The constricting effect of crime

A safe and secure environment is essential for business, but a government-commissioned report shows that we’re not feeling safe or secure. DANIELLE DU TOIT looks at the findings and highlights what companies can do to lessen the impact of crime
 

Crime has become such a part of our lives that we forget the effect it can have on our emotions and our ability to do our jobs, never mind the financial strain it puts on businesses and the stress this places on managers.

The promotion of entrepreneurship and small business is an important government priority – so much so that in 2008, when crime spiked as a result of the recession, the Office of the Presidency stepped in. It commissioned SBP, an independent not-for-profit research company, to conduct a survey.

The resulting report, The Impact of Crime on Small Businesses in South Africa, makes for troubling reading.

The spike in crime was a direct consequence of the economic recession. With many essential commodities (including food, rates, taxes and fuel), increasing in price, and the added pressure of large-scale job losses, many were led to a life of crime.

The study focused on 446 small and emerging businesses with less than 50 employees, based in Johannesburg, Cape Town and Durban. The companies were located in inner city business parks, large urban townships, high density business locations, industrial parks, houses and informal traders – the report really covered all bases.

More than half of those surveyed said crime was a major concern to them and the state of their business, and that they did not anticipate a respite any time soon. They mostly feared being either robbed or burgled which, according to statistics released by the South African Police Service, is a legitimate fear: there were 14 667 reported cases of business robberies in the year to September 2011 – an average of 40 a day.

Responding to the statement “I and/or my staff are at serious risk of crime while at work”, seven of every 10 participants said yes.

Government believes citizens’ perceived levels of crime are greater than actual crime levels, saying the fear is fuelled by constant media coverage, rumours, anecdotes and statistics.

Dave Sleep, director of the reaction division at Stallion Security, says it goes both ways. “Crime is a massive problem and some people are very aware of it, while others do not have any idea really what is going on out there. As an example, people who work in security controlled business estates are less influenced by actual crime and take the issue very lightly, even with incidents still happening in these types of environments. Some people therefore lead very fearful lives while others tend to believe that they have adequate protection and don’t experience crime like others do in different areas and circumstances.”

The cost of crime?
There are two types of costs associated with being involved in a crime. Direct costs and indirect costs – and these can both be hugely burdensome when they begin to add up.

Direct costs are more tangible costs – this involves merchandise, cash or equipment being stolen. This also includes pre-marketable associative costs such as transport. Potential profit is also lost, plus replacement costs might be higher than the original price. Direct costs also include malicious damage due to breaking and entering, vandalism and sabotage. The direct cost of crime can be devastating on any company.

Indirect costs are costs such as revenue losses due to down time. This could be a result of repair or replacement of equipment, disturbances to production, the availability of goods, legal expenses, higher operational costs, loss of operational records and loss of reputation.

Additional costs such as relocation and compensation for stolen goods were frequently mentioned by those who took part in the survey. There is also a reluctance of insurers to insure property and goods in high-crime areas.

Cost of preventative measures
Once a company has experienced a crime, more often than not, it will put preventative measures in place or upgrade whatever it already has. Sleep says it is common for people to install preventative measures only after a crime has occurred. Precautions represent a completely unproductive investment but also a completely necessary one.

The most important feature any business can offer is a safe and secure environment. This has become a top selling feature, and real estate agents know it – just think how property is advertised: “600 m2 office space to let in a safe environment with 24 hour security.”

The most obvious measures put in place are window protection/burglar bars and lighting. Stallion Security recommends to all prospective and new clients that barrier methods be put in place. Deterrents are one of the best crime prevention measures available, followed by alarm systems and panic buttons linked to a local security company.

However, once-off recurring costs begin to tally up. The survey revealed that small companies were spending almost 11 percent of their annual turnover on once-off preventable security methods, while larger companies were spending just one percent.

Psychological effects of crime on businesses
Psychological effects are less tangible but are the longest lasting and have the biggest impact on a person, and thus the business. The trauma of victimisation can alter a person’s sense of wellbeing. The effects vary from person to person, but there are almost always significant consequences.

As many as 19 percent of people said they could not return to the place where an incident took place. Flashbacks and nightmares are extremely common and the fear of recurring crime is prevalent in more than half of those affected by an incident.

How does this affect working ability? A Grant Thornton survey into the effects of crime in the workplace showed that people affected by crime showed a 65 percent decrease in productivity. Even when an incident took place away from work, people said it affected their ability to concentrate and that they had impaired motivation.

The SBP study showed similar results – managers reported high rates of absenteeism after an incident and said staff showed high anxiety and stress, and became sick more frequently.

The prevalence of post traumatic stress disorder (PSTD), an emotional illness caused by trauma, often as a result of crime, is also fairly common. Although those subjected to trauma won’t all develop PSTD, there are often significant physical changes that occur as a result of a traumatic experience. If left untreated, emotional illness can manifest into other symptoms and behaviours such as migraines and drug or alcohol abuse.

It is therefore essential that managers understand the emotional issues that can arise from crime-related trauma. As with any injury, psychological injury should not be underestimated. Having a supportive system both at work and at home will help with the healing process.

And having good security measures in place will not only help to prevent crime, but will deliver greater peace of mind – which in itself is a psychological benefit that will contribute to enhanced productivity.