Employee theft is a major issue that costs US businesses $50 billion annually. If you haven’t given any thoughts to protecting against theft in your workplace, there’s a good (if deeply unfortunate) chance that you’re allowing money to leak from your business.
Basic, common-sense protections can help reduce the chances of theft occurring at your organization.
Keep checks and balances on your money managers.
There is a general feeling that low-level employees are the most likely to steal from an employer, but that isn’t borne out by the actual data. 55% of employees who steal from their employer are in managerial positions, and most of those are in bookkeeping or payroll. The more unrestricted access employees have to funds, the more likely they are to siphon some of that into their own coffers.
Even if you’re a small business, you should never have one person handling finances from start to finish. Make sure that there are multiple opportunities to check numbers against each other. Failure to check invoices for years led to a situation in which one man was able to steal $1.2 million in fajitas from his employer. Regular internal audits would have caught this much earlier on.
Watch your payroll carefully.
Payroll fraud is a common type of company theft. This can range from “buddy punching,” in which employees clock in and out for another employee who hasn’t actually worked, to collecting pay for nonexistent employees or even simple theft of paper paychecks.
The larger your company grows, the more challenging it is to notice payroll discrepancies at a glance. Keeping any time clocks in a well-supervised area (ideally one with a camera) and regularly checking payroll expenses alongside work schedules can help nip payroll fraud in the bud. Still concerned? Consider hiring an outside payroll service to reduce the amount of access employees have locally.
Manage information to prevent intellectual property theft.
IP theft can come in a wide variety of forms, ranging from people simply sharing trade secrets verbally to outright theft of designs and copyrighted materials. Surprisingly, 50% of incidences of IP theft involve people using their corporate email accounts to send information or documents, meaning that the company’s network is a prime opportunity for keeping intellectual property secure.
Limiting internal access to highly valuable data can go far towards reducing opportunities for IP theft, and it’s cost effective as well. This isn’t a substitute for consulting an expert in cybersecurity for technology-specific solutions, though.
Hire the right people (and fire the right people).
In a sense, it doesn’t matter whether you’re talking about an employee stealing office supplies or embezzling millions of dollars; when it comes to preventing employee theft, the best solution is to hire trustworthy employees.
Thorough reference checks and background checks are critical in this regard. Someone with a history of unethical behavior, and especially theft, is unlikely to be someone you can trust with sensitive data, valuable assets, or access to funds. While some employers treat references as a rubber stamp procedure and don’t bother with background checks for rank-and-file employees, this can lead not only to one incident of employee theft, but an environment where theft flourishes.
And of course, your own experiences with employees constitutes part of their background as well. Don’t hesitate to terminate an employee for low-level theft. There’s an excellent chance that this employee would have stolen more, given the opportunity. If you need support with terminations, we have a free NYS Employee Termination Kit to help with that challenging process.
Focus on awareness, not paranoia.
It can be easy to start distrusting everyone, leaving you with an unhappy, unproductive work environment. On the other extreme is a blissful state of naiveté, assuming that company theft would never happen to you.
The balance is being aware of the possibilities for theft. By checking on employees, assets, and funds regularly, you can create a culture of accountability and build a workplace where honest, hardworking people want to be.