How are employers responding to employee misconduct?
The misuse of company funds, time, and resources has emerged as the most-reported employee misconduct incidents in US workplaces, costing organisations an average of $9,000.
This is according to the latest report from Lance Surety Bonds Study, which revealed 19% of businesses have experienced internal fraud committed by an employee.
Misuse of company funds was the most frequently reported type of internal fraud, cited by 67% of respondents. This was followed by misuse of time or company resources at 65%, and inventory or product theft at 46%.
"The industries hardest hit by internal fraud were transportation, manufacturing, and healthcare, where complex operations and high employee turnover may contribute to greater risk," the report read.
Businesses lost an average of $9,000 due to internal fraud, according to the report, and have spent an average of three business days to rebuild trust after an incident.
Leadership was also affected by these incidents, as 70% noted that internal fraud was committed by someone they trusted.
As a result, 67% of leaders said they feel betrayed. Others reported feeling embarrassed (48%), anxious (30%), and isolated (26%).
"Employee theft might not make headlines like ransomware attacks, but it's quietly impacting businesses every day," the report read. "Most incidents go undetected for months, cost thousands of dollars, and leave emotional scars on leadership."
Responding to employee misconduct
Following internal fraud incidents, more than four in 10 employers said they installed surveillance or monitoring software (43%) and changed team structure or responsibilities (41%).
More than a third of the respondents said they reduced employees' access to sensitive data (37%) and added background checks (35%).
These measures implemented were shared across the organisation, according to 73% of the respondents.
More than a quarter (27%) said they chose to keep it discreet to avoid tension in the workplace.
Employee dishonesty bonds
Meanwhile, the report underscored the importance of obtaining a dishonesty bond at work, which is a type of fidelity bond that provides a safety mechanism in case an employee engages in illegal actions.
Over a third of employers (35%) said they took a dishonesty bond after experiencing internal fraud in their organisation.
But adoption remains limited, with 78% of the respondents saying they are not protected by an employee dishonesty bond. In fact, 78% said they have never heard of it before the report.
Having a clearer understanding of what a dishonesty bond is can increase the chances of employers obtaining one, according to the report.
"As awareness increases, more companies will learn the steps they need to take to protect themselves," the report read. "Understanding and using tools like employee dishonesty bonds can help businesses prevent future losses and rebuild confidence."
