FIGURES FROM THE COMMERCE DEPARTMENT SHOW THAT EMPLOYEE THEFT IN THE UNITED STATES ROSE FROM $3 BILLION IN 1967 TO $18 BILLION IN 1977. IT SEEMS TO BE INCREASING AT A RATE OF 20 PERCENT A YEAR AND IS ADDING 1.5 PERCENT A YEAR TO CONSUMER COSTS. TOP MANAGEMENT IS CALLED THE KEY TO A COMPANY'S THEFT PROBLEM. FOUR MANAGEMENT STYLES WHICH LEAD TO EMPLOYEE THEFT ARE IDENTIFIED: (1) 'MANAGEMENT BY OBFUSCATION,' WHICH SETS UP SECRET BOOKS, CASH SLUSH FUNDS, AND CONFUSING ACCOUNTING PATHS TO HIDE CORPORATE DISHONESTY; (2) 'MANAGEMENT BY BENEVOLENT EXCEPTION,' WHICH ALLOWS A PRIVILEGED HIERARCHY TO BYPASS ALL POLICIES AND HELP THEMSELVES TO MERCHANDISE, MONEY, AND PERSONAL SERVICES OF EMPLOYEES, THUS BUILDING RESENTMENT AMONG THE NONPRIVILEGED; (3) 'MANAGEMENT BY CRISIS,' WHICH OBSCURES AUDIT PATHS BECAUSE EVERYONE IS 'GOING TO CATCH UP ON THE PAPERWORK LATER;' AND (4) 'MANAGEMENT BY SELF-DELUSION,' WHICH REFUSES TO FACE SHORTAGES AND EVIDENCE OF PILFERAGE. A WORKING PRINCIPLE FOR LOSS PREVENTION IS PROPOSED, WHICH COMBINES GOOD LOSS CONTROL TECHNIQUES, PHYSICAL SECURITY DEVICES, AND EMPLOYEE TRAINING. IT IS POINTED OUT THAT MANAGEMENT FREQUENTLY DOES NOT APPRECIATE THE EMPLOYEE THEFT PROBLEM. IT IS RECOMMENDED THAT THE LOSS PREVENTION DEPARTMENT CAREFULLY DOCUMENT RESULTS FROM SPECIFIC PROGRAMS, COMPARING LOSSES BEFORE AND AFTER THE PROGRAM'S IMPLEMENTATION. SINCE LOSS CONTROL IS NOT A VISIBLE PROFIT CENTER, IT MUST CONTINUALLY PROMOTE ITS CONRIBUTIONS TO COMPANY WELARE. (GLR)