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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Written by RLO Training