lying requires more cognitive effort than telling the truth. The test is too expensive for general com- mercial use at this time, with an estimated cost of $10,000 for an examination. For more infor- mation see www.noliemri.com.

Whatever decision the security manager makes regarding the use of integrity tests, he or she would be well advised to consult a reputable firm to learn about what such examinations involve.

Concerns following the September 11, 2001 bombing of the World Trade Center have researchers looking for ways to detect deception at airports. The problems associated with tra- ditional polygraphs and the PSE have been discussed. Recent work by scientists has taken the same theory of lying and stress and applied it to new technology. In this instance a heat sensi- tive camera spots possible deceit by looking for telltale increases in body temperature around the eyes. Such a device could be of value to airport security personnel. Although the research team was led by experts from the Mayo Clinic and Honeywell Laboratories, polygraph authori- ties question the utility of the device until further testing is completed.15 As of 2007 it appears that the same stress pitfalls are present in this new technology. TSA personnel might be target- ing nervous, jangly, harmless travelers as well as those who might be terrorists.16 As of 2010 there is little new published information on the developments on this front.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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http://www.noliemri.com

306 INTRODUCTION TO SECURITY

Americans with Disabilities Act

The ADA is a federal statute requiring employers to focus on the abilities of applicants rather than on their disabilities. Because of this, inquiries about medical conditions or medical tests before a job offer is made are prohibited. Offers can, however, be made contingent on success- ful completion of medical examinations. Employers must make certain that medical, psycho- logical, and physical agility examinations come at the end of the hiring process rather than at the beginning. Currently the ADA does not protect the following categories: drug abusers; homosexuals, bisexuals; persons who engage in aberrant sexual behavior; compulsive gam- bling, theft, or pyromania; persons whose disorders have been caused by drug abuse; or per- sons whose disabilities are only temporary. It should be noted that tests for illegal drugs are not subject to the ADA’s restrictions on medical examinations.17

Job announcements, descriptions, and applications should be carefully reviewed to ensure that they conform to the ADA requirements concerning the description of each position’s essential functions. All staff involved in recruiting, hiring, and personnel processing and deci- sion making generally should be retrained to ensure that they understand and conform to all ADA requirements. In the end, employers should hold persons with disabilities to the same performance standards as other employees.18

Drug Screening

There are few areas of preemployment screening that provoke the strong reactions that drug screening does. Two major issues usually raised about this type of testing concern invasion- of-privacy arguments and the problem of the risk of false positives. The issues related to drug screening will be dealt with in more detail in Chapter 14.

Other Screening Options

In addition to the screening tools already discussed, other sources of information can provide details of the applicant’s background that might prove valuable in making a hiring decision.

Credit reports not only reflect an applicant’s financial situation and stability but also pro- vide other useful information such as past addresses and previous employers. The legal restrictions of the Federal Fair Reporting Act must be complied with if a person is denied employment as the result of information discovered through this source.

Motor vehicle records are easily obtained and can aid in identifying high-risk employees by noting the number of driving violations and types.

Civil litigation records provide detailed, documented records of an applicant’s personal his- tory, background, and financial relationships. These records also document previous injury complaints. They may also provide clues to other employment problems not filed as criminal charges, such as theft, fraud, or serious misconduct.

There are many other possible sources of information, but time and space considerations do not allow for total coverage in an introductory text. As noted earlier there are numerous web based sites willing to provide information for a price.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 307

Hiring Ex-Convicts and Parolees

It should be strongly noted here that rigid exclusionary standards should never be applied to ex-convicts or parolees who openly acknowledge their past records. Such a policy would be at best unjust and at worst irresponsible. These people have served their sentences. Their records are available in situations in which employment is being sought. To turn them away solely on the basis of their past mistakes would be to force them back into a criminal pattern of life in order to survive.

While people with criminal backgrounds might well be unacceptable to certain companies, a rigid policy refusing all such people employment would be denying companies many poten- tially good employees deserving a chance to show that they have rehabilitated themselves. Experience has shown that these employees, knowingly hired in the right positions and prop- erly supervised, are not only acceptable but are frequently highly responsible and trustworthy. They should be given an opportunity to reestablish themselves in society.

Employee Assistance Programs

One innovation in coping with employee problems relating to, among other things, honesty, alcohol/drug problems, and depression has been the advent of the employee assistance pro- gram. “At a time when substance abuse, mental health problems, and other stresses beset the American work force, an effective employee assistance program (EAP) can be a wise invest- ment.”19 Today more than 90 percent of the Fortune 500 companies have introduced EAPs.20 Programs vary with the type and size of company. Some companies provide full-service, in- house operations, whereas smaller firms may restrict the type of service and contract with pro- fessional EAP firms.

The fact is that EAPs are proving valuable for some firms. McDonnell-Douglas reports a 34 percent reduction in absences in comparison to its corporate counterparts. In the area of attrition of drug users, McDonnell-Douglas displays a job drop-out rate from 40 percent in their control group to 7.5 percent in the EAP participants. Other firms also report success: Chicago Bell, General Motors, HARTline, and so forth. There is a belief among many of these employers that improving family life will also reflect positively in the workplace.21 For a discus- sion on EAPs see Chapter 14, Violence and Drug Use in the Workplace.

Continuity of the Screening Program

When a company makes a systematic and conscientious effort to screen out dishonest, trou- blesome, incompetent, and unstable employees, it has taken a first and significant step toward reducing internal theft. It is important that the program continues on a permanent basis.

Care must be taken to avoid relaxing standards or becoming less diligent in checking the backgrounds and employment histories of applicants. There is a tendency to lose sight of all the dimensions of the problem if the security program makes substantial inroads into the loss factor. Past problems are too soon forgotten, and carelessness follows closely behind. Active supervision is always necessary to maintain the integrity of this essential aspect of every secu- rity program.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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308 INTRODUCTION TO SECURITY

CASE STUDY

A security survey conducted for the Assets Corporation recommended a complete revamping of the activity and aims of the Human Services Department. At the present time the personnel department deals only with plant personnel hiring. The office manager finds and hires all office personnel, sidestepping Human Services. The Human Services manager merely records these employees after they are hired.

The Assets Corporation uses one application form for all employees, regardless of job classification. The legal-size application form was copied 10 years ago from one used by the human services manager in a prior job. It contains one line to record the applicant’s race and another to record religion. It also asks for three non-relative references and a listing of all prior employment with only the years of such employment required. No skill-related tests are given. The Human Services Department bases the employment decision on a review of the application and an interview with Human Services staff.

In a pending court case, the Assets Corporation has been charged with discharging a secretary for reasons of race. This employee stated on her application form that she had a high school diploma and could type 60 words a minute. After employment, her typed letters showed many uncorrected errors, including typing errors, misspelled words, and poor knowledge of business terms. This poor performance continued despite the availability of a comprehensive word processing program. She responded to all criticism by claiming racial discrimination on the part of her supervisor. She was verbally discharged, and no written record was kept of her poor performance.

l How could Assets protect itself from allegations such as those made by the discharged stenographer?

l What changes in the practices of the personnel department should the survey have recommended regarding: l Make-up of the application form? l Decision to hire employees? l Clerical applicant tests?

While employee screening and background checks can reduce later problems with employee performance and dishonesty, time and money often restrict the amount of effort in these important areas. Even the tools, such as polygraph and paper-and-pencil tests, that are used in place of personal checks of records are not universally accepted.

One thing, however, is clear. Employees who have options and feel treated like a part of a team are usually not going to become security problems.

Procedural Controls Auditing Assets

Periodic personal audits by outside auditors are essential to any well-run security program. Such an examination will discover theft only after the fact, but it will presumably discover any

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 309

regular scheme of embezzlement in time to prevent serious damage. If these audits, which are normally conducted once a year, were augmented by one or more surprise audits, even the most reckless criminal would hesitate to try to set up even a short-term scheme of theft.

These audits will normally cover an examination of inventory schedules, prices, footings, and extensions. They should also verify current company assets by sampling physical inven- tory, accounts receivable, accounts payable (including payroll), deposits, plant assets, and out- standing liabilities through an ongoing financial audit. In all these cases, a spot check beyond the books themselves can help to establish the existence of legitimate assets and liabilities, not empty entries created by a clever embezzler.

Separation of Responsibility

The principle of separation of responsibility and authority in matters concerning the com- pany’s finances is of prime importance in management. This situation must always be sought out in the survey of every department. It is not always easy to locate. Sometimes even the employee who has such power is unaware of the dual role. But the security specialist must be knowledgeable about its existence and suggest an immediate change or correction in such operational procedures whenever they appear.

An employee who is in the position of both ordering and receiving merchandise or a cashier who authorizes and disburses expenditures are examples of this double-ended func- tion in operation. All situations of this nature are potentially damaging and should be elimi- nated. Such procedures are manifestly unfair to company and employee alike. They are unfair to the company because of the loss that they might incur; they are unfair to the employee because of the temptation and ready opportunity they present. Good business practice demands that such invitations to embezzlement be studiously avoided.

It is equally important that cash handling be separated from the record-keeping function. Cashiers who become their own auditors and bookkeepers have a free rein with that part of company funds. The chances are that cashiers will not steal, but they could and might. They might also make mathematical mistakes unless someone else double-checks the arithmetic.

In some smaller companies, this division of function is not always practical. In such con- cerns, it is common for the bookkeeper to act also as cashier. If this is the case, a system of countersignatures, approvals, and management audits should be set up to help divide the responsibility of handling company funds from that of accounting for them.

Promotion and Rotation

Most embezzlement is the product of a scheme operating over an extended period of time. Many embezzlers prefer to divert small sums on a systematic basis, feeling that the individual thefts will not be noticed and that therefore the total loss is unlikely to come to management’s attention.

These schemes are sometimes frustrated either by some accident that uncovers the sys- tem or by the greed of the embezzlers, who are so carried away with success that they step up the ante. But while the theft is working, it is usually difficult to detect. Frequently the thief is

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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310 INTRODUCTION TO SECURITY

in a position to alter or manipulate records in such a way that the theft escapes the attention of both internal and external auditors. This can sometimes be countered by upward or lateral movement of employees.

Promotion from within, wherever possible, is always good business practice, and lateral transfers can be effective in countering possible boredom or the danger of reducing a func- tion to rote and thus diminishing its effectiveness. Such movement also frustrates embez- zlers. When they lose control of the books governing some aspect of the operation, they lose the opportunity to cover their thefts. Discovery inevitably follows careful audits of books they can no longer manipulate. If regular transfers were a matter of company policy, no rational embezzler would set up a long-term plan of embezzlement unless a scheme was found that was audit-proof—and such an eventuality is highly unlikely.

To be effective as a security measure, such transfers need not involve all personnel since every change in operating personnel brings with it changes in operation. In some cases, even subtle changes may be enough to alter the situation sufficiently to reduce the totality of con- trol an embezzler has over the books. If such is the case, the swindle is over. The embezzler may avoid discovery of the previous looting, but cannot continue without danger of being unmasked.

In the same sense, embezzlers dislike vacations. They are aware of the danger if someone else should handle their accounts, if only for the 2 or 3 weeks of vacation, so they make every effort to pass up holidays. Any manager who has a reluctant vacationer should recognize that this is a potential problem. Vacations are designed to refresh the outlook of everyone. No mat- ter how tired they may be when they return to work, vacationers have been refreshed emotion- ally and intellectually. Their effectiveness in their job has probably improved, and they are, generally speaking, better employees for the time off. The company benefits from vacations as much as the employees do. No one should be permitted to pass up authorized vacations, espe- cially one whose position involves control over company assets.

Computer Records/Electronic Mail and Funds Transfer/Fax

The computer has become the most powerful tool for record-keeping, research and develop- ment, funds transfer, electronic mail, and management within most companies today. It is essential that the computer and its support equipment and records be adequately protected from the internal thief.

Besides the computer, the transfer of information using Wi-Fi, wireless phones and other electronic devices is an everyday occurrence. This is such an important area of security that additional coverage is provided in Chapter 17.

Physical Security

It is important to remember that personnel charged with the responsibility of goods, materi- als, and merchandise must be provided the means of properly discharging that responsibil- ity. Warehouses and other storage space must be equipped with adequate physical protection to secure the goods stored within. Authorizations to enter such storage areas must be strictly

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 311

limited, and the responsible employees must have means to further restrict access in situa- tions where they feel that the security of goods is endangered (see Chapter 10 for a discussion of pass systems).

Receiving clerks must have adequate facilities for storage or supervision of goods until they can be passed on for storage or other use. Shipping clerks must also have the ability to secure goods in dock areas until they are received and loaded by truckers. Without the proper means of securing merchandise during every phase of its handling, assigned personnel cannot be held responsible for merchandise intended for their control, and the entire system will break down. Unreasonable demands, such as requiring shipping clerks to handle the movement of merchandise in such a way that they are required to leave unprotected goods on the dock while filling out the rest of the order, lead to the very reasonable refusal of personnel to assume responsibility for such merchandise. And when responsibility cannot be fixed, theft can result.

The Mailroom The mailroom can be a rich field for a company thief. Not only can it be used to mail out com- pany property to an ally or to a prearranged address, but it also deals in stamps—and stamps are money. Any office with a heavy mailing operation must conduct regular audits of the mailroom.

Some firms have taken the view that the mailroom represents such a small exposure that close supervision is unnecessary. Yet the head of the mailroom in a fair-sized eastern firm got away with more than $100,000 in less than 3 years through manipulation of the postal meter. Only a firm that can afford to lose $100,000 in less than 3 years should think of its mailroom as inconsequential in its security plan. In addition, recent events related to bioterrorism make mailroom security an even greater responsibility.

Trash Removal Trash removal presents many problems. Employees have hidden office equipment or mer- chandise in trash cans and have then picked up the loot far from the premises in cooperation with the driver of the trash-collecting vehicle. Some firms have had a problem when they put trash on the loading dock to facilitate pickup. Trash collectors made their calls during the day and often picked up unattended merchandise along with the trash. On-premises trash com- paction is one way to end the use of trash containers as a safe and convenient vehicle for removing loot from the premises.

Every firm has areas that are vulnerable to attack. What and where they are can only be determined by thorough surveys and regular reevaluation of the entire operation. There are no shortcuts. The important thing is to locate the areas of risk and set up procedures to reduce or eliminate them.

When Controls Fail There are occasions when a company is so beset by internal theft that problems seem to have gotten totally out of hand. In such cases, it is often difficult to localize the problem sufficiently

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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312 INTRODUCTION TO SECURITY

to set up specific countermeasures in those areas affected. The company seems simply to “come up short.”

Management is at a loss to identify the weak link in its security, much less to identify how theft is accomplished after security has been compromised.

Undercover Investigation

In such cases, many firms similarly at a loss in every sense of the word have found it advis- able to engage the services of a security firm that can provide undercover agents to infiltrate the organization and observe the operation from within.

Such agents may be asked to get into the organization on their own initiative. The fewer people who know of the agents’ presence, the greater the protection, and the more likely they are to succeed in investigations. It is also true that when large-scale thefts take place over a period of time, almost anyone in the company could be involved. Even one or more top execu- tives could be involved in serious operations of this kind. Therefore secrecy is of great impor- tance. Because several agents may be used in a single investigation and because they may be required to find employment in the company at various levels, they must have, or very con- vincingly seem to have, proper qualifications for the level of employment they are seeking. Over- or under-qualification in pursuit of a specific area of employment can be a problem, so they must plan their entry carefully. Several agents may have to apply for the same job before one is accepted.

Having gotten into the firm’s employ, agents must work alone. They must conduct the investigation and make reports with the greatest discretion to avoid discovery. But they are in the best possible position to get to the center of the problem, and such agents have been suc- cessful in a number of cases of internal theft in the past.

These investigators are not inexpensive, but they earn their fee many times over in break- ing up a clever ring of thieves. It is important to remember, however, that such agents are trained professionals. Most of them have had years of experience in undercover work of this type. Under no circumstances should a manager think of saving money by using employees or well-meaning amateurs for this work. Such a practice could be dangerous to the inexperienced investigator and would almost certainly warn the thieves, who would simply withdraw from their illegal operation temporarily until things had cooled down, after which they could return to the business of theft.

Prosecution

Every firm has been faced with the problem of establishing policy regarding the disposal of a case involving proven or admitted employee theft. They are faced with three alternatives: to prosecute, to discharge, or to retain the thief as an employee. The policy that is established is always difficult to reach because there is no ready answer. There are many proponents of each alternative as the solution to problems of internal theft.

However difficult it may be, every firm must establish a policy governing matters of this kind. And the decision about that policy must be reached with a view to the greatest

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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Chapter 12 l Internal Theft Controls/Personnel Issues 313

benefits to the employees, the company, and society as a whole. An enlightened manage- ment would also consider the position of the as-yet-to-be-discovered thief in establishing such policy.

Discharging the Thief

Most firms have found that discharge of the offender is the simplest solution. Experts estimate that most of those employees discovered stealing are simply dismissed. Most of those are car- ried in the company records as having been discharged for “inefficiency” or “failure to perform duties adequately.”

This policy is defended on many grounds, but the most common are as follows:

1. Discharge is a severe punishment, and the offender will learn from the punishment. 2. Prosecution is expensive. 3. Prosecution would create an unfavorable public relations atmosphere for the company. 4. Reinstating the offender in the company—no matter what conditions are placed on the

reinstatement—will appear to be condoning theft. 5. If the offender is prosecuted and found not guilty, the company will be open to civil action

for false arrest, slander, libel, defamation of character, and other damages.

There is some validity in all of these views, but each bears some scrutiny. As to learning (and presumably reforming) as a result of discharge, experience does not

bear out this contention. A security organization found that 80 percent of the known employee thieves they questioned with polygraph substantiation admitted to thefts from previous employers. Now it might well be argued that, because they had not been caught and dis- charged as a result of these prior thefts, the proposition that discharge can be therapeutic still holds or at least has not been refuted. That may be true, and it should be considered.

Prosecution is unquestionably expensive. Personnel called as witnesses may spend days appearing in court. Additional funds may be expended investigating and establishing a case against the accused. Legal fees may be involved. But can a company afford to appear so indif- ferent to significant theft that it refuses to take strong action when it occurs?

As to public relations, many experienced managers have found that they have not suf- fered any decline in esteem. On the contrary, in cases where they have taken strong, positive action, they have been applauded by employees and public alike. This is not always the case, but apparently a positive reaction is usually the result of vigorous prosecution in the wake of substantial theft.

Reinstatement is sometimes justified by the circumstances. There is always, of course, a real danger of adverse reaction by the employees, but if reinstatement is to a position not vulner- able to theft, the message may get across. This is a most delicate matter that can be determined only on the scene.

As far as civil action is concerned, that possibility must be discussed with counsel. In any event, it is to be hoped that no responsible businessperson would decide to prosecute unless the case was a very strong one.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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314 INTRODUCTION TO SECURITY

Borderline Cases

Even beyond the difficulty of arriving at a satisfactory policy governing the disposition of cases involving employee theft, there are the cases that are particularly hard to adjudicate. Most of these involve the pilferer, the long-time employee, or the obviously upright employee in finan- cial difficulty who steals out of desperation. In each case, the offender freely admits guilt and pleads being overcome by temptation. What should be done in such cases? Many companies continue to employ such employees, provided they make restitution. They are often grateful, and they continue to be effective in their jobs.

In the last analysis, individual managers must make the determination of policy in these matters. Only they can determine the mix of toughness and compassion that will guide the application of policy throughout.

It is hoped that every manager will decide to avoid the decision by making employee theft so difficult and so unthinkable that it will never occur. That goal may never be reached, but it is a goal to strive for.

Review Questions 1. What are some of the common danger signals of employee dishonesty? 2. Discuss procedural controls for decreasing the incidence of employee theft in specific

departments. 3. What should management’s role be in effecting internal security? 4. Should employees be prosecuted for stealing? Why? 5. Discuss the differences between personnel screening and backgrounding. 6. What areas of federal legislation must be considered when conducting reference checks

and employment histories? 7. Discuss the role of lie detection in backgrounding of employees. 8. What impact has the Americans with Disabilities Act had on employee selection?

References [1] Association of Certified Fraud Examiners. The cost of occupational fraud. 2010.

[2] Zalud B. 2002 Industry Forecast Study Security Yin-Yang: Terror Push, Recession Drag. Security, January 2002.

[3] Grannis K. Retail Losses Hit $41.6 Billion Last Year, According to National Retail Security Survey. National Retail Federation, <www.nrf.com>.

[4] Carson CP. In: Managing employee honesty. Boston: Butterworth-Heinemann; 1977.

[5] Josephson M. No baloney: stronger ethics an anti-fraud antidote. J Insur Fraud Summer 2010;1(1):2.

[6] <www.insurecast.com/html/crime_insurance.asp>, downloaded 7/9/2007. [7] Association of Certified Fraud Examiners. 2010 Report to the Nation on Occupational Fraud and Abuse. p. 4.

[8] Merchants Information Solutions, Inc. Employment Screening, September 2009, <http://employment- screening-services.blogspot.com>, downloaded 9/13/10.

[9] Jolly D. Germany Plans Limits on Facebook Use in Hiring. The New York Times, August 25, 2010.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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http://www.nrf.com
http://www.insurecast.com/html/crime_insurance.asp
http://employment-screening-services.blogspot.com
http://employment-screening-services.blogspot.com

Chapter 12 l Internal Theft Controls/Personnel Issues 315

[10] Mahoney S. Seeing through Lies. Secur Prod September 2010:110.

[11] <www.pimall.com>, downloaded 7/9/2007. [12] www.newyorker.com/2007/007/02.

[13] The use of polygraphs and similar devices by federal agencies: hearing before a subcommittee on govern- ment operations, house of representatives. Washington, DC: Government Printing Office; 1974. p. 29.

[14] <www.newyorker.com/reporting> 2007/07/02. [15] Shachtman N. Liar, Liar, Eyes on Fire? Wired January 2002 [downloaded 3/6/2003, <www.wired.com/

news/technology/0,1282,49458,00.html>] [16] www.newyorker.com

[17] U.S. Equal Employment Opportunity Commission. Facts about the Americans with Disabilities Act; U.S. Equal Employment Opportunity Commission, The ADA: Your Responsibilities as an Employer; U.S. Equal Employment Opportunity Commission, The ADA: Questions and Answers.

[18] Fyfe JJ, Greene JR, Walsh WF, Wilson OW, McLaren RC. In: Police Administration, 5th ed. New York: McGraw-Hill Companies; 1997. Pre-employment Screening Considerations and the ADA (1997), <http://janweb.icdi.wvu.edu/kinder/pages/pre_employment_screening.html>U.S. Equal Employment Opportunity Commission, Facts about the Americans with Disabilities Act; Gilbert Casella (1995, October 10), ADA Enforcement Guidance: Preemployment Disability-Related Questions and Medical Examinations (EEOC Notice Number 915.002), <www.eeoc.gov/docs/preemp.txt>.

[19] Pope T. An Eye on EAPs. Secur Manage October 1990:81.

[20] Contact, “Is an Employee Assistance Program (EAP) A Good Idea for My Client Companies?” downloaded 1/14/2003, <www.contactbhs.com/brokers/brokers/brokers10.html>.

[21] Pope.

Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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http://www.pimall.com
http://www.newyorker.com/2007/007/02
http://www.newyorker.com/reporting
http://www.wired.com/news/technology/0,1282,49458,00.html
http://www.wired.com/news/technology/0,1282,49458,00.html
http://www.newyorker.com
http://janweb.icdi.wvu.edu/kinder/pages/pre_employment_screening.html
http://www.eeoc.gov/docs/preemp.txt
http://www.contactbhs.com/brokers/brokers/brokers10.html

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Fischer, R., Halibozek, E., & Walters, D. (2012). Introduction to security. ProQuest Ebook Central <a onclick=window.open(‘http://ebookcentral.proquest.com’,’_blank’) href=’http://ebookcentral.proquest.com’ target=’_blank’ style=’cursor: pointer;’>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-03 11:27:54.

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