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Firms stung by employee pilfering

Only a few months after the American steel company US Steel took over the largest industrial monolith in Slovakia, VSŽ Košice, its management may have come face to face with an example of what sociologists and human resources experts have said is a problematic remnant of communism - employee theft.
At the beginning of February, the US firm discovered that a 145,000 crown ($3,100) electrical engine, weighing 7.2 tonnes, had been stolen. US Steel Košice management, led by company president John Goodish, offered a 500,000 crown reward for information leading to the detention of the thief, saying that in offering the huge reward they hoped to persuade employees with any information to come forward and help the compny, not protect their friends.
Košice regional police said that their experience with similar cases had invariably proved employee involvement in the crime, adding that "in this case as well it is more than likely that employees of the firm played a part in this theft".


US Steel Košice was robbed of a 7.2 tonne engine last month, in what may have been the firm's introduction to employee attitudes on theft.
photo: TASR

Only a few months after the American steel company US Steel took over the largest industrial monolith in Slovakia, VSŽ Košice, its management may have come face to face with an example of what sociologists and human resources experts have said is a problematic remnant of communism - employee theft.

At the beginning of February, the US firm discovered that a 145,000 crown ($3,100) electrical engine, weighing 7.2 tonnes, had been stolen. US Steel Košice management, led by company president John Goodish, offered a 500,000 crown reward for information leading to the detention of the thief, saying that in offering the huge reward they hoped to persuade employees with any information to come forward and help the compny, not protect their friends.

Košice regional police said that their experience with similar cases had invariably proved employee involvement in the crime, adding that "in this case as well it is more than likely that employees of the firm played a part in this theft". Head of the Košice regional police department for property crime Rastislav Husár said: "Similar cases have been reported in the past in the plant, and the involvement of employees as well as of the company's own security service has been proven."

US Steel Košice spokesman Jozef Marko admitted that VSŽ had in the past been the victim of theft by employees, and said he thought the latest larceny might have involved company workers in some way.

"The participation of employees in similar cases has been proven, and in this case too, the thieves had to know the facility's environment as well as its equipment. It couldn't be somebody external only," Marko told The Slovak Spectator.


Communism taught workers it was OK to help themselves to portable stock.
photo: Ján Svrček

A poor legacy turning sour

Sociologists and human resources experts have said that theft of company property by employees has a long tradition in Slovakia and other former communist states, and that the practice is rooted in the previous regime (see story below).

Gerard Koolen, head of the HR firm Lugera & Makler, said that under communism employees often stole small things, such as bricks, small electronic parts and any production material they could use themselves, and that could be carried in their bags as they left work.

But while the US Steel Košice case is also an example of company theft, experts say the size of the object stolen corresponds to an increase in the scale of crimes committed by workers against their employers over the last 10 years. Some argue that the growing audacity of the thefts have been prompted by "a lack of basic values in society".

"People now don't have any moral barriers stopping them from stealing or committing these types of crime. In the past there was an authoritative state and people were afraid of stealing larger things, so the thefts were relatively small. But now these criminals go unpunished, and that's why they are motivated to do this," said Iveta Radičová, a sociologist with Comenius University's department of political science.

She added that the poor example set by their bosses is prompting employees to pilfer from their own firms.

"With more and more cases appearing of tunnelling [asset-stripping by company management], when crimes involve very large sums of money, one can't expect that an average employee with a small income will show more respect towards his company than his bosses do," says Radičová.

Companies themselves have also seen the difference. One personnel manager at a large Slovak mechanical engineering company, who asked not to be named, said that losses through theft in his company had risen over the last four years, adding that while employee theft had been seen in his firm before, it was becoming more and more serious - sometimes involving as much as two tons of non-ferrous metals being stolen at one time.

"We had only small thefts reported during the previous [communist] regime, but the situation has changed, and the crimes that we have to report now have a much more negative influence on our performance. Losses from this kind of theft can reach as much as 200,000 crowns, as was the case with the last such crime we reported. We know that our employees are involved in these cases. We have also offered a reward in some cases, but have never been successful. People are afraid to speak," he said.

Change for the better

According to HR expert Koolen, the somewhat bleak picture that the anonymous manager painted could soon change as more foreign investors, as well as strong domestic firms buying into Slovak companies, build their development strategies on good relations with their employees.

He said that one of the main reasons why employees might steal in Slovak firms was a lack of loyalty towards the company, and a corresponding lack of appreciation of their work from their employer.

"There is still a complete lack of motivation on the employee's side. It's primarily because company representatives don't have enough consideration for their employees, and seldom spell out how important they are for the overall economic performance of their business. They [employees] are not rewarded for their work, and they are detached from their company," he explained.

"Foreign companies offer a different perspective and different rules of the game for their employees. They motivate people by providing them with opportunities for growth, they train them, increase their salaries if a company's performance improves, and pay bonuses for extra work. An employee is informed about a company's economic performance. Basically, they want them to know that they are a part of the company, and that the company is aware of it. The nicer they treat them, the more considerable the decline in incidences of stealing," Koolen said.

US Steel Košice, which is one of the largest foreign investors in Slovakia, has, according to its president John Goodish, an eminent interest in developing good relations with its 23,000 employees. "We have just approved a collective agreement in which it was in our interest to make decisions with employees and show our interest in them," he said. The agreement, which was signed in mid-February, guarantees a 1,200 crown ($25) rise per month for three years.

Some foreign companies doing business in Slovakia have already been successful in cutting down on thefts within their organisations by building strong ties with employees as well as making it clear that stealing is unacceptable.

Martin Ciran, director of Poprad-based Whirlpool Slovakia, which has been running a washing machine production plant for seven years, said that the company hadn't reported any cases of theft since it introduced a policy of 'naming and shaming' company thieves and making sure other employees know what their punishment is.

"I agree that an employee has to have a motivation to work for his company and has to know that he is important to his employer, and we do that, but at the same time, an employer cannot avoid punishing thieves when they are identified. Thieves in our company have lost their jobs immediately. Others have remembered it, and have avoided doing it," Ciran said.

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