Employee Sabotage Don t Be a Target!

Sabotage. The very word conjures scenes right out of a James Bond movie. Indeed, sabotage is the type of undercover intrigue that international crime dramas are made of. But sabotage, as it turns out, isn t just the stuff of Saturday-night thrillers. It s actually a rarely discussed form of workplace violence that s causing HR nightmares throughout Corporate America. Angry, bitter, envious and resentful employees are taking out their aggressions on their employers for inequities they ve experienced—whether real or perceived.

With increasing frequency, workers are overtly and covertly setting computer bombs, erasing customer databases, tampering with consumer products and impeding co-workers careers—and that s the short list! And it s happening to big-name organizations like Forbes, the City of New York and The Chronicle Publishing Co. of San Francisco, to name just a few.

In the process, employers are losing, time, money, reputations and more, trying to piece their businesses back together. While sabotage by employees generally doesn t happen as often as other workplace crimes, the impact on businesses is greater than ever before. Being aware of your risk potential, and being prepared with proactive human resources practices and policies, are your best defenses.

What is employee sabotage and why does it happen?
According to their book Sabotage: How to Recognize and Manage Employee Defiance, (Mercury Books, 1992), authors Farhad Analoui and Andrew Kakabadse report that employee sabotage can range from deliberate nonperformance to financial fraud. It can be as simple as acts of vandalism or pranks, or as complex as computer revenge. Angry employees have put rodents into food products, put needles into baby food, set companies on fire and wiped out entire company databases.

As far as employee crime in the workplace goes, however, sabotage is unique. Sabotage falls into the broad category of workplace violence, but often falls just short of physical violence, such as workplace homicide. It s usually misconduct tinged with an edge of revenge. “With sabotage, there s definitely an attempt to undermine or disrupt the operation in some way or slander the company,” explains Darren Donovan, vice president of Pinkerton s Inc. s eastern U.S. consulting and investigations division based in New York City. Pinkerton s is a large security company based in Westlake Village, California. “There s a special nature to sabotage because of the overtness of it—and it can be violent.” It s a huge step up from breaking windows or stealing. “Companies can replace windows and equipment, but it s harder to replace their reputation,” adds Donovan. “I think that s what HR execs need to be aware of because it is a crime, but it can be different from stealing or fraud.”

Although there are as many reasons for sabotage as there are employees, it usually falls into two categories: sabotaging people, or sabotaging equipment and operations. “The first kind is done politically, to damage careers, a company s professional image, reputation, credibility and so on,” says Lynne McClure, an expert on workplace violence with McClure Associates Management Consultants Inc. in Mesa, Arizona. “The second type of sabotage is done physically to hurt the company as opposed to hurting specific individuals.”

The motive for sabotaging people is usually to advance one s own career by making others look less qualified, or specifically hurting another person s career to get even for real or perceived mistreatment. “The former seems to occur more often,” says McClure. She says the reasons people feel motivated to sabotage others are intense competition at work, coupled with fewer promotions, perceptions of favoritism, perceptions of unfair or nonexistent performance criteria, and personal conflicts and envy.

Generally, workers destroy equipment because they want to vent anger and frustration usually relating to work situations, such as getting even for a real or perceived injustice or mistreatment at work. It s the only way these workplace criminals have of dealing with their anger. They often don t know how to speak up when they feel mistreated, or they perceive the organization or management is unfair and it s the only way to “be heard.”

In addition to overt sabotage, there s other misconduct that s just as deadly to a company s operations. “In today s workplace, I believe there s a lot of covert, subtle sabotage that s happening daily,” says Nancy Probst, manager and organizational development consultant of management advisory services for Dixon Odom PLLC, a certified public accounting and management advisory firm based in High Point, North Carolina. Examples include intentional reductions in productivity, especially at large organizations in which management has flattened and spans of control have greatly expanded. Then there are managers who agree to whatever is being planned, but have no intention of actually doing it and sabotage those final plans in subtle ways. Employees who actively resist change efforts also could be considered saboteurs.

While the less overt forms of sabotage may not dramatically disrupt business operations in the same way a product contamination incident might, if it s pervasive enough over time, it can cause similar consequences, such as losing your competitive edge or market share.

Sabotage is committed most often by employees who are bored, feel overworked, have unresolved grievances, are attempting to gain unfair competitive advantage or are simply disgruntled. Acts of sabotage usually stem from people who have deeply personal beefs about workplace treatment, and want their employer to feel their pain. “Employees see it as a way to level the playing field, and a way they can gain leverage on their employers,” says Daniel S. Levine, author of Disgruntled: The Darker Side of the World of Work (Berkeley Boulevard Books, 1998) and owner of disgruntled.com, a Web site for workers who want to vent their frustrations.

The downsizing phenomenon has lead to an increase in employee sabotage. Although people have become conditioned to the at-will employment contract, they still can be disheartened and angered by reduction-in-force situations. Says Dick McCormick, senior managing director of Pinkerton s Washington D.C. Business Risks International (BRI) division: “With downsizing, some companies can be fairly brutal in the way it s done—and I think that has a lot to do with it from an HR standpoint. Companies that deal with it in a very humane, moral way don t have these kinds of problems. And maybe that s the crux of the issue: If you treat people shabbily, then human instinct is to get revenge.”

Jeff Zakaryan, president of Global Strategies, an executive coaching firm based in Dana Point, California, says he s seen a dramatic increase in bitterness from people in many types of workplaces over the past decade. He adds: “Sabotage seems to be just one more way for [workers] to kick the big corporation in the shins.”

How often does sabotage happen and what s the cost?
It s difficult to pin down exactly how often workplace sabotage actually occurs, since such misconduct often goes unreported and unpunished to outside law enforcement agencies. Although several organizations keep track of the overall number of violent acts committed in the workplace, none—even the Federal Bureau of Investigations (FBI) and the U.S. Justice Department—keep track of the exact number of instances of employee sabotage.

And security expert opinions vary about whether incidents of sabotage are increasing. “I don t see any dramatic spiking in it,” says Pinkerton s Donovan. “It s not epidemic, but it does happen. And it still happens too much.” However, Dennis Dalton, president of the security company Dalton Affiliates in Fremont, California, recently was quoted in a Los Angeles Times article on work rage, saying that he sees far more employee sabotage now than he did 20 years ago.

Yet there are some areas where sabotage is definitely increasing. For example, computer crimes are increasingly an “inside” job. In its 1997 1998 “Intellectual Property Loss Special Report,” the American Society for Industrial Security based in Alexandria, Virginia, reports that 89 percent of respondents said their biggest concern about system security was retaliation from disgruntled employees. Information-security experts indicate they ve been warning their companies for years that the greatest threat to organizational databases isn t an attack from outside hackers. Rather, it s often disgruntled or simply dishonest employees. In fact, in its fourth annual study of 500 information-security professionals this year, the San Francisco-based Computer Security Institute (CSI) and the FBI s San Francisco Computer Crime Squad reports that corporations, banks and government agencies all face a growing threat from computer crimes committed both inside and outside their organizations.

The costs of sabotage are high. Approximately half of the respondents to the CSI/FBI computer-crime study acknowledged that computer break-ins resulted in financial losses. A third of the respondents (about 163 organizations) could say how much money had been lost—$123 million for them alone. The most serious losses occurred through the theft of proprietary information and financial fraud, the survey said, although it added that other computer crimes ranged from data sabotage to laptop theft.

In a recent case filed by the City of New York, charges are being levied against 29 people, including four former employees with the city s department of finance (which handles tax payments) and 22 landlords. Apparently, the city claims that the employees manipulated a computerized system for recording real-estate tax payments from property owners by wiping out millions of dollars in taxes for landlords who, in turn, paid them bribes. The city will be seeking to recover $13 million in property taxes, plus another $7 million in interest. In the meantime, the city has recently installed a new system which prevents fraud of this type from happening in the future.

Overall, in the United States, the losses from employee fraud and abuse cost more than $400 billion annually, costing organizations 6 percent of their annual revenue. Although high-profile attacks by disgruntled workers garner most media attention, the problem is far more complex. The National Safe Workplace Institute in Monroe, North Carolina, calculates that a single episode of serious workplace violence, which includes employee sabotage, can cost employers $250,000 or more in lost work time and legal expenses.

And according to the Workplace Violence Research Institute based in Palm Springs, California, on-the-job violence costs employers at least $36 billion annually, up 850 percent over the past five years.

And the pressure is rising. Workplace violence was just rated the No. 1 security threat to America s largest corporations according to Fortune 1000 security executives. These results were revealed in Pinkerton s sixth annual “Top Security Threats Facing Corporate America.” The Northwestern National Life Insurance Co., based in Milwaukee, Wisconsin, estimates that approximately 30 percent of violent incidents involve current or former employees, including temps and subcontractors. Clearly, workplace anger that s funneled into nonviolent or violent acts of sabotage is an issue HR managers can t afford to ignore. It can happen when you least expect it.

Expect the unexpected.
Employees are more likely to commit acts of sabotage when they think their employer has done them wrong. For instance, sabotage is common after a termination. Omega Engineering of Bridgeport, Connecticut, has lived this particular nightmare. The company, which does work for NASA and the U.S. Navy, suffered $10 million in actual and productivity losses after someone unleashed a software program known as a “logic bomb” that deleted critical computer files. The incident took place 20 days after the dismissal of the company s former chief computer network program designer, Timothy Lloyd, in 1996. Lloyd has been charged with the crime, and the case is pending.

“I ve experienced sabotage when a merger and acquisition was announced at my former company and it became evident that a major downsizing was in the works,” recalls Linda Konstan, a former HR director who s now president of LMK Associates, an HR consulting firm in Denver, Colorado. “Not only were there suddenly major glitches in computer programs, but items were walking out the door.” She says they arrived one day to find the company s cafeteria refrigerator gone. “I m still trying to figure out how they got it out with a full security system in place. We had to bolt everything down for the remaining nine months of the ongoing downsizing.”

Similarly, an electric company in California resorted to sealing manhole covers during a strike to prevent employees from cutting power wires critical to employee service. At another company, Chronicle Publishing Co., which publishes the San Francisco Chronicle and the San Francisco Examiner, a striking driver electrocuted himself while tampering with a transformer box outside a company office during a strike in 1994. The strike was regarding pay and management plans to reduce the number of delivery truck drivers.

“That s one area where you re more likely to [encounter sabotage] is during a prolonged and ugly strike,” says Pinkerton s McCormick. “If there s enlightened labor relations and no really serious problems on each side, it s less likely to happen. Again, it comes back to what kind of management and HR policies you have.”

Company reactions are mixed.
“Companies aren t taking this lightly,” says one public-relations director at a large firm where an employee sabotaged the company s computer system two years ago, causing more than $100,000 worth of damage. She declined to use her firm s name, but says the company pressed charges against the ex-employee, who has since been prosecuted and jailed. She adds: “The willingness to go after the offender is something to be noted. Companies are making sure that the legal remedies are applied, and policies are being formulated that didn t exist before.”

Employees need to know such behavior won t be tolerated right from the date of hire. “We always suggest our clients put policies in their handbooks that give management the absolute right to inspect lockers, desks, filing cabinets—anything that belongs to the company. And that s a condition of employment,” explains Jerry Eisen, president of Human Resource Center Inc., an HR management consultant based in Phoenix, and former VP of HR for several large organizations. Here s how he usually words his clients policies on the topic:

Most of the time, employees who are found guilty of sabotage or damaging property are subject to paying back the deductible on the company s insurance policy which covers such losses.

Companies are often shy about reporting such crimes. The FBI and other law enforcement agencies are trying to overcome companies reluctance to report computer and other crimes because of the negative publicity involved. Companies fear public scrutiny about what they did to cause an employee to get so angry or feel so desperate.

Human resources managers and even risk managers aren t eager to talk on the record about employee sabotage—especially those who ve experienced it firsthand. Several human resources professionals whose companies were known to have experienced employee sabotage were contacted for this story, but declined comment. However, while it may be a touchy subject, it must be discussed so that fewer incidents occur in the future.

Preventing sabotage requires a kinder, gentler approach.
Perhaps there ll always be those employees who just get ticked off and explode, regardless of environmental, social or workplace stress. You may never be able to do anything to prevent those people from retaliating against your company, but doing thorough prescreening and background checks always helps. And there s a lot you can do to prevent most sabotage.

Most experts say the best prevention is simple: Treat your people right and they ll treat you right. The risk of sabotage seems to be directly proportionate to the way in which a company treats its employees fairly. Often, that s much easier said than done.

In his book, Silent Sabotage: Rescuing Our Careers, Our Companies and Our Lives from the Creeping Paralysis of Anger and Bitterness, (Amacom, 1995) William J. Morin, chairman and CEO of Drake Beam Morin Inc., a large organizational and individual transition consulting firm based in Boston, stresses that organizations need to reengineer both personal and corporate values. “What is silent sabotage? It s a turned-off, disenfranchised society that gives up in silent disapproval. It s a worker who comes in later and goes home earlier than he or she did 10 years ago,” writes Morin in his book. “I believe there s only one way to overcome the effects of silent sabotage—by critically analyzing and reevaluating our own values and our codes of ethics, and then rebuilding or reengineering them entirely.” Companies need to create shared values that we all know, understand and live by.

It s also important to open the lines of communication. That doesn t mean squelching conflict. It means managing it by creating cultures of constructive conflict by making sure that all organizations systems are based on a common set of objectives, says Erik Van Slyke, an expert on organizational conflict and author of Listening to Conflict: Finding Constructive Solutions to Workplace Disputes (Amacom, 1999). These objectives include: a shared perception of reality, results-oriented operating agreements, clarified roles and accountabilities, consensus decision making, and a formalized conflict-resolution process. It also means conducting regular employee communication meetings, collecting feedback through employee surveys and other anonymous channels like hotlines, and third-party reporting systems.

Efforts to treat employees fairly almost always pay off. Consider a 1996 study conducted by the University of Florida s National Retail Loss Survey project and the Winter Park, Florida-based consulting firm Loss Security Prevention Inc. The survey queried 350 companies from all 50 states in 22 types of retailing. The study examined the relationship between the way companies treat their employees and the level of employee theft they experienced. What the study uncovered was the companies that pay their employees better, have low turnover (including low management turnover), promote from within, have profit sharing throughout the company and maintain a high ratio of full-time employees to part-time employees, encounter less theft than retailers that don t rate as well in these human resources areas.

Now more than ever, employees need places to vent their feelings, and employee-assistance programs are still a good HR investment. And an interesting change in EAP services is emerging. “As health care costs continue to rise, employers will see the benefit of pulling together all risk-prevention programs—wellness, EAP and work/life—under one umbrella,” says Ann Vincola, senior partner of Boston-based Corporate Work/Life Consulting, a subsidiary of Knowledge Beginnings in San Rafael, California. Adds Vincola: “Risk-prevention services are increasingly overlapping in requests, and the lines will continue to be blurred. When an employee calls about child care but is anxious over a number of things, stress and marital problems may be at the core.” It s these types of underlying problems that build up and can emerge in inappropriate ways.

Employee sabotage is a complex and complicated issue. The implications are clear: Treat workers right, and they ll reward you with the right stuff. Of course, all things dealing with employees are somewhat uncertain. Your best hope is to keep business as fair as possible. Perhaps you won t predict every employee bomb that might explode, but you need to identify fuses that are lit and burning fast. Look carefully, and listen.