Introduction
Employee theft is a significant problem that affects businesses of all sizes, and it can occur in various forms. It may involve employees stealing cash, office supplies, or merchandise, or they may commit more complex fraud schemes such as embezzlement. Unfortunately, many employers may be unaware that employee theft is happening in their workplace, and some may even turn a blind eye to it. In this context, it is crucial for businesses to take proactive steps to prevent employee theft and identify any potential risks. This article aims to explore the possibility of employee theft happening right under an employer’s nose and provide some useful tips to help companies prevent and detect employee theft.
Statistics – The Cold Truth.
Although you may feel confident that your employees wouldn’t steal, some statistics may make you reconsider. For instance, it is a common fact that a typical organisation loses 5% of its annual revenue to employee fraud, which could result in a potential global fraud loss of over $2.9 trillion. Moreover, according to the Department of Justice, nearly one-third of all employees commit some form of employee theft. Employee Theft Solutions, a division of The Shulman Center for Compulsive Theft and Spending, also estimate that one-third of all U.S. corporate bankruptcies are a direct result of employee theft. In addition, the U.S. Chamber of Commerce estimates that 75% of employees steal from their workplace and that most of them do it repeatedly. So, despite feeling like you know your employees well, the above statistics suggest that the risk of employee theft may still be significant in your small company.
How to Protect Against Employee Theft.
Employee theft can have a significant impact on a business, from financial losses to damage to reputation and employee morale. Therefore, it’s essential to take proactive steps to minimise the risk of employee theft in your business. Here are some tips that can help you protect your business against employee theft.
Expect it.
As the saying goes, “Expect the unexpected.” This is especially true when it comes to employee theft. Even if you trust your employees, it’s best to be prepared for the possibility of theft. By acknowledging the possibility, you can take steps to minimise the risk and put safeguards in place to protect your business.
Make it clear you have a zero-tolerance policy.
One of the most effective ways to deter employee theft is to have a zero-tolerance policy. Make it clear that any act of theft, no matter how small, will result in immediate termination and potential criminal prosecution. This sends a clear message to employees that stealing will not be tolerated, and it shows your commitment to protecting your business.
Put in place internal and external checks and balances.
Having checks and balances in place is crucial to detecting and preventing employee theft. This can include having multiple employees involved in financial transactions, conducting audits regularly, and performing background checks on new hires. It’s also helpful to have an external accounting firm review your books periodically to ensure that everything is in order.
Know your margins.
Knowing your margins is essential to detect any fraudulent activity early. If you monitor your margins closely, you can quickly identify when something is amiss. Keep track of your margins regularly and investigate any discrepancies promptly. This will help you detect any employee theft early, reducing the financial impact on your business.
Train your employees
Training your employees on the importance of honesty and integrity is crucial to preventing employee theft. Make sure your employees understand the potential consequences of theft and the importance of reporting any suspicious behaviour. Encourage an open and honest work environment where employees feel comfortable speaking up if they notice anything out of the ordinary.
Can Insurance Cover My Business?
Management liability insurance is a type of coverage that protects businesses and their management team from lawsuits related to a variety of risks, including employee theft. This type of insurance can help mitigate the financial impact of employee theft, which can be a significant loss for many businesses. For example, if an employee steals from the company and the business owner is sued for failing to prevent theft, management liability insurance can provide coverage for legal fees and damages. Additionally, some management liability insurance policies may include coverage for employee dishonesty or theft, which can help cover the financial losses associated with such incidents. For businesses concerned about the potential for employee theft, management liability insurance can provide peace of mind and protection against potential lawsuits and financial losses.
Conclusion
Employee theft is a serious issue that can have a significant impact on a business. By taking proactive steps to minimise the risk of theft, you can protect your business and ensure that your employees are aware of the potential consequences of their actions. By following the tips outlined above, you can help prevent employee theft and create a more secure work environment for everyone.