What’s the Best Way to Reduce Your Company’s Risk of Employee Theft?

marketing planHiring the right staff and cultivating a positive work culture can help your small business reduce the risk of employee theft

In corporate environments, most business owners want to do everything they can to keep good workers around — and to make sure only good workers are hired in the first place. Sadly, that may be easier said than done.

The U.S. Chamber of Commerce revealed that 75% of employees have admitted stealing from their employers at least once, while 38% have copped to doing so at least twice. Additionally, cautious hiring practices aren’t always enough to stop these crimes from happening. More than 96% of employees surveyed say that their companies conduct at least one type of employment background screening, which should (in theory) weed out applicants who might turn out to be a liability for the organization.

But unfortunately, that’s not always enough to stop employee crime. And since 85% of misappropriation cases involve the business partner or employee of the owner of a trade secret, these business-related criminal acts are likely more common than you think. In many cases, however, business owners and managers can reduce the risk of being fleeced by employees by taking some simple steps that will reduce incentive and increase observation.

Work on Your Culture

Believe it or not, the culture of your organization can actually make a huge difference in the likelihood that an employee might steal from you. For one thing, you’ll want to clearly define your corporate policies and enforce them with regularity. You should have a zero tolerance policy for illegal activities and make sure that employees don’t turn a blind eye if and when they observe an employee engaging in theft or other crimes.

Creating an employee handbook and holding ongoing training sessions will ensure workers of all levels are on the same page. Consider having a means for employees to anonymously report incidents, as well. You’ll also want to make sure that employees don’t really have incentive to steal. If they feel they’re grossly underpaid, for example, or they feel they’re being taken advantage of in other ways, they may be more inclined to minimize their criminal actions.

By prioritizing employee satisfaction and retention through fair wages, great benefits, and paid vacation time (96% of American workers say vacation time is important), you can actually reduce the risk that an otherwise honest employee might be tempted to take from the till.

Pay Attention to Behavioral Changes

Prevention is key, but you may not always be able to stop employee theft before it ever starts. The next best thing is to nip it in the bud early. That often comes down to becoming a shrewd observer of employees. While you shouldn’t automatically suspect (or worse, outright accuse) your workers of wrongdoing, it may pay off to keep your eyes and ears open for any behavioral changes — particularly in employees you know well.

Watch out for employees who exhibit a sudden change in their lifestyle (e.g., spending beyond their means with no reasonable explanation) or those who have recently shown a new devotion to coming in early or staying late with no apparent cause. And while it’s important not to perpetuate the stigmas surrounding addiction, employees with a known history of substance abuse have sometimes resorted to illegal activities in order to continue in this cycle.

Employees who protest procedural changes related to inventory or financial matters should also be observed carefully. While none of these changes is definitively indicative of employee theft, it’s possible that leaving these behaviors unchecked could have drastic consequences for your organization.

Supervise and Survey

Of course, keeping an eye on employees — without micromanaging or always looking over their shoulder — can help to keep employee theft from occurring. You’ll also want to make sure there’s more than one person responsible for a given shift or for a specific responsibility, as working alone can make temptations difficult to resist.

Roughly 34.5% of inventory shrink (which costs American businesses $45 billion each year) can be attributed to employee theft, but there’s no way for you to be everywhere at once to ensure nothing goes missing. That’s why you might want to consider investing in surveillance equipment. Video footage, security systems, access management and other IT security measures, inventory tracking, internal audits, and more can all allow business owners to keep tabs on what’s really going on within their organization. Using outside resources to manage your surveillance and audits can also reduce your blindspots to “loyal” employees and to ensure you aren’t letting anything slip through the cracks.

Even for the most experienced of business owners, preventing employee theft can prove a challenge. No one wants to monitor every move their workers make, and trust between employer and employee is paramount to a successful professional partnership. However, it’s essential that small business owners, in particular, be proactive about taking employee theft seriously. By creating a culture where workers feel valued and properly supervising employees, you may be able to reduce your losses and keep your best workers around for far longer.

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Valerie M.

Contributor at Small Business Marketing Tools
Valerie M. is a writer from Upstate New York. She received her Bachelor’s degree in Journalism from The State University of New York at Fredonia in 2016 and is currently working at a digital marketing agency where she writes blog posts for a variety of small businesses all over the country. Valerie enjoys writing about music, animals, nature, and traveling.