It doesn’t matter how much of a family your organization is or how good your culture is, there is always a risk of employee theft.
It’s not necessarily restricted to product-based companies; it can happen in SaaS, services, and e-commerce companies too.
To give you an idea of what happens in this world and what to look out for to stay in the clear, I’ve collected some interesting employee theft statistics.
Let’s dive right in.
Top Employee Theft Stats
Here are the five most shocking employee theft statistics I found; read on to find more details on these.
- 34% of millennials believe that stealing from employers is justifiable.
- 22% of small business owners report employee theft.
- 89% of occupational fraud cases involve asset misappropriation.
- 49% of employees admit to time theft by adding more time to their timesheets than they’ve given to the company.
- 34% of companies don’t refer employee theft and fraud cases to law enforcement because of bad publicity.
The Current State of Employee Stats
Due to the law of large numbers, it’s only a matter of time before your company becomes a victim of employee theft as it grows.
That means, the bigger your organization is, the more likely it’s happening and with more frequency.
That said, SMBs need to remain attentive too; here’s what you need to know.
Certified Fraud Examiners estimate that companies lose 5% of revenue each year to employee theft and fraud. (ACFE)
According to the Association of Certified Fraud Examiners, the median loss per case is around $145,000.
They also found that the average loss per case was $1.7 million. Today, companies lose about $4.5 trillion a year around the world, with the majority of losses coming from schemes perpetrated by financial employees.
21.5% of billable hours are not recorded due to inaccurate manual timesheets.
This is more problematic in the case of agencies that offer per-hour services, and other organizations with salespeople that work on an hourly+commissions basis.
A good majority of organizations still rely on manual timesheets today. Most are using them because that’s how they’ve been doing it for years.
There’s also the case where employees offer off-the-clock freelance services to clients which also accounts for revenue lost by the company.
When a company faces its most disruptive fraud incident, 31% of the time it’s because of an internal perpetrator. (PwC)
In 2020, that number was at 38%. Furthermore, 26% of the time, the incident occurs when internal and external perpetrators are in collusion.
Meanwhile, 43% of the time, the incident happens due to external perpetrators.
For companies with less than $100 million in global revenue, 23% of fraud instances are due to asset misappropriation. (PwC)
It’s the same for companies with a global revenue between $100 million and $1 billion.
For companies with a global revenue between $1 billion to $10 billion, 24% of fraud cases are asset misappropriation.
And, for companies with global revenue exceeding $10 billion, 31% of fraud cases are asset misappropriation cases.
Meanwhile, for SMBs (less than $100 million in revenue), 32% of fraud cases are of cybercrime and 27% are customer fraud cases.
34% of millennials believe that stealing from employers is justifiable.
An academic study in a controlled environment found that 56.8% of millennial employees were engaged in employee theft and related offenses.
Meanwhile, the same was true for 40.5% of Generation Xers. Meanwhile, only 2.7% of baby boomers engaged in employee theft.
Keep in mind that this is a controlled study and that other factors like median age, gender, and industry also matter.
22% of small business owners report employee theft. (Business.org)
Furthermore, 35% of small business owners have personally caught an employee shoplifting. Another 35% have caught employee theft on camera.
Employee theft numbers in SMBs have remained somewhat consistent. For example, this 1979 journal entry estimates that 30% of SMBs are victims of employee theft.
Another 1985 journal entry talks about the prevalence of employee theft and out-of-sight crime.
However, modern security cameras along with AI-tracking software have made it somewhat easier to catch employee theft.
The median duration of fraud by an employee is 8 months.
Furthermore, the median loss for an employee is $60,000, and the loss per month is $7,500.
Meanwhile, fraud by managers goes on for a median duration of 18 months, with a median loss of $184,000 to the company.
That comes to around $10,200 loss per month. Fraud by business owners or executives has a median duration of 24 months and a median loss of $500,000.
That brings the loss per month to around $20,800.
89% of occupational fraud cases involve asset misappropriation.
The median loss in asset misappropriation cases is $120,000. Furthermore, 48% of cases of occupational fraud involve corruption at a median loss of $200,000.
Financial statement fraud makes up about 5% of occupational fraud cases but has the highest median loss at $766,000.
74% of employee theft and fraud perpetrators are men.
The median loss of fraud cases with men as perpetrators is $158,000.
Meanwhile, women were perpetrators 24% of the time and caused a median loss of $100,000.
Furthermore, men are 84% more likely to be the perpetrators if they are the owner or have an executive-level position.
If they have a manager-level position, they are 78% more likely to be the perpetrators.
Employee Theft Market Statistics
Employee theft isn’t a new concept, it’s always been there in one way or another. In fact, a 1988 paper estimated that employee theft cost American businesses up to $40 billion ($105 billion adjusted for inflation).
Since then, with rising populations, more businesses, and busier economies, that number is bound to be higher.
The mining industry has the highest median loss of $550,000 due to employee theft and fraud.
If you’ve seen the 2006 Leo film, Blood Diamond, this might not be as surprising.
The study found wholesale trade to be number two with a median loss of $361,000. That’s followed by the manufacturing industry at $267,000, and the construction industry at an even $250,000.
In fifth place, the real estate industry and the government & public transportation tied at $200,000.
Nonprofit organizations experience median losses of $76,000, half the size of other types of organizations.
Private and public companies, along with the government have around $150,000 in median losses.
Keep in mind that non-profit organizations, in this case, do not include not-for-profit organizations. Non-profits are considered to be more vulnerable to employee theft.
According to fraud experts, nonprofits are more trusting of their employees and have relatively loose financial controls.
The Asia-Pacific region has the highest loss per region at $1.2 million.
Western Europe comes in second, reaching $1 million in losses. That being said, Latin America and the Caribbean have the highest median losses per region at $250,000.
In comparison, the Asia-Pacific region has a median loss of $200,000, and Western Europe has a median loss of $181,000.
Generally, across all regions, the median loss is around $145,000. The 25th percentile is at $25,000 and the 75th percentile is at $750,000.
The global fraud detection and prevention market size is worth $43.97 billion.
The fraud detection and prevention market is expected to be worth $52.82 billion by the end of 2024.
Furthermore, research shows it’s growing at a CAGR of 21.8%, which means it will be worth $255.39 billion by 2032.
The global employee fraud detection market is growing at a CAGR of 21.5% between 2023 and 2028. (Research and Markets)
Employee fraud detection software looks for theft, bribery, and embezzlement, for the most part.
However, such software are often limited because they are only capable of integrating with online or cloud-based services.
Organizations that still have operations that run on a cash basis miss out on such software.
That’s why most businesses have either shifted or plan to shift all operations to digital systems in the future.
How Companies Are Using Employee Theft
In every problem, there’s an opportunity that arises. The same goes for employee theft; some use it as a way of increasing loyalty while others use it to make a statement.
Here’s how that’s going nowadays.
49% of employees admit to time theft by adding more time to their timesheets than they’ve given to the company.
46% of employees admit to adding between 15 and 60 minutes to their timesheets while 3% admit to adding more than 60 minutes.
Time theft has been a serious issue for companies for a while now and most find it hard to prove. Mostly because it isn’t exactly illegal, but companies have managed to prove it these days.
For example, a court decision in January 2023 in British Columbia, Canada ordered an accountant to pay back 50 hours of employee theft time, along with court fees and interest on outstanding wages.
Another case is when BART’s Independent Office of the Inspector General’s investigation led to convicting three employees of time theft, who were claiming 10-hour shifts while spending a large portion of that at home.
It’s becoming easier to deal with time theft these days but solutions have been here for a while.
For example, this press release by Nucleus Research from 2009 talks about dealing with time theft by automating attendance and time with biometrics.
Today, companies have more robust, cloud-based time-tracking tools with multiple contingencies to minimize time theft.
Are these solutions perfect? Probably not, but they reduce company losses to a reasonable extent.
84% of fraudsters and employee theft perpetrators display at least one behavioral red flag.
Regardless of whether an employee will commit employee theft, you should keep behavioral red flags in mind.
A few things companies currently do are:
- Employees who do not give details about their tasks and work.
- Dishonesty, even if it’s as little as lying about deadlines.
- Abuse of power, which is predominant in managerial and executive positions.
- Lack of teamwork or downright refusal to work with others.
- Missing documentation; the most common example is misplaced or missing invoices.
Last, but not least, take an extra look at complaints from other employees.
If a fraudster has worked in the organization for ten years or more, the median loss of their fraud will be $250,000.
If an employee has worked at a company for 6-10 years, the median loss of their fraud will be $137,000. If their tenure is between 1-5 years, their median loss will be $100,000.
If an employee with a tenure of one year or less commits fraud, the median loss of their fraud to the company will be $50,000.
For this reason, companies tend to have more stringent requirements for long-term employees. It’s also why they try to retain long-term employees the most.
68% of perpetrators of employee theft and fraud are terminated by their employers.
Organizations only report 57% of the cases to law enforcement, including regulatory bodies.
Of the cases that are actually reported to the authorities, 72% end up in an actual conviction.
That means, at the very least, 28% of known perpetrators of employee theft go free.
34% of companies don’t refer employee theft and fraud cases to law enforcement because of bad publicity.
Fear of bad publicity is a huge reason why a lot of cases of employee theft and fraud go unnoticed. You may think this only happens in large organizations or enterprises, but it’s the same with SMBs.
Most SMBs are in extremely competitive markets where incidents of fraud may give the other the advantage they need.
Other than that, 49% of companies said they don’t refer to law enforcement because of internal discipline policies.
Employee Theft Solutions Statistics
The most famous way to keep time for employees was punch cards, which are still used today; albeit an evolved version of them.
Today, most employee theft solutions are based on that idea, such as time-tracking software.
Here’s how they’re helping.
Time-tracking software increases productivity by 47%. (Clockify)
Increased employee productivity through time-tracking leads to fewer cases of time theft, ultimately helping increase revenue; or, in this case, recover lost revenue.
Back in 2007, a paper in the Kentucky CPA Journal (Biting the Hand that Feeds: The Employee Theft Epidemic by Terrance Daryl Shulman) found that US employers lose more than $400 billion in lost productivity.
The time-tracking software market is worth $5.23 billion today.
The time-tracking software market is expected to reach $12.3 billion in 2030, growing at a CAGR of 14.97%.
According to the study, key drivers for the market include the growing popularity of remote work, greater emphasis on workforce productivity, and the need for precise invoicing and billing.
The study also found certain restraints, including opposition to change by employees on account of privacy, micromanagement, and adverse effects of using time-tracking software.
Other than that, integration difficulties are also present due to companies using multiple software for payroll, HR, and project management.
The global employee monitoring software market size is $1.29 billion. (Spherical Insights)
The employee monitoring software market is growing at a CAGR of 7.2% and is expected to reach $2.10 billion in value by 2030.
While the primary driver for the growth of the market is an increase in productivity, employee theft and fraud prevention are also a major driver.
The median loss when an organization decides to file a civil suit is $300,000.
In general, if losses are high, there’s a higher chance of an organization filing a civil suit.
Civil suits are not filed when the median loss is around $95,000.
Employee productivity increases by 7% if they know they are being monitored. (SHRM)
It’s no secret that employees are less likely to engage in time theft if they know they are being monitored.
I’ve personally seen companies tell employees that all their work and screens are under constant monitoring, while it’s not actually true.
Just the thought is enough to raise productivity in employees.
Employee Theft Recent Trends
As companies deploy more robust organizational structures and processes, the opportunities for employee theft continue to decrease.
Generally speaking, you’ll see fewer cases of employee theft today. Don’t believe me, believe the data, but keep in mind that fewer offenses do not equal lower losses.
There were around 6,600 employee theft offenses in the United Kingdom in 2023. (Statista)
2020 and 2021 had the lowest offenses at around 5,000, primarily due to the pandemic. 2021 and 2022 saw an increase to 5,633 offenses.
However, when you compare these numbers to pre-2020 numbers, you’ll see that there’s a consistent drop in offenses.
2003 and 2004 have the most offenses at around 17,700. Since then, the total number of employee theft offenses has been gradually decreasing.
Considering that the UK has a working population of 32.98 million people, current numbers are very low.
If we limit one offense per person, it means that only 0.02% of the working population is taking part in employee theft.
That being said, there’s another thing to take into account here. While overall offenses are decreasing, it doesn’t mean overall losses are decreasing too.
It may just mean employees are getting smarter and getting better at hiding. It may also mean that there are fewer offenses of greater magnitude now.
For example, another study by Statista on the cost per incidence of employee theft found an upward pattern.
2007 and 2008 had a £235 per incident cost while 2014 and 2015 had a £1,114 per incident cost.
90.5% of the managers believe that accurate timesheets lead to increased revenue. (Tribes AI)
The study also found that mismanaged timesheets led to $51,000 in revenue loss per employee.
This may seem like human error instead of employee time theft. However, in most cases, employees end up taking advantage of the situation.
For example, they may overcharge by adding additional hours to the manual timesheets. Or, they may offer clients services on the side so they don’t get charged by the company.
The point is, that mismanaged manual timesheets are a breeding ground for employee theft, whether it’s in the form of time theft or lost clients.
In the long run, it creates a bad image for managers whose teams are costing the company money. That’s why most managers are in favor of automated well-kept timesheets.
The minimum limit for employee dishonesty coverage today is $100,000. (McGowanPRO)
Policies can go up to $500,000 without premiums. Companies today can also get coverage for individual activities that may be prone to employee theft.
Generally, employee dishonesty coverage prices depend on the industry. For example, it would cost more for firms that handle cash and securities.
However, a general rule is to estimate the annual volume and multiply by 20% to get a starting limit.
Wrap Up
Employee theft and fraud have been around in various forms since the dawn of time. In recent times, employee theft has become more complicated.
It’s no longer missing inventory and cash counter mismanagement, it’s more about asset misappropriation and corruption practices.
And these cases often take the attention away from other forms of employee theft, such as time theft.
That said, you can find solutions for most forms of employee theft and fraud today. I’m not only talking about reactive measures but also preventative measures.
If you, as a business owner, do not want to subject your employees to monitoring and time-tracking software, you should have stricter control of your processes.
That includes cash flow checks, productivity checks, employee-based deadlines, and better employee engagement programs.
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