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Ways to reduce, prevent employee theft
By Jenny
C. McCune Bankrate.com
 Employee
theft is a big problem for small companies whether the economy is
booming or busting.
The U.S. Commerce Department has estimated that
30 percent of business failures result from employee theft. Many
of these are smaller firms that can ill afford theft and the resulting
losses. The government agency also estimates that American companies
lose $20 billion to $40 billion annually from employee theft.
"If anything, it's a bigger problem for smaller
companies because they can't withstand a theft as well as a huge
multinational company can," explains Dick Gibbins, senior vice president
of Swailes & Company, a private investigation and security management
company based in Houston.
Here are ways to take a bite out of employee
crime:
- Screen job candidates thoroughly.
Don't just ask for references -- check them.
Determine whether a potential employee is trustworthy before you
hire him or her, Gibbins says.
- Write and post an ethical conduct policy.
It should outline how employees should behave
and what constitutes stealing, says Joe Rosetti, senior vice president
of IPSA International, a security and investigative firm headquartered
in Atlanta. Rosetti, who has conducted employee surveys on theft,
has found that many employees, particularly younger ones, don't
understand what constitutes stealing or why they should "inform"
on a friend who is stealing. "One way to prevent good people from
going bad is to explain to them what the bad behavior is," Rosetti
says.
Strictly enforce policies across the board.
"You should have zero tolerance for this activity," Rosetti says.
"You need to set the tone."
- Educate workers on the cost of theft to
your business.
Many employees may mistakenly believe that your
company is doing so well that taking home some products or dipping
into the till won't impact your business. Explain to them the cost
of such petty thievery and its impact not just on your company,
but on their paychecks.
Very often, crimes committed by employees are
opportunistic and are not tied to financial hardship or ill will
toward an employer. Eliminate the opportunity and you can eliminate
the crime. Secure company valuables such as portable phones and
laptop computers. Removing "impulse" stealing situations can go
a long way toward protecting you and your company.
- Conduct an annual independent audit of
your books.
Such an audit will act as a deterrent and will
uncover any irregularities, says Bruce H. Henderson, a principal
with the law firm of Tanner & Guin in Tuscaloosa, Ala. Require
employees who have access to money to take vacation time. Their
time off gives you time to examine their records. It protects you
and them.
- Always require a counter-signature on
company checks.
Having two signatures required can help keep
your accounting staff honest and out of trouble.
- Take the time to go
over accounts payable.
Small-business owners often get into trouble
because they fail to take the time to oversee bookkeeping. Such
oversight can lessen the temptation to steal and can uncover little
thefts before they turn into big ones.
- Do not allow company
books to leave your office.
Letting your accounting staff remove financial
records gives them an easy way to doctor books.
What to do when it happens
When you suspect the worst, quickly address the problem. Many small-business
owners are embarrassed when they suspect a trustworthy employee
of doing something untrustworthy. But embarrassment is a much smaller
price than discovering embezzlement after the fact.
"It's often a Pyrrhic victory" when a company
brings charges against a employee for theft," says Tanner &
Guin's Henderson. He recalls a prominent lawyer in his town that
brought charges against an employee for embezzling funds. "The problem
is that this is a lifestyle issue," Henderson says. "The people
taking the money use it to fund their lifestyle. They blow it on
cars, cruises. So although the lawyer won the case he didn't get
a nickel back."
To recompense your company for funds lost through
theft, get a good insurance policy that covers outside crime, employee
theft and computer fraud. It won't prevent employee theft, but it
will help your company in the event that your crime deterrents don't
work.
Jenny C. McCune is a contributing
editor based in Montana
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