“The FBI calls employee theft the fastest growing crime in America, and the majority of these cases happen in companies with fewer than 100 employees. In another alarming statistic, the U.S. Chamber of Commerce estimates that 75 percent of employees steal at least once, and half of them steal repeatedly.” The total cost of employee theft is costing businesses $200 billion a year.
Thankfully, there are ways to help prevent employee theft.
1. Create a division of labor. Concerning your accounting books, have several different employees manage your finances. Never allow the same employee to cut checks and manage your books.
2. Rotate job responsibility. Switch it up. Train employees in multiple roles, and rotate positions, preferably unannounced. For example, have an employee who normally handles cash periodically assigned to a different role, such as stocking inventory.
3. Consider outsourcing some or all of your bookkeeping. This allows for red flags to be raised without the offender’s ability to manipulate the system, and for confidential financial information to remain under your control.
4. Inform employees of spot checking and audits, and follow through. You will need to implement policies and programs that cut down on employee theft. Conduct regular audits on areas that are likely to be targeted by theft. Audit every area where money changes hands. Make some of these audits random so thieves do not have time to cover their tracks.
5. Educate your employees. Create training sessions to explain how employees benefit from reporting theft. Be sure to tell them how to spot employee theft, and make it easy for your employees to anonymously report theft.
6. Keep an eye on your finances. Use pre-printed checks with pre-printed check numbers, and require immediate reconciliation of bank statements and accounting for every check number. Always be aware and investigate purchases or cash flows that seem out of the ordinary.
7. Stick to a zero tolerance plan. Caught an employee stealing? They’re out of there. Set an example and be consistent. No matter how small, inform employees your business takes theft very seriously.
8. Install security cameras. Security cameras greatly discourage theft, and also help curb “sweethearting”. Sweethearting is “a term used in the retail loss prevention industry to mean intentional margin loss/shrink through employee theft at the cash register”, and is the most common type of employee theft. Sweethearting occurs when an employee fakes a transaction of merchandise or cash for a friend, family member, etc. When an employee or customer is aware of being monitored by CCTV, their likelihood of stealing decreases.
9. Screen candidates with specific questions. A new study on employee theft suggests that when hiring, “by adding a few screening questions that focus on the potential employee’s risk-taking, ethics and need for social acceptance, employers could identify ‘bad apples’ up front and simply avoid hiring them”.
10. Foster and maintain a positive work environment. Build trust with your employees, and support them. This environment decreases crime and strengthens loyalties.
Do you have any tips for what works for your business? Leave us your thoughts and comments on our Facebook page.