While passion can start a business, that isn’t enough to sustain it. To achieve longevity, an entrepreneur needs to develop certain technical and financial know-how.
One of these is proper cash management strategies for business. Many owners still don’t know the differences between cash flow and profit. Others cannot separate their personal and commercial expenses for more accurate accounting.
The mismanagement of essential assets like cash impacts the owner and the employees, which could lead to more severe problems, including stealing.
How Common Is Employee Theft?
Unfortunately, for organizations, the percentage of employee theft is likely higher than what they believe. Some reports suggest that it accounts for as much as 5 percent of revenue losses each year.
Although the rate seems small, that can still be devastating for a small company. As simple math, a business that generates $200,000 could potentially lose $10,000 annually—money they could use as added capital so it can grow more quickly.
Inside jobs are also one of the leading causes of data security breaches. According to Purplesec, over 60 percent of these attacks are due to internal sources. About 7 percent of these incidents are malicious, which can already include fraud.
Some of those who commit these acts have prior convictions, but a lot don’t. So why do they steal from the business?
There’s no official study about that, but some informal surveys may provide an idea. In one poll involving at least a thousand managers and employees, most agree that stealing in the workplace isn’t okay. However, almost 70 percent of the same respondents have taken something not theirs.
Around a fifth believed that it’s okay. When asked why, nearly 25 percent said that the company is likely to notice anything is missing. This partly explains the increasing incidents of office supply theft, which now accounts for about 20 percent of workplace stealing.
At least 17 percent claimed they couldn’t afford to buy the item. The other two reasons are more telling. Over 20 percent said that they are not paid enough, while 13 percent are likely stealing to exact revenge against a rude, mean, or evil boss.
Are Workers Paid Less?
The United States is one of the few countries to have achieved a developed-nation status, but it actually doesn’t offer the highest minimum wage. Based on the list of the World Population Review, this distinction belongs mostly to European countries, such as Luxembourg, the Netherlands, France, United Kingdom, and Ireland. Only one non-European nation, Canada, made it to the list.
Some may say that Europe tends to have a higher cost of living, which necessitates a bigger wage. However, the data from Numbeo reflects that it may not be the case all the time.
For example, if one compares New York and London, the former New Amsterdam is still almost 15 percent more expensive than the UK’s capital, even without rent. Rent and property prices are some of the few times London becomes pricier than NY, but the differences in costs are small.
When it comes to disposable income, it rose slightly in 2019, reaching almost 2 percent. But this growth was still slower than the required spending. Worse, the monthly percentage dipped significantly during the pandemic as millions of Americans lost their jobs.
Lastly, Pew Research Center data revealed that while paychecks today were higher than forty years ago, the purchasing power (or the ability of the consumers to buy goods) hardly changed. In other words, despite the increase in minimum wages or salary, they are barely enough to meet both wants and needs.
Lower Wages and Theft
Definitely, stealing from the company is a crime, and receiving lower wages doesn’t justify it. Providing bigger salaries also doesn’t guarantee that the employee will no longer steal.
Nevertheless, the pieces of information are worth thinking over. At the end of the day, Maslow’s hierarchy of needs still holds: before someone aspires to do greater things, they must meet their basic needs. This includes generating enough income for their family.
Fortunately, excellent fiscal management in the business can help achieve that. The company can generate enough profit and steady cash flow that they will have more than enough to bump the benefits and wages of their employees.
For instance, they may provide health insurance policies that extend to their family members, stock options plants, and retirement and savings programs.
All these may even create more income. Employees may feel more motivated or engaged to contribute to the company’s growth since they know they can also benefit from its progress.