Employee theft costs businesses millions and millions of dollars each year, and small to medium-sized businesses bear the brunt of the consequences.
CNBC recently determined that workplace crime is costing businesses $50 billion a year with vendor fraud, payroll theft, theft of information and merchandise theft devastating business owners.
So how can you, as a manager, prevent employee theft and what should you do once theft has been detected? This guide to employee theft prevention will help you learn more about how to deal with this growing problem:
Be Careful About Who You Trust
The unfortunate truth is that employees who are most likely to steal from a company are those who are most trusted by their bosses and managers.
The bookkeeper or accountant who has been working for the company for years or the shift manager who oversees inventory have access to important information, company records and to company cash.
Even small amounts of money stolen over many years can really add up to a huge loss for a company that is trying to grow.
You may never know an employee perfectly, so be cautious about who you hire and what kind of access you allow them.
Learn to recognize behaviors that seem suspicious among your employees such as living beyond their means, drastic lifestyle changes, overall discontent.
When you're working in retail you have to work as a team, and this might mean you're tempted to rely on an employee to help you with some of the behind-the-scenes work. Be careful, however, about who you give access to.
Restrict access to computer data, inventory, company merchandise and supplies and keys and passwords. Change your passwords often and keep your cash in a safe place.
Write A Policy About Employee Theft
Your employees should know what you expect from them and what won't be tolerated. Make them aware of company policies regarding theft and post these policies where they can be seen every day.
Though having a policy in place won't prevent all theft, it will make employees aware that you've got an eye out and what the consequences will be for those who steal from the company.
Keep Track Of All Transactions
If your employees know that you're a stickler when it comes to documenting business transactions, they might be less likely to attempt to steal from you. Create an atmosphere where efficiency is a top priority. Number all of your documents and forms.
Set up through payroll procedures so that you alone have to make an approval for payments and financial transactions. Even when you have a bookkeeper or accountant in charge of your payroll, you can be the one to click the final "send." This way, you can keep an eye on amounts and make sure they are correct.
Watch Your Inventory
There is more than one type of inventory within each company. There's the inventory of supplies which can include all types of office supplies, decor, electronics, etc. Then there's the inventory that the business is selling. These are the products that are sold to customers which might include parts, various products, clothing, and so on.
Both types of inventory are vulnerable to employee theft. Even when mostly small, inexpensive items are stolen, they can add up to big losses.
Keep track of all your inventory. Consider keeping a chart where employees are required to write down their name and date when a product is being used or sold. Maintain a close eye on high-value items and document all damaged, unsold, and low-selling merchandise.
You should be the most concerned with employees who handle merchandise and manage the bookkeeping.
Set up two-step processes between at least two people wherever possible. For an example, the employee in charge of taking in merchandise and setting it up for sale shouldn't be the same person who determines when certain products should be posted for sale or scrapped altogether.
Review Your Documents
Just putting tracking measurements in place is not enough. You have to take the time to periodically look over all the forms and documents to make sure your inventory is in place.
Go over your numbers regularly as a management team and consider ways you can make your tracking methods more efficient.
If you suspect an employee has been stealing, you need to gather proof of the theft before you can proceed. You might want to consider installing security cameras, detection systems, or security mirrors to monitor employees and discourage theft.
If the theft was reported to you by another employee, gather their eye-witness account while keeping the information confidential.
It's important to document all the details of the situation including how much or what is stolen, the date, and if anyone else is involved. If you need to fire the employee, this documentation is needed, otherwise, the employee can sue you for firing them without proof.
Utilize Professional Investigatory Resources
If you feel like you've gathered enough evidence to move forward with prosecuting and/or firing an employee.
You need to be careful with how you approach the situation so as to avoid any legal issues. Turn to human resources, law enforcement, and forensic auditors to help you confront the employee.
Fire The Employee
If you're able to validate that your employee has been stealing from you, you need to fire them. Work together with human resources and payroll to issue final paperwork and checks.
Don't allow the employee to leave without being escorted out as some employees have been known to seek revenge as they leave and grab valuable items or information once they've been fired.
Invest In Added Security
At SensorNation, we specialize in loss prevention for retail business owners who can't afford the growing costs of employee theft. We provide the video security, security mirrors, retail hang tabs, security hooks and labels, and everything else you need to monitor and protect your inventory.
To learn more about our products, visit our website and contact us with any questions on how we can help you with your employee theft problems. We're happy to help.