Emotional Reactions to Employee Theft and the Managerial Dilemmas Small Business Owners Face

Abstract

Employee theft is one of the most harmful crimes that can occur to a small business. Research on this crime has focused primarily on its financial impact and how to prevent it. However, like other forms of crime, employee theft also has more personal and subjective effects on victims. To date, these aspects of employee theft victimization have been largely ignored. We address this gap in the literature by exploring the emotional consequences of employee theft as experienced by the owners of small businesses. Guided by grounded theory methodology, we conducted a series of in-person interviews with the owners of small businesses to gain a better understanding of the total impact of employee theft. Analysis of interviews indicated that victimized business owners experienced a range of cognitive and emotional reactions to theft. At times, these reactions were severe, and they were exacerbated if the victim had a strong emotional connection with the offender.

Keywords

employee theft small business victimization qualitative

Introduction

Employee theft is a serious problem for all businesses, but it can be especially devastating for small businesses. Because of their relatively small size, these firms are more vulnerable to financial losses caused by employee theft than larger business enterprises. In many ways, employee theft is a personnel management issue, and many studies of employee theft have focused upon the individual- and organization-level antecedents to theft (Ambrose, Seabright, & Schminke, 2002; Berry, Ones, & Sackett, 2007; Bowling, 2010; Bowling & Eschelman, 2010; J. Greenberg, 1990, 1993, 2002; Levine & Jackson, 2002; Omar, Halim, Zainah, & Farhadi, 2011; Spector & Fox, 2002). Although small business owners try to identify and retain trustworthy employees, many owners eventually find that they must confront the reality that someone they entrusted with a job has stolen from them. While there is substantial research on how an owner’s behavior can influence the prevalence of organizational deviance (Ezeribe, 2011; Litzky, Eddleston, & Kidder, 2006; Treviño & Brown, 2005; Van Fleet & Griffin, 2006), the effects that employee theft can have on business owners themselves have received little attention from researchers. In particular, the emotional costs of employee theft victimization have been virtually ignored.

That criminal victimization can have emotional as well as physical and financial costs is widely recognized in law and scholarship. One of the primary reasons that states have formal legal systems is because of the need to manage and control the collective emotions of citizens who are victimized by violent aggression or theft (Karstedt, 2014). Nowadays, the emotions of victims get special attention in the courtroom. Since the advent of the victims’ rights movement of the 1970s, all 50 states have passed statutes granting victims an independent participatory role in criminal justice proceedings. This role is most evident in the practice of allowing victims to confront offenders in open court and to make public statements about the impact that the offense had on them. Victim impact statements are often highly emotional and meant to be so. They are meant to provide the victim with an opportunity to describe the emotional damage caused by the crime (National Center for Victims of Crime, 2015).

Scholarly attention has also been devoted to the emotional costs of criminal victimization. Understandably, most of this research has focused on victims of violent crime, with special attention paid to victims of rape (Atkeson, Calhoun, Resick, & Ellis, 1982; Frank & Stewart, 1984) and intimate partner violence (Caetano & Cunradi, 2003; Coker et al., 2002). However, some research has also been conducted on nonviolent crimes, such as residential burglary (Brown & Harris, 1989; Fischer, 1984). This research consistently finds that burglary victims experience a number of postevent emotional reactions, such as anger, anxiety, and feelings of violation and insecurity (Brown & Harris, 1989).

In this article, we extend the literature on the emotional effects of victimization through a description of the experiences of a type of victim that has heretofore been ignored by researchers: small business owners victimized by employees through internal theft. As we detail below, our investigation finds that (1) this nonviolent property crime has surprisingly strong emotional effects on the victims and (2) these effects are in some ways similar to the experiences reported by the victims of more traditional street crimes, but differ substantially in other ways. Thus, our study presents new insights into a widely recognized problem and advances understanding of crime victimization from a novel perspective.

Employee Theft in Small Businesses and Its Consequences

According to the U.S. Small Business Administration (SBA), the vast majority of businesses have far fewer than 100 employees (U.S. SBA, 2013). The U.S. Department of Commerce (2012) estimates that 97.7% of all businesses in the United States have 99 or fewer employees, while less than one quarter of 1% of all businesses employ 500 people or more. Small businesses make up approximately 46% of the country’s total gross domestic product (U.S. SBA, 2012a) and employ almost half (49.2%) of all private-sector workers (U.S. SBA, 2012b). Since 1993, small businesses have accounted for approximately 64% of total new jobs growth within the private sector, adding over 11.8 million new jobs to the economy. In addition, small businesses are an important source of social and economic stability in communities throughout the United States (Gaskill, Van Auken, & Manning, 1993; Sutton, 2010). Unfortunately, the social and economic contributions of these businesses are routinely lost, as small businesses fail at a much higher rate than larger businesses. Approximately 50% of small businesses fail within 5 years of opening, and only a third survive for 10 or more years (U.S. SBA, 2014). Although small businesses fail for a variety of reasons, one of the main reasons is employee theft (Moorthy, Seetharaman, Somasundaram, & Gopalan, 2009).

“Employee theft” is a generic term used to categorize a wide range of deviant and criminal behaviors that have at their core some type of illegal or undesirable activity by an employee while on the job. Unfortunately, however, there are no generally accepted criteria for the types of behaviors that qualify as employee theft (L. Greenberg & Barling, 1996). As a result, the term has come to serve as a type of catchall categorization for many different but seemingly related behaviors. For example, acts of interpersonal deviance, such as when a health-care employee steals a patient’s property, have been termed employee theft because the theft was committed by an employee (Harris, 1999; Harris & Benson, 2000; Lindbloom, Brandt, Hough, & Meadows, 2007; Weber, Kurke, & Pentico, 2003). Employee theft has also been used to label counterproductive work behaviors such as arriving late to work, leaving work early, or taking unauthorized breaks (Boye & Wasserman, 1996; Snider, 2001, 2002). Additionally, studies of employee theft have examined the taking (and giving away) of food (Hollinger, Slora, & Terris, 1992), theft of finished goods and work in process (Sieh, 1987), and theft of products to be sold by the business (Rosenbaum, 1976).

Estimates of the extent of employee theft vary, depending in part on who is asked about what type of behavior. For example, studies by Ash (1991), Dalton and Metzger (1993), and Sieh (1987) found that only 8–10% of businesses reported experiencing employee theft. Similarly, a study by Fisher and Looye (2000) examining crimes committed against small businesses in the Midwest found that only 16% of businesses reported experiencing employee theft. At the other end of the scale, however, research by Kennedy (2014), Krippel, Henderson, Keene, Levi, and Converse (2008), and Wimbush and Dalton (1997) identified rates of business-reported employee theft reaching as high as 60%. Jones and Terris (1985) suggest that, depending upon the industry being examined, as many as 70% of businesses can expect to experience employee theft. When employees are asked about their own deviance, rates of self-reported employee theft have varied from 35% to 70% (Boye & Slora, 1993; Hollinger et al., 1992; Kamp & Brooks, 1991; Slora, 1989).

According to the Association of Certified Fraud Examiners (ACFE), businesses with fewer than 100 employees are most likely to be victims of employee theft. These businesses experienced 28.8% of victimizations in 2014 and over 30% of total victimizations since 2008. Furthermore, the dollar value of the losses suffered by small businesses is typically larger than those suffered by other businesses (ACFE, 2012), and the impact of any financial loss is much greater in small businesses (ACFE, 2014). The ACFE estimates that in 2014 the median loss for small businesses was US$154,000.00 per theft, which is larger than any other category except for businesses with over 10,000 employees (median loss = US$160,000). Alarming as these figures are, they most likely do not capture the full extent of the problem, because the losses reported by the ACFE represent cases where Certified Fraud Examiners (CFEs) were called to investigate the theft. However, hiring a CFE is expensive and it is likely that many victimized small businesses are not able to afford such investigations. As a result, the ACFE’s data on losses likely reflect only those of more profitable enterprises. The losses experienced by less profitable small businesses remain part of the dark figure of this form of crime.

While the literature is full of recommendations for how business owners should respond to, or attempt to prevent, employee theft (Alstete, 2006; Carland, Carland, & Carland, 2001; Chersan, 2009; Jackson, Holland, Albrecht, & Woolstenhulme, 2010; Marholin & Gray, 1976; Osborne, 1995; Shanmugam, Haat, & Ali, 2012; Snyder, Whitfield Broome, & Zimmerman, 1989; Zetocha, 1986), little attention has been paid to the emotional impact that theft can have on business owners. Neither has serious attention been given to the ways in which emotional reactions may influence how business owners make decisions after the event (for an exception, see Christopher, 2003).

Criminal victimization is one of the most difficult experiences a person may ever face and the effects of crime can be long lasting, affecting many aspects of the victim’s life by causing psychological trauma, physical injuries, and financial costs (Bachman, Saltzman, Thompson, & Carmody, 2002). Responses to victimization are influenced by a number of factors, including the relationship between the victim and the offender, the type of victimization, and the contextual factors that surround the event (Berg, Stewart, Schreck, & Simons, 2012; Feinstein, Humphreys, Bovin, Marx, & Resick, 2011). Several studies have found that victims of property crimes experience negative cognitive, emotional, and behavioral reactions, including stress, anxiety, and anger (Frieze, Hymer, & Greenberg, 1987; Kunst, Rutten, & Knijf, 2013; Kuroki, 2013). Barnes and Ephross (1994) found that victims of property crimes experience anger, sadness, and fear if they perceived the actual target of the offense to be themselves, rather than the property that was stolen or damaged.

These findings have relevance for the study of employee theft because the personal dimensions of the employment relationship may lead small business owners to experience strong negative emotional reactions when theft occurs. Research on other offenses finds that when victims have close relationships with offenders, they are more likely to experience emotional distress and are less likely to report victimization to the police than victims who are not related to their offenders (Campbell, 2002; Campbell & Lewandowski, 1997; Feinstein et al., 2011; Flanagan, Jaquier, Overstreet, Swan, & Sullivan, 2014; Gartner & Macmillan, 1995; Ullman & Siegel, 1993; Weiss, Dixon-Gordon, Duke, & Sullivan, 2015). The persistent nature of victimization effects may be due, in part, to the fact that victims are attempting to understand why they have been victimized by someone they trusted (Gromet, 2012).

Managerial Dilemmas Caused by Employee Theft

Taking steps to protect oneself from future victimizations is a common and expected response by victims of both personal and property crimes (Holder, 1997; Outlaw, Ruback, & Britt, 2002). Victims may lock their doors, change their walking patterns to avoid certain people and places, or choose to alter their relationships in order to avoid interactions with people and places associated with crime or disorder (Barnes & Ephross, 1994; McDevitt, Balboni, Garcia, & Gu, 2001). As steps toward reducing the likelihood of repeat victimization, these reactions are both understandable and wise as they increase guardianship and reduce the victim’s proximity to potential offenders (Cohen & Felson, 1979). However, for small business owners, increasing guardianship and reducing proximity to potential offenders may not always be an option. This is because the owner continually returns to the location of the crime and by necessity must continually interact with employees who may subject the owner to repeat victimization. This situation limits the ability of business owners to reduce their proximity to potential offenders and raises emotionally tinged managerial dilemmas for them. Given the familial nature of many small businesses (Montgomery & Hall, 2014; Seaman, McQuaid, & Pearson, 2014), it is to be expected that employee theft will lead to serious managerial problems for small business owners.

For example, prior to a theft, the owner may view employees as trusted and essential partners of the business, as their daily efforts and activities help to ensure the success of the business. Following theft, business owners may find it very difficult to trust their employees. Emotional reactions to trust violation may challenge the business owner in ways that affect their relationships with other employees, and the owner may even begin to view other employees as potential offenders against whom the business must be protected. So business owners are challenged by the dilemma of needing to trust employees as they did prior to the theft, while at the same time needing to institute control measures that will protect the business from future victimization.

Payne and Gainey (2004) found that theft by one dishonest employee can lead a business owner to distrust all other employees, irrespective of their history of workplace behavior. Yet, they also found that how the business responds to employee theft can have a significant influence on the occurrence of counterproductive behavior by other employees. Workplace changes made in response to theft may signal to nonoffending employees that they are not trustworthy, which may lead them to take a more negative view of the business. Feelings of injustice or unfairness may then lead employees to engage in counterproductive behaviors (Fox, Spector, & Miles, 2001; Yang & Diefendorff, 2009), even though the changes that caused the hurt feelings were instituted to reduce the business’ exposure to criminal opportunities.

Organizational and procedural changes that reduce employee autonomy or responsibilities have also been shown to adversely affect employees’ positive organizational behavior (Dalal, Lam, Weiss, Welch, & Hulen, 2009). When postemployee theft changes to the workplace affect the way employees perceive factors of justice and fairness within the workplace, they may be more likely to distrust the business and less likely to engage in positive workplace behaviors (Dirks & Ferrin, 2002; Li & Cropanzano, 2009). A decrease in positive workplace behaviors represents a potential collateral form of victimization that arises out of the owner’s attempt to prevent the reoccurrence of the original form of victimization.

Another potential dilemma faced by victimized business owners is the loss of a valuable and important personal relationship if the employee thief and the owner have a close personal connection. Within small businesses, owners are intimately involved in many of the most important aspects of the business, and they tend to have deep emotional connections to the business (Culkin & Smith, 2000). When employee theft creates an emotional loss for a business owner, there may be a resultant decline in the owner’s desire to engage in relationship building behaviors, or their desire to maintain established relationships with other employees (Allen, 2013). The severing of long-standing emotional ties because of employee theft can exacerbate feelings of victimization, leaving business owners to deal with the interpersonal issues associated with theft, while at the same time attending to the guardianship needs of the business.

Method

This article reports results from a mixed-methods study that investigated the employee theft experiences of small business owners and managers in a medium-sized Midwestern U.S. city. The study used a mailed survey questionnaire and a series of in-person interviews to gather data on incidents of employee theft, information about the employees involved in the thefts, details regarding responses to theft, and descriptions of the reactions of business owners and managers (hereafter referred to as “owners”). Data on the reactions of business owners to employee theft were gathered during the in-person interviews that formed the qualitative portion of the study. The purpose of the in-person interviews was to gain a better understanding of the subjective effects of employee theft on business owners and other important stakeholders such as employees and customers.

Study Design

The study had two main parts: (1) a quantitative mailed survey of small business owners and (2) a series of qualitative interviews with a subgroup of survey respondents. The quantitative survey was designed to gather information on the prevalence, distribution, and correlates of employee theft, as well as information on managerial practices in regard to employee supervision and organizational culture. The qualitative portion of the study was intended to explore subjective features of the employee theft victimization experience and to gain a greater understanding of how owners responded to theft. In this report, we focus primarily on the qualitative data, but to provide a context for the interview data, we occasionally refer to results drawn from the quantitative survey.

The interview portion of the study was guided by grounded theory, a methodology that is based upon a set of “systematic, yet flexible guidelines for collecting and analyzing qualitative data to construct theories ‘grounded’ in the data themselves” (Charmaz, 2006, p. 2). As data were collected from respondents, categories were created by coding emergent themes found in interview transcripts, and continuous comparisons were made between the data collected and the literature. Grounded theory calls for an iterative approach to data collection where early data are analyzed for themes that might affect the direction of later data collection (Ladge, Clair, & Greenberg, 2012).

The original interview protocol was designed to answer the general research question “How does the occurrence of employee theft affect the way in which owners and managers of small businesses manage their businesses?” However, after only two interviews, it became apparent that there was an emotional dynamic to the victimization experience that warranted exploration. As a result, a second research question was added: “How does the occurrence of employee theft personally affect the owners and managers of victimized small businesses?” This led to the addition of new questions to the interview protocol; a list of questions asked during the interviews can be found in Appendix A.

Interview Participants and Incident Characteristics

Interview participants were small business owners who indicated on the mailed survey questionnaire that they would be willing to participate in a follow-up in-person interview. A total of 30 interviews were conducted; however, only 22 of the interviewed business owners had experienced an employee theft. The results we report in this article are derived from interviews with victimized small business owners; data from the eight business owners that did not report experiencing an employee theft are omitted.

All participants but one were the owner of the business; one participant was the vice president of her firm. The businesses had an average of 53 employees, ranging in size from 15 to 225 employees and representing the following industrial categories: retail, services, manufacturing, and wholesale trade. A total of 44 employee thefts were reported for an average of two thefts per business; 11 businesses reported one theft; 5 reported two thefts; 3 reported three thefts; 1 reported four thefts; and 2 reported five thefts.

The average loss associated with the 44 reported thefts was US$10,513. However, reported losses ranged from a low of US$20 to a high of US$130,000; the median loss was US$1,000 and losses for five thefts were unknown. In some cases, the values reported are approximations of the actual dollar loss associated with the theft, as the victims did not know the exact amount of money or property that was taken over time. However, the lack of precise estimates of the financial costs is not a significant shortcoming for this study, because our focus is on understanding the subjective emotional effects of this crime rather than estimating its objective financial costs. Participant characteristics are displayed in Table 1.

Table 1.

Interview Participant Characteristics.

Identifier	Position	Gender	Industry	Theft	Employees	Thefts	Losses, US$
001	Owner	Male	Services	Yes	150	1	750.00
002	Owner	Male	Services	Yes	22	1	20,000.00
003	Owner	Male	Wholesale trade	Yes	50	1	10,000.00
004	Vice president	Female	Manufacturing	Yes	27	2	3,500.00
005	Owner	Male	Services	Yes	28	1	Unknown
006	Owner	Male	Services	Yes	15	1	500.00
007	Owner	Male	Services	Yes	225	5	30,400.00
008	Owner	Female	Retail trade	Yes	15	2	2,400.00
009	Owner	Male	Manufacturing	Yes	16	1	130,000.00
010	Owner	Female	Manufacturing	Yes	50	4	25,250.00
011	Owner	Female	Services	Yes	38	2	1,100.00
012	Owner	Male	Retail trade	Yes	17	2	85,000.00
013	Owner	Male	Retail trade	Yes	27	5	3,400.00
014	Owner	Female	Retail trade	Yes	172	3	770.00
015	Owner	Male	Retail trade	Yes	18	1	600.00
016	Owner	Female	Services	Yes	25	1	Unknown
017	Owner	Male	Retail trade	Yes	15	3	70.00
018	Owner	Male	Manufacturing	Yes	20	3	21,500.00
019	Owner	Female	Manufacturing	Yes	25	2	350.00
020	Owner	Male	Retail trade	Yes	55	1	2,000.00
021	Owner	Male	Manufacturing	Yes	125	1	125,000.00
022	Owner	Male	Manufacturing	Yes	35	1	Unknown

The Interviews

All interviews were conducted by the first author, and all but one was recorded. Copious notes were taken during the interview that was not recorded, and prior to leaving the interview the author verified the accuracy of his notes with the interviewee. The interviews were conducted at the interviewee’s place of business. On two occasions, the interviewee and author were joined by a third person; in one case, the business’s human resources manager participated in the interview, while a co-owner participated in the other case. Interviews lasted an average of 48 min, but the length of each interview was determined by the speed and depth at which the participant responded to questions as well as the occurrence of tangential conversations.

Interview recordings were transcribed verbatim into a Microsoft Word document and supplemented with handwritten notes taken during the interview, which addressed things such as key words or phrases used by the respondent, motions made when discussing their experiences, potential avenues for future questions, and descriptions of items pointed to by the respondent during the interview. Transcription occurred within a few days of each completed interview and each transcript was immediately reviewed for errors as well as question responses needing further clarification.

Data Analysis

The verbatim transcripts and interview notes were analyzed in the software program NVivo, Version 10. Following grounded theory methods, data analysis was a continuous process that began after the completion of the first two interviews and continued throughout data collection, as interview data were examined in an iterative fashion (Glaser & Strauss, 1967). Specifically, interview transcripts were reviewed and coded for emergent themes and concepts, which were continually compared across interviews, within each interview transcript, and collectively to the literature. Codes that emerged from the data represent the process of moving beyond concrete statements (i.e., data) to analytic interpretations by categorizing segments or slices of data with a word or phrase that summarized that piece of data (Charmaz, 2006). As noted above, the investigation of emotional issues related to employee theft was not an original focus of our research. However, early into the study, it became apparent that the respondents had experienced profound emotional costs. Hence, we elected to follow this emergent theme in subsequent interviews. Codes pertaining to the emotional impact of employee theft were dispersed throughout the transcripts and were not confined just to discussions involving questions on the effects of employee theft. These codes were developed throughout the data collection process, and as each code was identified it was entered into a coding dictionary that was used to assist the coding of later transcripts.

Findings

Defining Employee Theft

Interview participants categorized a range of behaviors as employee theft. Many of these descriptions fit traditional conceptualizations of property theft, such as when an employee stole items that were then “sold to a friend who had a retail store.” In addition to stealing merchandise, many of the thefts involved money. In these cases, the thieves often used their position within the company to facilitate their crimes. For example, in one instance, an employee set up a “personal bank account at the same bank as the company” and deposited customer payments into the personal account rather than the business’s account. Cash thefts also involved the taking of physical cash or using some other financial instruments (e.g., checks, credit cards, electronic funds transfer) to steal from the business.

Interviewees also defined the taking of intangible items, such as intellectual property, as theft. For example, the owner of a product services firm reported a theft that involved employees “stealing electronic files and [setting] up a business using the files” and stealing “software.” Businesses with hourly employees described theft of time through time card manipulation and overreporting hours worked. Another owner considered the use of company cell phones for personal affairs to be theft, stating “if you’re on the phone for 20 minutes that’s not work related, that’s theft.” While there was variation in the specific activities business owners considered theft, it was clear that each respondent defined behaviors that constitute theft in terms of their particular situations.

Regardless of the number of thefts that occurred, the interviews showed that the emotional impact of employee theft could be profound, and strong relationships between owners and employees intensified the emotional effects of theft. To begin to elucidate and unpack the emotional effects of employee theft, we start with the owners’ descriptions of how emotional connections to employees develop. These connections grow out of normal organizational practices and later compound the emotional costs of victimization.

The Development of Emotional Connections in the Workplace

Almost all of the interview participants referred to their business as a “family.” This choice of words gives insight into how small business owners view their business, as well as the employees who work for them. Small businesses function, in part, because employees, owners, and managers use emotional ties to build a sense of belonging within the business (Fletcher, 2002). When employees feel they belong and feel that they are important to the organization, they are more likely to be committed to organizational norms and values and more likely to engage in extra-role behaviors that help the business achieve its goals (Masterson & Stamper, 2003).

Furthermore, the relational cues that employees glean from business owners can influence the quality of interpersonal relationships in the workplace, relationships that are key to increasing organizational and individual effectiveness as well as trust among coworkers (Ferres, Connell, & Travaglione, 2004). In essence, effective interpersonal relationships create work environments where employees, owners, and managers feel a sense of familial investment in each other. For example, a manager of one small business [004] stated that when “[we] hire somebody, we don’t ever intend on letting them go. I mean, we’re pretty much a family, so we all get along really well here. You know, it’s like I said we’re just family. So you get your little squabbles, you know.”

Just as in a family, squabbles and personal disagreements in the workplace are a normal part of peer interactions. However, the emotional impact of trust violation can be exacerbated by the feeling of familial-like interpersonal investment among coworkers. As one business owner [011] stated, “I think that most small businesses have a certain type of family atmosphere. And, it’s like you know so much about your employees, it’s almost like they are family. So it’s almost like you have family that is violating your trust [when employee theft occurs].” Another business owner [015] described the impact of employee theft as “very traumatic. It was very traumatic because we’re very close knit. Family. Small business.”

The sting of employee theft is even more painful in situations if business owners feel they have gone to great lengths to create a familial atmosphere by taking overt steps to show employees they are valued and cared for. For example, one victimized business owner [007] said that in his business:

We just feel that it’s kind of our duty [providing high-quality health insurance] and it’s a benefit we have here to help make the job more attractive to people. And with a small group of employees that have been here a long time, you know, you feel like its family. And to have theft go on … [respondent sighed, then fell silent].

The development of a familial business atmosphere is partially a reflection of the investment owners have made in the business and their employees. Many times this investment comes across as acts of generosity extended to employees generally, or to specific employees with whom the owner may have a special connection.

Business owners understand that sometimes employees face difficulties in their personal lives, and they see acts of generosity as a way to assist employees in their times of need as well as a means to increase employee investment in the business. Acts of generosity not only highlight the investment business owners have in their employees but also in some cases they may help to reduce the likelihood of employee theft. For example, the owner of a retail establishment [016] described the system she developed around employees’ desires to obtain products the business stocked for resale:

We give everybody real nice discounts who work with us. So if they have something they really want they buy it, if not they have little boxes so that if stuff comes in that they really want we let them put it in a little box. It’s very handy for us for birthdays and Christmas because we can just give them things that they want, or they can purchase things as they can afford them. So [we’ve] made it pretty easy for people to have what they want.

Allowing employees to take products off the shelf and place them into a box to be purchased later at a discount or to be given to the employee without charge, a cost borne by the business, may not be the most fiscally effective method for operating a small business. However, the owner’s investment in her employees was aimed at keeping her employees happy, rather than micromanaging profit margins. Happy employees who are given ample opportunities to obtain the things they desire may be less likely to steal. Unfortunately, however, shows of generosity do not always prevent employees from violating the trust and emotional bonds they share with business owners (Cressey, 1953).

Some employees take advantage of the generosity extended to them by businesses and business owners. One small business owner appeared to be particularly distressed by a trusted employee’s theft from the business because of the financial and emotional investment the owner made in the employee. She [014] stated,

[the employee] was having some financial issues and she had some children who were having some financial issues, and we know that she was helping them with her funds and that was making her short. And, honestly, had she come to me and said “I need this,” I would have given it to her and she wouldn’t have had to pay it back.

However, instead of trusting in the relationship she had with the business owner the employee instead:

Misused funds but then would pay them back thinking I would never know. [She] filled up her car with gas but then put money back in. Paid a bill, but then put money back in. So [she] was using us as sort of [her] private source of savings account.

The employee could have simply stolen the funds and not repaid them, yet she chose to repay the funds when she had the ability to do so; it was not clear to the business owner whether this was done because of the emotional connections the employee shared with the owner, or as an attempt to cover up her thefts.

It is ironic that several employee thieves worked for business owners who would have supported them financially had the employee only asked for assistance. Yet, at times, employee thieves appear to not fully appreciate the generosity shown by employers. This may happen because they do not place the same importance on the emotional connections they share with business owners as do the owners. It is also likely that some employee thieves are simply opportunists who have no difficulty accepting an owner’s generosity, while at the same time taking advantage of opportunities to steal from the business. The owner of a manufacturing and construction firm [009] describes how his personal attitude toward dealing with people leads him into just such a situation:

I try to help people. I mean, my whole theory is I’m one of those “Pass it on club” kinda guys. You know, I help you, don’t owe me nothin’, but you’re gonna pass it on. So we have like older vehicles, you know what I mean, sales people, company vehicles. [The employee thief] had a car that just broke down and she says “Oh, I can’t make car payments.” So, I says “Okay, here’s what we’ll do,” at the time I think the vehicle was worth fifteen grand, so I says “here’s what we’ll do. I’ll sell it to you for ten grand, company will float the bill, you just pay it back. You tell me what you can afford on a monthly basis. No interest charges or anything like that.” So that’s the deal I made with her. And I forget about it cause I’m in this office and you’re in this office, between you and my son [the company’s financial manager], payroll deduction. Just do your thing. So we’re moving on. She’s got a nice car, I’ve got a happy employee. Everybody’s happy.

While the owner thought he had a happy employee, the employee saw opportunities to take from the business. Upon discovering the employee’s theft, the owner began to realize just how significant the violation of his trust had become:

And I kept thinking, oh shit. And obviously I go in, and this is like a day later, and now [the accountant’s] doing some digging, you know. So we’re doing some digging, and she came in, no, she wouldn’t come back in. So now, it ended up being, it’s like she would never admit to the fifty, sixty grand, it was only supposed to be like you know, small, a few thousand dollars. And [the accountant] found like twenty-five, thirty thousand dollars, and it’s like [the employee] admits “yeah, that’s what it is twenty-five, thirty thousand dollars. I’ll pay it back, do whatever you want, twenty-five, thirty thousand dollars.” And it’s like, you know what [accountant], you need to do a little more digging, okay let’s do a little more digging. And it was like, the more we dug, the more we found. And the more we went back, the more we found.

However, he was completely shocked when he later found out, through his accountant’s search of financial records, that “[the employee] was faking the payments on the car. So she drove this car for three or four years, never made a payment.”

This business owner’s [009] description of his reaction to the entire incident was intriguing because he did not berate or demean the employee. He did not accuse of her of being a bad person or in any way attempt to debase her character. Rather, in the end, his reaction was self-reflexive and suggested that he had difficulty reconciling his generosity with the outcome he was experiencing: “I’ve always been a pretty trusting person. And it’s like, I felt like I really went out on a limb, and other people did here for her, and it’s like, she just slammed. It just, it made me feel like crap, you know. It just, you know, cause like I said, it just, we’re small but we’re not small, but it’s a small office, you know. And you like to think you can help people. It’s shitty.”

Divergent and Conflicting Affective Responses to Trust Violation

For a few of the small businesses, employee theft pushed the business to the brink of financial ruin; and had the thefts continued, the business likely would have gone into bankruptcy. The prospect of having to declare bankruptcy as a result of employee theft, particularly when the theft was committed by a trusted employee, appeared to be particularly distressing for business owners. In these cases, the financial losses associated with theft seemed to influence the owner’s emotional reactions. In other cases, however, the violation of trust and the damage done to relationships between employees and owners appeared to be more important in shaping the owner’s affective responses. So while it is common to assess the severity of employee theft in terms of economic losses associated with theft, for its victims the emotional costs may be just as important, if not more important, than the financial impact on the business.

The experiences of victimized business owners appear to differ from those of other types of property crime victims. For example, victims of property crime often experience “anger, fear, and loss of confidence in the justice system” in the immediate aftermath of the event (Mesch, 1997 p. 57). But as time passes, the more permanent effects of property crime victimization tend to center on self-protective behaviors and perceptions of safety, rather than emotional feelings of loss, anger, or violation (Plass, 2014). However, among our respondents, it was clear that despite the passage of time, in some cases several years, the emotional scars of victimization continued to haunt them. The lingering emotional outcomes influenced how the victims behaved as people and managers for a substantial time.

Not surprisingly, the course of action most interview participants chose to take in response to theft was to fire the employee (this occurred in 29 of the 44 thefts). But this logical and understandable response is not without emotional costs. For example, the owner of a marketing services firm [008] described how she felt after firing an employee who stole: “Letting her go knowing she was addicted, knowing she had two children, made a pit in my stomach like I’ve never … [pauses] … I was so upset. And I can’t control it. I can’t change it.” This business owner went on to describe how the love she still carried for this employee, an employee who had worked for her for 10 years, led the owner to remain a part of the employee’s life:

So she left. And in my guilt, I sent things to her children. She was gone like in the spring, like in this time maybe two or three years ago now. We sent things to her, but I just couldn’t think about it because it made me feel so bad that the mother of her children did these things to her children.

Despite the fact that a trusted employee and friend stole from her, this business owner felt such a personal and vested interest in her employee that she was unhappy about doing what most victimized business owners saw as the most appropriate response (i.e., firing the offending employee).

Some victimized small business owners hide their emotional distress and wait years before telling anyone else about the incident, if they ever mention anything at all (Koss & Burkhart, 1989). Long-term and persistent emotional reactions following employee theft may seem counterintuitive because it is a nonviolent property crime. However, the emotional blow of the crime arises out of the violation of trust and consequent severing of emotional ties. In this case, the passage of a few years can seem like a very short period in which to come to terms with the event. This is particularly true when one of the negative outcomes resulting from employee theft is the feeling of being violated by someone you trust. For example, the owner of a trucking company [012] described his feelings in the following way:

So, you feel violated, you feel pissed, you feel … [pauses] … it just, it goes against all your grain. Especially when you have a trusted employee like my mechanics stealing my parts and then writing it off on a different truck, and then not doing the repairs on that truck, but repairing somebody else’s. See, those become more personal.

Employee theft can also affect other aspects of the personal lives of small business owners (Gold, Sinclair, & Balge, 2000; Lurigio, 1987; Widom, Czaja, & Dutton, 2008). In some cases, it alters their view of other people, as one owner described:

It does have an emotional effect on people for sure, theft, and it’s shock. There is shock and trauma there and when you trust somebody, like our maintenance guy, I mean he’s all over the place. He had keys to everything, he was here all the time, I mean all hours, you know, in our offices, everywhere. And, just to know that he was, you know, that there was this underlying negative you know, personality disorder or whatever was going on with him, you know you just feel yucky, just violated. So there was that initial thing, there is that initial shock and it sort of takes over your world for a little while, and other stuff just doesn’t get done because you’re focusing on that. [018]

In another case, the vice president of a manufacturing firm [010], stated that “when [employee theft] happens you’re even more susceptible to opening yourself up to a lot of other things that go on, and then you feel bad. You feel violated sometimes when your friend, your family member does this to you.”

When businesses operate like families, relatively small violations can have a very large, long-lasting impact upon business owners and other employees. For example, the owner of a retail establishment [015] described the impact of an employee’s theft of about US$1,000 in cash that occurred in “[19]97, but I remember it like it was yesterday because it was such a traumatic event for everyone involved here.” According to the owner, the trauma of the event resonated with the employees because of the relationships they had with the employee thief, as “everybody certainly had a lot of compassion for [the employee] and his problem and addiction or whatever that drove him to this, cause he was a great guy. He was everybody’s buddy, family member, you know.” However, the familial nature of the business meant that the investigative processes the business undertook to determine who the thief was, as well as to determine the extent of the thefts, created a great deal of discomfort for employees:

When it was all going down and until [the employee] came clean and it was all over … I think that a lot of my staff was very very uncomfortable having to go through the process to the point where I didn’t lose anybody because of it, but they were very worried and they let me know that. [015]

The owner went on to state that the result of the process of dealing with the theft as a family was that “if anything, it probably brought us all a little tighter, closer, because of that incident.” Yet, the uncomfortable feelings employees had about the investigative process and the intimate relationships they had with the thief meant that they became vicarious victims of the same crime. Feelings of vicarious victimization may be particularly strong when employees are involved in the discovery of the theft, or help victimized business owners deal with their own emotional issues surrounding the theft (Courtois, 1993). Yet, strong familial connections within the workplace and access to support from peers and coworkers may reduce some of the negative effects of vicarious victimization (Kort-Butler, 2010).

Discussion

The scope and scale of emotional responses to employee theft victimization have not been previously addressed in the literature, yet the results of our study indicate that this issue deserves attention from criminologists, organizational behavior scholars, victimologists, and victim advocates. Specifically, our interviews revealed three central themes: (1) victimized business owners experience employee theft as both a property and a personal offense, (2) emotional reactions to theft are common and can be severe, and (3) strong emotional connections between the victim and offender exacerbate the emotional damage caused by theft.

Most victimized small business owners described the emotional impact of their employee theft experiences from a personal perspective, highlighting the personal and intimate nature of this type of property crime. Employee theft can lead small business owners to feel personally victimized and territorially violated despite the fact that the business rather than the individual was the actual target of the theft. Not only is the initial victimization experience emotionally laden and difficult for many business owners to process, but the emotional toll of victimization lingers over time.

The nature of the emotional impact of employee theft on small business owners suggests that their victimization experiences in some ways resemble the experiences of other types of crime victims, such as intimate partner violence. Employee theft and sexual victimization are, of course, dramatically different forms of crime, and the damage caused by the latter is certainly substantially more serious. Nevertheless, we would be remiss if we did not draw attention to the fact that what makes both of these types of crimes so emotionally traumatizing is the offender’s relationship with the victim. In both cases, the victim suffers at the hands of someone they thought they could trust, and the breaking of trust exacerbates whatever physical or financial damage a victim undergoes.

The victims of intimate partner violence often experience severe emotional responses to their victimization, especially depression (Caetano & Cunradi, 2003; Coker et al., 2002). Our results suggest that even a nonviolent property crime, such as employee theft, can provoke a similar emotional response if they occur within the context of trust relationship between offender and victim. Accordingly, the process of recovery from victimization must acknowledge the emotional and psychological needs of the victim, be they a battered wife or a small business owner.

Another implication of the interview data relates to some of the crime prevention suggestions that flow from the routine activity and lifestyle exposure perspectives (Hindelang, Gottfredson, & Garofalo, 1978). For example, for many traditional forms of crime creating stability in work-life routines and restricting activities to those that involve trusted others is hypothesized to reduce the likelihood of victimization. Spending greater amounts of time with trusted others on a consistent basis can decrease one’s risk of personal victimization, particularly repeat personal victimization (S. W. Greenberg, Rohe, & Williams, 1982; Lasley & Rosenbaum, 1988; Wilcox, Madenson, & Tillyer, 2007). Yet, the narratives of victimized small business owners indicate that having stability within the workplace, in terms of workplace routines, processes, and procedures, may facilitate employee theft. Stability in workplace routines allows motivated employee offenders to learn organizational vulnerabilities that ultimately aid them in the successful completion of theft. It is knowledge of these workplace lifestyle patterns that facilitates employee theft, rather than the mere convergence of employee and target in a work setting lacking capable guardianship (Pratt & Turanovic, 2015).

Neither the size of the theft (in financial terms) nor the number of thefts appeared to have a significant influence on the amount of emotional pain small business owners feel, except in cases where the theft threatened the survival of the business. Rather, it is the violation of trust that victims undergo that influences the degree of emotional distress they feel. Like other victims of crime, small business owners can experience severe feelings of trust violation when someone close steals from them (Jantzer, Hoover, & Narloch, 2006). While research has shown that being a victim of crime can have a negative impact on one’s overall levels of trust (Salmi, Smolej, & Kivivuoir, 2007), employee theft creates an especially difficult dilemma for business owners.

When a person is robbed on the street, many times they are able to avoid the place and situation where their victimization occurred; for example, they can chose to avoid a particular street corner at a particular time of day or they can chose to take a different route through the neighborhood. But it is difficult for business owners to engage in these same types of protective behaviors, as changing the physical characteristics of the business is likely to do little to affect an employee’s knowledge of workplace routines and processes. Knowledge of these routines and processes will enhance an employee thief’s potential for success, yet should a business owner choose to make continuous and significant changes to workplace processes many other counterproductive outcomes may occur. Furthermore, making changes to organizational processes and procedures while dealing with the emotional impact of an employee theft can lead to the implementation of counterproductive and harmful changes.

Because of the significant emotional toll victimization can have, the effects of employee theft can linger with the business when management styles are altered in an attempt to adapt organizational practices to address opportunities for employee theft (Averdijk, 2011). According to Payne and Gainey (2004), management adaptations that are heavily influenced by negative affective responses to theft can lead to additional negative organizational outcomes. One reason for this may be the fact that victimized business owners must face the fact that despite being criminally violated by someone they trust, they cannot simply refrain from trusting other employees as a means to protect themselves from further victimization. This means that they must prepare for the possibility of future trust violations through employee theft.

Being forced to extend trust after having experienced trust violation creates several managerial dilemmas. The intimate connections that exist between the owner and other nonoffending employees are likely impacted when emotional distress following employee theft is high. Changes to management style, the quality and quantity of interactions with employees, and formal processes and procedures within the business may be heavily influenced by the victimization experience. In such instances, business owners are susceptible to making changes that, while providing some level of control, inadvertently may provoke other counterproductive work behaviors (Robinson & Bennett, 1995) in other employees (Dalal et al., 2009; Payne & Gainey, 2004).

Limitations

As with any study, this one has several limitations that must be acknowledged. First, while this study gathered data from small businesses of various sizes, it is possible that differences in the emotional responses of business owners to theft may vary by the size of the small business. For example, the owners of businesses that employ 10–15 people may respond to employee theft differently than the owners of businesses with several hundred employees. The emotional bonds between owners and employees are likely to be stronger in smaller establishments, but this is an expectation that deserves to be tested directly.

Second, it is possible that feelings of trust violation and loss related to theft vary over time. They may be stronger and have a greater impact on the owner immediately after the discovery of the theft. The passage of time may not completely dull the emotional pains associated with employee theft, but it may affect how owners interpret or process their emotions. Future research should attempt to identify whether the narratives of victimized owners change as time passes.

Conclusion

The results of this study indicate that employee theft takes a serious emotional toll on the owners of small businesses. Although employee theft is considered to be a property crime committed against the business, at times it can affect business owners in ways that appear similar to a personal crime. This can lead business owner to experience a range of emotional and psychological reactions and can influence the way in which they manage the business in the future. Importantly, an emotionally impactful experience with employee theft may lead a business owner to question the trust they have in employees generally. While it may be natural to respond to theft by questioning the trustworthiness of employees, it must be remembered that such actions can lead nonoffending employees to feel as if they are being treated like criminals. The negative organizational and interpersonal outcomes of such a situation are potentially significant (Payne & Gainey, 2004). Thus, the victims of employee theft find themselves in a position that may be unique among victims. Taking steps to reduce the likelihood of repeat victimization may exacerbate other problems.

Footnotes

Appendix A

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This research was supported by funding from the following: the University of Cincinnati Graduate School; the Goering Center for Family and Private Business, Lindner College of Business, University of Cincinnati; and, the Center for Criminal Justice Research, School of Criminal Justice, University of Cincinnati.

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