Study Ties Unexplained Pay Cuts to Thefts

Pay cuts may prompt workers to steal company property, but bosses can reduce the problem by explaining the cuts properly, a study suggests.

“You can make people less likely to hurt the company by . . . explaining to them in a socially sensitive manner--and a highly informative manner--why it was necessary for them to suffer this inequity,” researcher Jerald Greenberg said.

His study found that employee thefts at a manufacturing plant more than doubled when a poorly explained 15% pay cut was imposed and fell back to normal when full pay was restored.

An identical pay cut at a comparable plant caused less of an increase in pilfering because of a better explanation, said Greenberg, a professor of management and human resources at Ohio State University.

The study focused on non-union factory workers who were largely semiskilled and unskilled. It would take further research to know if its conclusions apply to other kinds of employees, but “there’s good theoretical reason to believe that it probably would,” Greenberg said.

Greenberg presents the results of his study in the Journal of Applied Psychology. He said it is not clear whether the extra pilfering is aimed at making up for lost income or getting revenge.

The study included three Midwestern manufacturing plants owned by the same company, which was not identified. The plants make small mechanical parts, mostly for the aerospace and automotive industries.

Greenberg designated them Plants A, B and C. Before the pay cut, Plant A employed 64 workers, Plant B had 53 workers and Plant C had 66. The study lasted for 30 weeks, centered on the 10-week pay cut.

Employee theft was measured by an accounting formula that revealed percentage of inventory, such as tools and supplies, that was missing for no other known reason.