Preventing Employee Theft
It seems that stories about employee theft are in the news more and more. Unfortunately, anyone can become one of these stories; even the best employee can be tempted to steal from his or her employer.
The U.S. Chamber of Commerce estimates that 75% of all employees steal at least once, and half of these steal repeatedly. U.S. businesses lose as much as $110,000,000 every day from employee-related crimes. Another study shows that businesses lose up to 5% annual revenue to employee fraud.
The average time before office fraud is detected: two years.
Here are steps you can take to prevent theft in your business.
- 1. Separate responsibility: issuing checks, making deposits, managing inventory, and reconciling accounts should all be separate jobs
- 2. Put controls in place: for example, require a second signature for checks over $500
- 3. Rotate tasks among employees: help employees hold each other accountable
- 4. Perform audits, including unannounced audits: this creates an atmosphere of honesty, and prevents thieves from having time to cover their tracks
- 5. Supervise your employees: research shows that low levels of supervision correspond to high levels of theft
- 6. Create a fraud-avoidance policy: make a plan and set the rules and consequences of employee theft. This plan should include pre-employment and periodic background checks, regular changing of passwords, audits, and consequences of theft.
- 7. Consider cameras: you must provide legal notice to clients and employees that they are being recorded {“Smile, you’re on camera!”}. Fake cameras are an option, but it only works when you are the only one who knows what’s {not} being recorded.
- 8. Catalog inventory: employees are much less likely to steal products or supplies if you are keeping a close eye on everything. Also, create a logbook for inventory: everything in or out gets recorded.
- 9. Have a hotline: have a way for employees to anonymously report fraud
- 10. Keep track of keys: use keys that cannot be duplicated without the master, and only give keys to management.
Suspect an employee? Take the right steps:
- 1. Conduct an investigation to determine if a theft occurred
- 2. Verify the extent of the theft and document missing items
- 3. Remove the thief and eliminate access to the workplace
- 4. Try to recover the money or property
- 5. If the loss is significant, seek legal advice
- 6. Check your insurance policy for theft coverage
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