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For many small business owners, there's no such thing as a small loss due to theft or fraud. When a dishonest employee is the cause, it only compounds the injury. There's not only the financial burden of the crime, but the loss of an employee and the trust in your workforce.
Is employee theft really a problem? A recent study found that, in a retail setting, one of every 27 employees was apprehended from their employer for theft. In an office environment, office fraud lasts an average of two years before it’s detected. Apprehensions of employees for dishonesty spiked nearly 10% from 2015 to 2016, according to a survey of retailers.
How to Watch for Employee Theft & Fraud
The most-likely culprits to steal from employers are employees who have worked at their jobs for several years.
Some danger signals that you should look out for are:
Is employee theft really a problem? A recent study found that, in a retail setting, one of every 27 employees was apprehended from their employer for theft. In an office environment, office fraud lasts an average of two years before it’s detected. Apprehensions of employees for dishonesty spiked nearly 10% from 2015 to 2016, according to a survey of retailers.
How to Watch for Employee Theft & Fraud
The most-likely culprits to steal from employers are employees who have worked at their jobs for several years.
Some danger signals that you should look out for are:
- A sudden devotion to their jobs or working later than normal hours.
- Evidence of drug or alcohol abuse.
- Evidence of financial troubles or irresponsibility.
- Having strong objections to procedural changes related to financial, inventory or supply matters.
- Living above their means.
- Moonlighting in a parallel business.
Combating Employee Theft
Here are five ways to make it more difficult for dishonest employees to steal from your business and minimize the damage done to your business:
1. Run background checks When making hiring decisions, don’t just check a prospective employee’s references. Run a complete background check. It may seem a little pricey but it can be money well spent if it prevents you from hiring a future thief.
2. Have an anonymous system to report issues
Most honest workers don’t enjoy working with a dishonest employee. But they may be hesitant to point fingers in public. Provide an anonymous way for employees to blow the whistle on suspicious behavior.
3. Divide financial responsibilities
Unless you handle all accounts yourself, don’t have a single person do it all. For example: Separate paying the bills and handling receivables from the recording of transactions. The farther apart you separate functions, the harder it is for anyone to doctor the books to hide larceny.
4. Use a buddy system
Keeping more eyes on a process can cut the risk of theft. Any time you have incoming inventory, a sale has to be voided or credit given to a customer, you can reduce risk by requiring more than one person to be present and witness what is happening.
5. Bond with employees
It's much easier to steal from someone you don’t know very well. Getting to know your employees and creating a psychological barrier can make it more difficult for them steal from you.
Here are five ways to make it more difficult for dishonest employees to steal from your business and minimize the damage done to your business:
1. Run background checks When making hiring decisions, don’t just check a prospective employee’s references. Run a complete background check. It may seem a little pricey but it can be money well spent if it prevents you from hiring a future thief.
2. Have an anonymous system to report issues
Most honest workers don’t enjoy working with a dishonest employee. But they may be hesitant to point fingers in public. Provide an anonymous way for employees to blow the whistle on suspicious behavior.
3. Divide financial responsibilities
Unless you handle all accounts yourself, don’t have a single person do it all. For example: Separate paying the bills and handling receivables from the recording of transactions. The farther apart you separate functions, the harder it is for anyone to doctor the books to hide larceny.
4. Use a buddy system
Keeping more eyes on a process can cut the risk of theft. Any time you have incoming inventory, a sale has to be voided or credit given to a customer, you can reduce risk by requiring more than one person to be present and witness what is happening.
5. Bond with employees
It's much easier to steal from someone you don’t know very well. Getting to know your employees and creating a psychological barrier can make it more difficult for them steal from you.
If and when you suspect a theft has occurred
Due to certain laws, you have to be careful about making accusations or even investigating possible theft. If you suspect you have a dishonest employee, check with legal counsel on how to proceed. Legal requirements can vary greatly from state to state and it's better to be safe than sorry.
Check with your agent to ensure your business has coverage for employee theft. Don't have an agent? Click below to find an agent near you.
Due to certain laws, you have to be careful about making accusations or even investigating possible theft. If you suspect you have a dishonest employee, check with legal counsel on how to proceed. Legal requirements can vary greatly from state to state and it's better to be safe than sorry.
Check with your agent to ensure your business has coverage for employee theft. Don't have an agent? Click below to find an agent near you.
