Employee theft costs American businesses 6 percent of their annual revenue. That’s right , 6 percent of your hard-earned money is going right out the door – illegally.
Given that employee theft is a major problem for many businesses, it is a good idea to learn how to spot and prevent it. Below, we’ll cover both!
Detecting Employee Theft
“Hey, Joe – did you steal $500 from the cash register yesterday? Yes? Please give it back and resume your duties.”
It would be great if every situation involving employee theft went that smoothly, but that’s now how it works. To help minimize this problem, you should know how to detect it. Below are a few red flags that should warrant further investigation.
Excessive Personal Spending
If your entry-level accountant suddenly trades his 1972 Ford Pinto in for a new Mercedes, he could have a very generous uncle or have just won a lawsuit. Then again, he may be embezzling funds or stealing in some other way. It’s better to be safe than sorry, so keep an eye on his activities – particularly if anything has gone missing.
Excessive Travel Expenses
Suppose you occasionally send an employee to New York to meet with clients. You notice that he often buys a single baseball ticket for $1,000 from a ticket broker. Yes, the employee is probably living it up in a luxury suite at a Yankees game – courtesy of your money.
If you often wonder why your 3-person business goes through 30 rolls of toilet paper each week, you may have someone who is highly lactose-intolerant. Then again, an employee may be trimming his own budget by stealing toilet paper.
Preventing Employee Theft
Contact all references and conduct a background check on any candidate that you intend to hire. By doing so, you’ll spot potential red flags such as a criminal history.
Although theft is obviously wrong, some employees may feel that doing so won’t harm the company. Inform them that nearly 1/3 of all bankruptcies are due to employee theft and that doing so could jeopardize their jobs.
Make Stealing Difficult
Valuable items that can be easily stolen should be secured. For example, consider placing valuable items such as laptops and PDAs in a locked drawer before you leave.
Install Security Cameras
By keeping an electronic eye on your workplace, you can detect and deter employee theft.
Require Multiple Signatures on Checks
Require multiple signatures on checks. Doing so will limit the risk of theft, as at least 2 employees would have to agree to the crime.
Conduct Independent Audits
At least once per year, conduct an independent audit of your company’s books. Have an outside accountant, for example, verify that everything is in good order.
Be aware of employees that refuse to take vacations. This may be a situation where they are afraid that theft will be detected by a replacement.
The Bottom Line
Detecting and preventing employee theft is essential to operating a successful business. By doing so, you can keep dishonest employees out of your workplace and improve your bottom line.
Be sure to look for warning signs and take precautionary measures such as performing background checks and educating employees. Your business simply cannot afford to overlook this problem.