The Lessons Of Theft

 

Finally, we got some early returns on our February issue, including this letter from quality guru Philip B. Crosby, whose firm lost nearly $1 million to an embezzler, as we recounted in an article entitled "Easy Money." I am very disappointed in your article. This was not a case of "employee theft." It was a deliberate, planned robbery by a professional who switched identities and laid a trail worthy of the CIA. At this moment he is doing the same thing to one of your subscribers. You had a great chance to show others what to look for and what he looked like.

Our policy of treating employees well had nothing to do with this robbery. In its aftermath, we have tightened our hiring procedures and strengthened our internal auditing operations. Therefore, we are more secure for the future. But I see no reason to start acting like everybody had his hand in the till. The internal auditors have examined every system in the company and have found nothing more than a few personal phone calls out of line.

Philip Crosby Associates Inc. (PCA) is a company with $30 million in assets, $50 million in sales, and a worldwide operation. We are completing our eighth year, and the projections for 1988 show it will be our best year ever. The key reason is the dedication and loyalty of our employees. Much of that comes from our policy of trusting them.

Management has assumed responsibility for the incident and has been completely open about it. I think INC. did not bother to listen to what should have been a learning case; other management teams could benefit from our experience. When a company approaches $50 million in sales, it runs into control problems that are not well understood. These need to be examined and analyzed. Everyone does not need to learn as we did.

Mr. Crosby may be disappointed, but we are just confused. We ran the article precisely because we thought his experience offered lessons from which other companies could benefit. Moreover, the piece focused on those very control problems he mentions. Yes, we treated this as a case of "employee theft." After all, the guy was an employee, and he stole. That does not mean companies should treat all employees as potential thieves, and we applaud Mr. Crosby's refusal to do so.

On the other hand, the Crosby episode clearly demonstrates that enlightened employee policies are not sufficient (in and of themselves) to protect companies against crooks. That's why we ran the accompanying piece, "Employee Theft," which offered practical suggestions about implementing controls. We believed we could better serve readers this way than by putting out an APB on the thief who victimized PCA. Surely, Mr. Crosby would agree.