One of the best ways to make your business successful is to prevent employee theft. And one of the worst ways to run your company is to assume your employees are honest. Sorry…..but this is true.
According to a recent employee theft study, 75% of employees stole from their employer at least one time. 37.5% stole at least twice. And get this….33% of all business bankruptcies are caused by employee theft. In the United States, employees rip off $50 billion (with a “b”) each year.
Even if you aren’t the owner, if the joker who works alongside you is ripping off the company, he is endangering your livelihood and your job. If he gets caught and it’s discovered that you knew about it, you’ll likely get fired too. And if you don’t get a raise one year, it could be because the clown working at the next desk stole so much the company didn’t have the cash to pay you what you really deserve. Unfortunately, employee theft is a huge problem for owners and employees alike because the people with the greatest access to the company’s assets are the staff.
How do you make sure your people don’t rob you blind?
1. Limit Access
Give access to people (assets and information) only as needed. If someone doesn’t need to access the books, assets and/or inventory don’t give it to them. If that need changes, change the access along with it. If you see something suspicious going on and you’re not the boss, you have no choice. You must tell your supervisor and document having done so. You have no obligation to cover up for anyone. Remember, this person is putting the safety and security of your family and everyone who works with you in jeopardy. If you are the owner, theft endangers your small business and at the very least, makes it worth a lot less to a potential buyer down the line.
2. Audits
Stage periodic and surprise audits. Reconcile inventory, assets and cash with your records. Most important, explain to the staff why you’re conducting these audits. Explain that the business needs to remain strong in order to safeguard jobs. And it’s not always hard assets you have to worry about. Let’s say Jim is responsible for buying the business insurance. You fear he’s been buying more expensive insurance for the business from his friend just to help him out. Maybe kickbacks aren’t even involved, but it’s still theft. Shop for business insurance yourself and make sure everyone is playing fair. While you are at it, make sure to buy insurance against theft. You can’t be too careful.
3. Talk It Up
If the staff understands the importance of anti-theft measures, they will become your eyes and ears when you’re not there. When your staff realizes that it’s in their interests to protect the company against theft, they’ll be a cost-free security system. Explain how added costs mean lower job security and fewer pay raises.
4. Hammer Time
When you catch somebody in the act, take swift and stern measures. How you respond to one dishonest person tells the entire staff that you won’t tolerate it. It doesn’t matter if the person helped themselves to $5 or $5,000. It also doesn’t matter if the person has been with you for years and years and years. Bad character is bad character. If you let this crook slide, you’re endangering the livelihoods of everyone else who works with you.
You don’t have to embarrass the person who demonstrated poor character, but you do have to fire them. Once a person has decided that your assets are fair game, they’ve gone down a slippery slope from which there is no return. You’ll be doing them a favor by providing a consequence for their actions. Maybe they will clean up their act as a result.
Have you ever encountered someone stealing at your firm? How did you handle it? What was the result?
Pat Murphy says
You have alluded to the primary prevention method: controls. What I find interesting is that the supervisors who manage those have difficulty (especially is small businesses) enforcing them. They don’t like confrontation.
The termination for theft must be backed up by a written policy. It sounds silly you have to write policy that says Don’t Steal but what exactly is “stealing”? Borrowing is theft. Cheating on time is theft. Put it in writing as best you can and enforce consistently.
Pat Murphy
krantcents says
When I owned a restaurant, I caught someone stealing. I fired him immediately. Sound controls and being around seems to stop 95% of it.