Employee Theft

How do you prevent loss when the thief already has the keys to all the locks in your building?
 
One of the most troublesome security attacks on small business is when an employee is a thief.  Ongoing research tells us that almost 65% of all small businesses have experienced some employee theft, but employers only report employee theft in 16% of those cases.

Surprisingly enough, many employers will just fire the employee and move on. They don’t see themselves as a victim, perhaps because they were the one who made the hiring decision.

Many employers also feel emotional ties to their employee, so the theft is seen as a painful betrayal by a friend. Since small companies work together so closely, they are often more like family than hired help. The employer often wants to move past the emotional baggage as fast as possible.

Legal ramifications of prosecuting an employee mean hiring an attorney and spending time in court. Often this time and money can never be recovered, so it only drags out the healing process. A decent lawyer will explain that the time, money and energy required to fight a theft.

Employee theft is often cash, but not limited to money. Sometimes employees steal merchandise, time, office materials, and tools are also easy items to steal.

Who are the employee thieves? There is some discussion on whether the culprits are low-level employees or mid-level managers, depending on who is compiling the statistics. The American Society of Employers believes that 55% of all employees who steal are managers. Only a smattering are mid-level service employees, such as secretaries, accountants, or receptionists. The lowest rate of theft (2%) was among cashiers.

How can a business owner fight employee theft?

First, understand that those who are in a position of trust with a general lack of supervision are the usual culprits. Some people are just prone to thievery. To that individual, it isn’t evil; it’s a game.* There are a variety of ways people can steal and not get caught--because no one is watching them. Where to start?

The hiring process

One of the easiest ways to keep down employee theft is through careful vetting of job applicants. As much of a bother as it may be, doing a background check and contacting to former employers will sometimes tip you off. It isn’t even always what the old company says. Sometimes, it’s the way they say it. So, when you call references, listen carefully and keep your instincts on high alert.

Opportunity

One solution to employees who may have opportunities to steal is to find ways to create accountability. Just like shoplifters are less likely to shoplift with someone watching them, workers are also less liable to steal if they know they’re being watched.

The way your business is organized can also have an impact on employee theft. Sometimes, the solution is as simple as having people work together in teams since working closely together makes it difficult for employees to steal. If you can’t do that, watch the security camera footage on a regular basis.

Inventory

If you are an inventory-based business, keep a careful eye on your inventory, and odd fluctuations in ordering. If you see anomalies in purchasing habits or inventory numbers, or if something seems off, pursue it.

Accounting

Especially when an employee is in a position of bookkeeping, accounting,  or handling money, it’s important for the business owner to be on hand in a way that gives the employee assurance that the business owner is on the lookout. Many employees succumb to temptation when they feel that the owner is just offering them an opportunity by not watching. 

The problem of employee theft is probably always going to be an issue in business. But, a watchful eye will go a long way in keeping temptation down. 

*In one study, employees were offered the chance to return stolen parts and tools without repercussions. The company was flooded with returns. One worker said it wasn’t that he wanted the parts, it was the thrill of getting something for nothing. Others stated that they returned the items because their wives complained they were ‘taking up space in the garage.'