I got a call the other day, one of those conversations that begin, "You know about this stuff. What can I do? It was Ron, a nice guy I once met at a nice neighbor's house. His younger brother, Carl, had just applied for a job with a large company and didn't get hired after all the signals were pointing positive: he's a perfect match for his experience level, he knows a lot of people who work there and likes them so he'll fit right in and he had great interviews that ended with strong handshakes all around. Then he was sent to the HR department to fill out some forms and that was the end. The "thanks but no thanks letter had just come in the mail.

I got Carl on the phone, asked him enough questions about those forms to figure out that one was an "honesty test and made the diagnosis in a flash. Sounded to me like a case of Corporate Theft Phobia. I've been seeing a lot of it recently.

The problem of corporate theft is usually attributed to employees' bad behavior. That's true, and it's a difficult, persistent, expensive problem. There are two methods that companies use to deal with it. Unfortunately, neither of them works very well. The first, most obvious approach is not to hire employees who will steal. There are assessments that purport to select for honesty, but most dishonest Psych 101 students can learn to beat them. Also, they don't distinguish very well between people who will take a half empty disposable pen home with them and those who will highjack your truck and fence the contents.

There is another problem with these tests. Since most people will steal something (more likely the pen) given the proper circumstances and motivation, if the company only hires "honest employees they tend to be left with very few people to hire. As the job market grows, this will become an even more serious problem. As it is, there are many industries where the same people get recycled, working for first one company then another.

The more common method is the deterrent approach, which centers around the threat of disciplinary action. It works well if all of its three components are present. First, your people have to know something bad will happen if they steal. Second, your people need to believe it will happen to them, that is, if they steal, they will be caught and punished. Third, your people have to care about getting fired. But that's the problem with deterrents. It is very rare that all three conditions are present. Prisons are filled with people who either never thought or believed they would be caught or just didn't care at the time.

And many people don't care about being fired. Some even prefer it, especially if they have worked long enough to qualify for unemployment benefits. The problem is, many employers will ignore the fact that the person was fired "for cause and won't challenge the benefits award. It's hard when you pride yourself on being a nice guy.

The treatment of Corporate Theft Phobia is tough. First, it makes sense to define theft as being the taking of something more valuable than the half used disposable pen. Unless you have a very special situation, it will be easier if you accept that some theft is inevitable and your goal should be to cut it to a minimum rather than try, unsuccessfully, to eliminate it completely.

Here are some action steps you can take to protect your business. Start with a security assessment that identifies your organization's vulnerabilities. This assessment should include an internal audit of finances, information technology and other critical systems. Second, forgo traditional "honesty tests, which often weed out excellent employees and allow in people who are dishonest, but sophisticated enough to fool the testers. If you're going to use an assessment, use one that's been customized to specifically address your organization's vulnerabilities but make sure that it doesn't discriminate on the basis of any factor such as race or gender.

And remember that even though past behavior is generally the best predictor of future behavior, ex-offenders can be extremely valuable employees. People often learn lessons the hard way. Third, appeal to your employees' motivation so they are less likely to want to steal in the first place. People who steal are often angry and the way they have treated. Finally, directly address your managers' supervisory skills, since they're any company's first line of defense. Focus on coaching and performance assessment skills to start.

If you're wondering what my advice to Ron and Carl was, I'll tell you. I had none. I simply asked, do you really want to work for a company that doesn't trust you?