Employee theft and fraud are one of the most pervasive causes of loss among business owners. They are also highly preventable, and with Ongoing effective leadership, employees will often feel obligated to maintain a level of transparency and honesty that will prevent major internal losses in the future.
What Is Employee Theft?
Employee theft can occur in a variety of ways but boils down to an employee stealing anything of value from your company. This can include cash, property, products, proprietary research, product development information and even client databases. Although some of these things may not have an actual price tag on them, they could potentially be sold to competitors or others who would place value on them.
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Retail stores, for example, as well as food service companies can experience theft in the form of taking cash or product and food without paying for it. Technology companies develop software that an employee could sell to a competitor. Spas and salons have a vital client database that an employee may steal and target with a competing location of their own. Pharmaceutical companies have research data that an employee could steal and use to influence trading activity or competing for drug research at a different company.
Steps to Prevent Employee Theft
There are several steps you can take to help manage and prevent theft among your employees. Although it’s impossible to prevent every single case of internal theft, there are practices that should be in place to hinder the appeal of it. If you prevent them from having a reason to steal from you, it will be far more likely they’ll be a happy and productive employee for you for years to come.
- Perform background checks on all new employees. Before offering permanent employment to an applicant, make sure they have no criminal record on file, or at least no type of theft, burglary, fraud or robbery. This process will need to be specialized for your company’s activity. If you operate a business that caters specifically to employing convicted criminals, for example, perhaps a criminal background isn’t important to you – but you’ll need training practices that allow you to eventually trust them with growing amounts of valuable items or information.
- Offer employee discounts to your staff. If you provide a generous discount to your employees on products and services offered, they’ll be less likely to try to actually steal them from you.
- Have a non-compete agreement in place with employees and contractors. Asking your 1099 workers and employees to sign a non-compete clause when hiring them is an actually common place for many sectors. This will prevent them from learning your business practices, then turning around and opening a competing business that may take your clients with them.
- Use old-fashioned security measures in your business. Utilizing security cameras in your business will help you determine what may have happened in a questionable incident after the fact. Also maintaining an accurate count on registers or petty cash in the safe will help you narrow down when those balances don’t agree with deposit and sales records.
- Pay your employees fairly. If your employee feels valued and is paid a good living wage, they will be far less likely to steal from you. Conversely, a person who is working for a wage that doesn’t allow them to make ends meet on a regular basis will often harbor feelings of animosity towards you and the company, and a person in a moment of weakness may feel no obligation, to be honest with you.
- Develop a rapport with your employees. Having regular meetings, training sessions and just connecting with your employees on a personal basis through regular conversation will develop a level of trust and rapport between you. If you are largely an absentee boss and your employees don’t have a relationship with you, they won’t feel any obligation to remain loyal to you.
- Set clear expectations and consequences in employee handbooks. If you develop standards that are outlined in your employee handbooks that state what is absolutely not allowed and steps that must be followed, there will be no questions in the future about how to handle a situation. If you determine that a questionable act has been committed by an employee and you immediately fire them according to your employment practices, this will let your staff know that you aren’t lax in your policies and will be less likely to test them.
Employee theft won’t be the death of your company and profits if you employ some of these practices to ensure your property and information are never stolen or given away.
